Three percent further tax may go in next budget: supplies to unregistered persons

ISLAMABAD (May 17 2004): The Central Board of Revenue (CBR) is seriously considering abolition of 3 percent 'further tax' on the taxable supplies made to un-registered persons in the next fiscal budget.

The second proposal under review is reduction in the rate of 'further tax' from 3 percent to 1 percent.

However, the CBR is not considering proposal to reduce the rate of general sales tax from 15 percent to 10 percent.

Sources told Business Recorder here on Sunday that the government has decided to implement one of these proposals in the coming budget.

The first proposal is total withdrawal of 'further tax', which is a major demand of the business community. Secondly, the CBR has the option to reduce the rate of 'further tax'.

In both the cases, amendment is required in section 3 (1A) of the Sales Tax Act, 1990.

Sources said that reduction in 'further tax' rate from 3 percent to 1 percent would not be a new thing as reduction to 1 percent has been exercised in the past. The sales tax net has been successfully expanded from 40,000 to 1,60,000 since levy of further tax.

The withdrawal or reduction of this tax could be considered as major tax relief's' measure in the budget.

However, sources clarified that rate of general sales tax would remain 15 percent in the coming budget.

The revenue implication of decreasing one percent GST rate from 15 to 14 percent is around Rs 15 billion. It would not be appropriate to slash the GST rate keeping in view the proposed target of Rs 571.2 billion for next financial year.

In this regard, tax managers' team, led by Chairman Central Board of Revenue (CBR) Muhammad Abdullah Yusuf, will discuss the budget proposals with the officials of Ministry of Finance on May 25, 2004.

Presently, further tax is not applicable on taxable supplies made by retailer or by any registered person to a person whose income is not liable to tax under Income Tax Ordinance 2001.

Further tax is also not applicable on other categories given in section 3 (1A) of the Sales Tax Act, 1990.

Related Articles

Back to top button