ISLAMABAD (March 31 2003) : On the direction of International Monetary Fund (IMF), the Central Board of Revenue (CBR) is chalking out mechanism to exactly ascertain the actual annual turnover of business community, for enhancing GST collection.
The turnover can be estimated on the basis of presumptive criteria ie, area of business premises, and number of employees or production equipment (looms), to bring these businesses within the tax net.
Sources told Business Recorder here on Sunday that tax administration had tough time while identifying new taxpayers, and determining the actual tax liabilities of already registered persons as book keeping is not common among small businessmen.
The absence of basic accounting procedure forced the CBR to assess tax liabilities on the basis of estimates or indirect determination.
The tribunals usually impose their own estimates of liabilities much less than the preceding estimate, and final assessments are in favour of the taxpayers.
The exploration of other areas ie number of employees or production equipment etc would help in detecting the actual turnover.
Sources said that the existence of fewer taxpayers and so many unregistered businesses purchasing material and finished goods is, itself, undermining the fundamental provisions of sales tax law.
These unregistered purchases do not need sales tax invoices in their support.
The registered vendor, having sold taxable goods to unregistered customers, get the opportunity to provide invoices for these goods to registered taxpayers wishing to inflate input credit.
In this way, the registered vendor reduces his own sales tax liabilities, as he does not have to remit the additional 3 percent tax on sales tax to non-registered persons and shares in the gains from the fraudulent invoice he has provided, sources added.