General sales tax to be raised to 20 percent on some raw materials

ISLAMABAD (June 03 2003) : The government would enhance general sales tax (GST) rate from 15 to 20 percent on certain raw materials being used by unorganised sector of the country.

The unorganised sector is hampering growth of registered industries which are paying huge amounts as sales tax, officials finalising taxation measures for the coming budget told Business Recorder here on Monday.

The GST would be raised from 15 to 20 percent on raw materials/inputs massively used by unregistered sector.

The production of unregistered manufacturers is being particularly scrutinised for this purpose, they said.

“These items would not be in hundreds, but a reasonable number of items would be brought under 20 percent GST regime,” sources said.

The decision would not only help in organising undocumented industries but would also gradually improve compliance by such industries.

On recommendations of Central Board of Revenue (CBR), the concerned authorities would slap 20 percent GST on the import and local supply of all such items to effectively check tax evasion.

Sources pointed out that at present unorganised sector is causing serious damage to the organised sector, which is paying duties and taxes regularly.

When this corespondent asked the authorities to name some of these raw materials to be brought under the 20 percent GST regime, they said that the above-mentioned policy decision has been communicated to budget markers and any item covered under the above-mentioned parameter would come under 20 percent GST regime.

The tax authorities made several amendments in the SRO dealing with 20 percent GST items to include/exclude certain names in the past.

It is interesting to mention here that the authorities have already ensured not to slash GST rate from 20 to 15 per cent for only one specific sector in the coming budget to keep uniform policy of 20 per cent GST intact.

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