SALES AND EXCISE TAX

Sales and Excise Tax
It is strongly suggested that the rates of sales be brought within the range of 10 to 12 percent instead of existing range of 15% to 21% in order to align the rates with the rates prevailing in the region. It is suggested that concerned member of FBR must identify potential sectors other than textile, beverages, tobacco, cement, sugar, telecommunication, oil and gas exploration and imports not merely individual businesses. This could only be possible in close liaison with federal bearue of statistics and State Bank of Pakistan.
It is further suggested that a minimum of at least 0.5% or 1% sales tax be levied on agriculture produce to collect the data relating to supply chain. This could be done through the sales tax collection agents, which include government departments and purchaser of such produce.
It is further suggested that the issue of tax fraud in supply chain management and black listing require fresh thought in consultation with the business community. It is suggested that refunds need only to be blocked to the extent of black listed supplier or customer. It is worthwhile here to note that a similar provision exists in all developing countries and the decision of European Court of Justice is worth considering for any such negotiation and new modus operandi.
Currently, FBR is monitoring the collection of sales tax on services, which is promulgated through the Provincial Sales Tax Ordinances. It is suggested that FBR should identify new service sectors and extend the existing list of five items. The potential sectors may include professional services.
Moreover, it is suggested that input and output relating to sales and excise tax should be made adjustable by amending section 7 and omitting second schedule of the Federal Excise Act, 2005.

Article courtesy of Muhammad Ashraf