Extending scope of SRO821(I)/2011: massive revenue loss imminent: APTPA

The Federal Board of Revenue may lose billions of rupees upon extending scope of SRO821(I)/2011 on value added textile sector. All Pakistan Textile Processing Association Chairman Saleem Parekh told BR on Friday that expanding the scope of the documentation SRO821(I)/2011 to the value added textile sector may result in huge loss to the national kitty.
As a result of enforcement of the SRO821(I)/2011, the unscrupulous elements may try to offer their sales tax registration for the purpose of documentation. Resultantly, sales tax to the tune of billions may not be recovered from unregistered segments of the society due to involvement of such kind of brokers who may use their CNICs for buyers making purchases from registered persons.
APTPA Chairman claimed that 80 percent of Pakistan's textile products are exported all over the world. Therefore this sector was given special treatment everywhere in taxation. He said that in Pakistan basically this is retail sector, that is yet out of the tax ambit and thus the issue of registration of complete supply chain arises. However, to tap the potential revenue on retail sales of textile sector, special modalities has been recently worked out and 5% sales tax on sales to un-registered persons was introduced with the consultation of trade and industry. Now if government pushed this sector to collect NTN/CNIC, it may provide an opportunity to the unscrupulous element to come into play and offer their sales tax registration for the purpose of reporting of documentation, resultantly billions of rupees potential sales tax to be recovered from unregistered segment was at stake.
Parekh has therefore suggested FBR to re-consider all aspects and impacts before implementing this controversial notification on different trades. He said that application of the notification might be fruitful for other trade but as far as textile sector is concerned, it is almost a documented sector. The undocumented segment in this sector basically relates to smuggled goods and unregistered retailers. The application of the notification thus needs scientific studies on different segment with the separate consultation of each trade, Parekh added.