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KARACHI: Steel merchants have demanded a uniform 20 percent sales tax for iron & steel products (Flat Products) to increase revenue collection.

Pakistan Iron and Steel Merchants Association (PISMA), in the past also the two-tier system of sales tax proved to be a burden on the national exchequer and was reverted to one rate of sales tax for registered and unregistered persons especially in Iron & Steel Industry/trade (flat products) in the years 2011 and 2012.

The sales tax for registered persons is 17 percent while for unregistered persons the rate of sales tax is 20 percent including some 3 percent further addition tax. The difference of 3 percent further tax is very huge and approximately Rs.4,500 per metric ton on Iron & Steel sector due to the higher price of the product.

In a letter send to higher official of Federal Board of Revenue (FBR), PISMA mentioned that the perception of FBR is that since the amount collected on account of 3 percent further sales tax is very low as compared to when it was 1 percent further Sales Tax. Further FBR is of the view that the reason for dubious refund/claims is also due to fake/flying invoices.

“There has always been an allegation on PISMA members that supplies they made are not usable in buyers’ products but it is imperative to mention here that merchants cannot ensure that goods are usable input of the buyers or not”, it added.

PISMA said that it has been struggling for the last three years and met minister for Finance, Chairman FBR and other FBR officials for the resolution of this problem.

According to PISMA proposal there should be one rate of sales tax for both registered and unregistered persons. Association also asked that the further tax U/S 3(IB) of the sales Tax 1990 must be abolish and the rate can be fixed at the higher slab of 20 percent for Iron & Steel Industry so that the National Exchequer does not suffer any loss.

FPCCI has also supported our point of view that there should be uniform rate of sales tax on Iron and steel products (flat products).

As suggested, one Rate of sales tax for iron & Steel products, which to be set at the higher side, will enable the government to increase the collection of tax and discourage the fake & flying invoice culture. There will help to halt in terms of issuance of fake Invoices, which will in essence cut the claims for illegal input/refund.

This step will also in turn reduce the revenue loss of 3 percent to the national exchequer and also unlawful input adjustment and will also lead to reduction in notices/ litigation. Furthermore, PISMA said that it has held several meetings with FBR officials and Federal Ministers who repeatedly assured us of the fact that they will make sure everyone gets registered. However, the issue is still not resolved.

Copyright Business Recorder, 2021

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