ISLAMABAD: The government has enhanced the rate of sales tax on electronically-integrated textile retailers from the existing 12 percent to 15 percent under the Finance Bill, 2023.
It was informed by Arshad Shehzad, a prominent sales tax expert that the government, in order to promote electronic real-time reporting, has introduced a reduced rate of tax facility on sales made by large-scale branded textile and leather retailers under entry#66 of the Eight schedule of the STA 1990.
The government is slowly and gradually reducing this cut in the tax rate on this sector for the last couple of years. This year also the government has moderately increased the existing rates on supplies by these integrated Point of Sales retailers from 12 percent to 15 per cent.
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The move seems appropriate since large numbers of these stores are now adopted electronic compliance.
In his opinion, the remaining difference of three per cent is also bridged up in coming years to apply standard rates across the board.
He, however, suggested that now after curtailing the incentive of tax cuts, the government should offer some other incentive such as immunity from audit to encourage the use of electronic means and self-compliance.
Shehzad further informed, this increment in tax rate will also eliminate the unnecessary accrual of sales tax refunds to this sector.
The proposed amendment, therefore, is positive for both the revenue and retail sectors, he concluded.
Copyright Business Recorder, 2023
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