A key proposal of the Economic Advisory Council (EAC) for budget (2015-16) is to reduce sales tax rate from 17 to 16 percent and carve out a long-term roadmap to bring it down to 12.5 percent depending on the amount of revenue collection. Sources told Business Recorder on Saturday that the Ministry of Finance would discuss the budget proposals of the EAC for 2015-16. The meeting of the Economic Advisory Council (EAC) is scheduled to be held on Monday (May 18) with Minister for Finance in the chair.
Members of the EAC have outlined key proposals pertaining to the Federal Board of Revenue (FBR): Firstly, all income above the level of last year''''s income to be taxed at the marginal rate of 15 percent. This will give incentive to people to declare their income and yet ensure that collection doesn''''t decrease because of lowering the tax rate. The rate of 15 percent will only be applicable to income above previous year''''s level.
Secondly, no audit is required for firms or individual who pay tax at least 15 percent more than previous year''''s tax. This will decrease the quantum of audits, and FBR will be able to concentrate on those taxpayers whose taxes aren''''t increasing substantially. Thirdly, the EAC has proposed reduction in sales tax rate to 16 percent with a long term roadmap to reduce it to 12.5 percent subject to collection of revenues. However, an increase in penalty to 3 percent for non-registered firms has also been proposed.
Fourthly, it is proposed to carry out combined audit of sales and income tax by professional accountancy firms. This will ensure that there is consistency in accounts given to sales tax and income tax officers. Fifthly, it is also proposed writing of HS code on sales tax invoices describing the goods. This will help reduce the tendency of firms to buy invoices and use them to reduce their sales tax payment as firms will be forced to declare exactly what they bought.
Sixthly, not allowing purchases for sales tax refund of raw materials in excess of 3 months of sales. This too will discourage using of sales tax invoicing, EAC proposed. Seventh, the EAC also proposed immediate issuance of sales tax registration numbers to manufacturers even without electricity connection when they having generators. Eight, it is proposed to increase in income tax paid by exporters from 1 percent to 1.5 percent and ending of Export Development Fund. The finance ministry can then pay TDAP, etc, funds for the promotion of exports, the EAC proposals added.
Comments
Comments are closed.