The menace of corruption as well as smuggling has not only resulted in discrimination of sales tax percentage on all H.S. Codes relating to 'Viscose Filament Yarn (VFY) but also increased the art silk yarn merchants' problems manifold.
For the first time in the country's history federal budget 2003-04 conceived discrimination of sales tax on H.S. Code 5403.3100, 5403.3200 and 5403.4100 from 15-20 percent otherwise all the budgets till 2002-03 contained uniformity of sales tax on viscose filament yarn, said Muhammad Younus Qureshi, General Secretary, Gujranwala Art Silk Yarn Merchants Association (GASYMA).
Talking to Business Recorder Younus Qureshi maintained that VFY is not produced in Pakistan rather it is either smuggled from Afghanistan-Bara-Gujranwala or imported to meet the requirements of silk power looms cottage industry.
Bara produced fabrics already hitting the silk power looms industry which is mainly based on smuggled yarn, he added. As a result of discrimination in sales tax on VFY, smuggling continued throughout the year 2003-04 which could have been curbed only through elimination of discrimination and rationalising the sales tax on H.S. Codes in the coming budget. He urged the government to remove anomaly of sales tax during the budget 2004.05.
He pointed out that issue of flying invoices emerged because of three-percent additional sales tax on the invoices issued to unregistered firms.
This levy could not play any positive role in enhancing revenue rather it promoted corruption in Sales Tax refunds and inputs. If government abolish additional three-percent sales tax, it would help saving government revenue being spent on payment of fictitious and fake Sales Tax refunds. Criticising the appointment of Maxwell Stamps to guide CBR off and on regarding taxation, he said the government should formulate easy, understandable and workable rules for the illiterate and less educated businessmen.
This would help enhance government revenue and curb corruption due to levy of three-percent additional sales tax, he maintained.