Increase in Sales Tax rate would lead to inflation: Yasin Siddik

Karachi, June 13, 2013 (PPI-OT): Mr. M. Yasin Siddik, Chairman – APTMA Sindh Balochistan Region while commenting on the Federal Budget 2013-14 said that no relief was announced for industry. He said that the five leading export oriented sector including textiles were required to charge 2% non refundable sales tax irrespective of sales to unregistered persons. Re-introduction of Further Tax of 2% in addition to on sales to unregistered persons through Finance Bill 2013-14 would encourage malpractice and flying invoices as the total sales tax of 4% would be an attractive amount to encourage evasion.

Commenting on Increase in sales tax rate from 16% to 17%, he said that it would increase the cost of production which would have multiple impact on prices of all commodities and would increase inflation.

Chairman – APTMA Sindh Balochistan Region said that insertion of sub-section (4) in section 21 of Sales Tax 1990, which empowers the Commissioner or any officer authorized by the Board in this behalf has reason to believe that a registered person is engaged in issuing fake/flying invoices, claiming fraudulent input tax or refund, does not physically exist, or conduct actual business, or is conducting any other fraudulent activity, such officer may after recording reason in writing, block the refund or input tax adjustment of such persons and direct the concerned Commissioner having jurisdiction for further investigation and appropriate legal action, would increase the discretionary powers of the Board. He suggested instead that there should be strict guidelines which should be followed and due diligence undertaken before issuing Sales Tax registration so that the menace of theft may be curbed.

Mr. M. Yasin Siddik while commenting on increase in Turnover Tax from 0.5% to 1% said that it would be an extra burden in case any company earning net profit of less than 3%, as the individual has to pay the tax from his own pocket.

This regime negates the provision of section 57 of ITO that allows for losses in tax year to be set off against future profits and is thus forcing the taxpayer to pay more corporate tax that would otherwise have been due, he added.

About the increase in the tax on exports from 1% to 1.5% he said this would have discouraging effect on exports.

On the other hand Chairman – APTMA Sindh Balochistan Region applauded the positive measures introduced by the Government through Finance Bill 2013-14, Mr. Yasin Siddik said that reduction of tax rate by 1% for the corporate sector, Special Economic Zone to attract Tax Holiday for 10 years instead of 5 years, auctioning of 3G License in July 2013, allowing duty free import of Solar and Wind Energy Equipments and the resolution of Circular debt within 60 days were welcome steps.

For more information, contact:
All Pakistan Textile Mills Association
APTMA House, 44-A,Lalazar,
Off: Moulvi Tamizuddin Khan Road,
Karachi -74000, Pakistan.
Phone: 0092-21-111-700-000
Fax: 0092-21-5611305
E.Mail: aptma@cyber.net.pk
Web Site: www.aptma.org.pk

Leave a Reply