Karachi, Federation of Pakistan Chambers of Commerce & Industry FPCCI says Federal Board of Revenue should withdraw Sales Tax multiple rate and apply 9% uniform rate for all products.
This will not decrease revenue of government as smuggling will die down and all quantities imported through legal channel, thereby reducing size of parallel economy, said FPCCI President Haji Fazal Khan Sherani Friday at seminar on Pre-Budget 2012-13 organized by Karachi Branch Council KBC of Institute of Cost & Management Accountants of Pakistan ICMAP & FPCCI.
Haji Fazal proposed under section 3(3)(a), a supplier is supposed to collect and deposit tax, whereas after introduction of Section 8 A, joint and several tax liability was placed for both buyer and seller for non-payment of output tax by seller. This not only clashes with section-3(3) (a), but is also against principles of natural justice.
At present, Department of Inland Revenue is issuing notices to commercial importers for doubtful/ illegal refunds obtained by manufacturers, while investigating cases of refund claimants, whereas, commercial importers discharge their liability by paying Sales Tax and Value Addition Tax at import stage and therefore, they should not be held responsible for this matter. He said FBR is seriously considering a budget proposal to reduce federal excise duty on cement from fiscal (2012-13) under government’s commitment to totally abolish excise duty on the commodity in phases.
Asif Kasbati, Director Tax Services, A F Ferguson & Co, spoke on proposals for Income Tax and felt Corporate income tax rate gradually be brought down to 25% and 30% for listed and unlisted companies respectively as 35% rate is very high viz-a-viz 25% tax date on other business houses. He opposed Final Tax Regime for corporate sector and suggested to allow set-off of prior years losses to promote Group Taxation and Amalgamation. As certain sectors already allowed to be taxed at Minimum tax rate of 0.5%, he suggested rate be restored for all taxpayers. Powers to set-aside be given to Commissioner Appeal and automatic stay of demand allowed on payment of 15% and 50% respectively at Commissioner & Appellate Tribunal stages. He proposed basic exemption limit be enhanced to Rs 450,000 due to high inflation rate. To promote capital market, tax credit for investment in shares be increased from Rs 500,000 to Rs 700,000 and retention period be restored to one year.
Adnan Mufti of Sheikha Mufti and Co., said in last Budget, Finance Minister announced Excise Duty Regime is being condensed and would entirely be withdrawn in next 2 years. “Despite such categorical announcement, we saw sugar placed under Excise Law and sales tax withdrawn there from. Industrial notes might be drawn by FBR in consultation with ICAP, & ICMAP for significant sectors and standard ratios of wastage occurring during such processes.”
Shaikh Shakil Ahmad, Vice President FPCCI said in past, retention of records was required to be kept for last three years, which was increased to five years, and now extended to six years in latest Finance Act, with further provision that in case of litigation, time period is extended until finalizing legal proceedings. FPCCI suggested that time period of 6 years for retention of record, particularly in electronic age, where all basic data of purchases and sales are reported online, has no justification.
Mian Zahid Hussain, Chairman Standing Committee of FPCCI said on Sales Tax FPCCI suggested that in cases where no revenue impact is involved, but where purpose of revision is just to correct minor particulars, eg, STR number, invoice number, GD, etc; no prior approval of Commissioner may be required.
Anisur Rehman, Chairman Karachi Branch Council said a clause be inserted under section 113(3) to specifically exclude insurance premium from definition of turnover. Alternatively, turnover for insurance companies be taken as reduced by re-insurance premium by incorporating appropriate amendment in Part III of Second Schedule. FBR in most cases misinterpreting word of total advances as net advances which is un-justified. It is suggested to issue a clarification to interpret total advances as gross advances shown in balance sheet.