13 June 2004	Sunday	24 Rabi-us-Saani 1425

ISLAMABAD, June 12: The government has proposed a levy of 15 per cent general sales tax on cottonseed and its oil, zero rate of sales tax on supply of ginned cotton, hides and skins, a reduction of GST from 20 per cent to 15 per cent on more than 228 items , and a cut in sales tax on activation of mobile phone to Rs1,000 from Rs2,000.

According to the Finance Bill 2004-05 released here on Saturday, the government had levied 15 per cent GST on supply of cottonseed, cottonseed oil and oil dirt/sludge. It was also decided to allow zero rate on oilcake so that oil expellers were able to claim required input adjustment without increasing the price of this essential item.

Through the Bill, the government abolished sales tax on import of tractors, bulldozers, combined harvesters and on a number of other agricultural implements. The government has done away with the effective rates of sale tax - 18 per cent, 20 per cent and 23 per cent - which created cash flow problems for the industries, and retained only a standard rate of 15 per cent.

In order to remove major trade distorting measures, the government abolished further tax of three per cent. It also allowed zero-rated application of sales tax on ginned cotton, hides and skins and raw wool, which would remove cash flow problems for important export-oriented industries to the extent of Rs15 billion per annum.

The government has abolished the turnover tax for small and medium enterprises and the exemption threshold for application of sales tax was raised from Rs0.5 million to Rs5 million, a 10-fold increase for both manufacturers and retailers.

The government has also allowed registered retailers having turnover in excess of Rs5 million per annum to pay sales tax on the basis of 15 per cent value addition with simplified record keeping requirements.

Through the finance bill, the government has also provided exemption from sales tax on imports, purchases of plant and equipment by civil society organizations, hospitals and educational institutions.

The government also exempted the importers from routine audit to improve the revenue collection. Exemption from routine audit for steel melters and re-rollers was also announced.

To widen the scope of services subjected to central excise duty in VAT mode by including advertisement on cable TV network and closed-circuit television and services rendered by shipping agents within its ambit.