KARACHI, July 22: Member Sales Tax Central Board of Revenue Shahid Ahmed on Friday said that the government may give extension for exhausting tax-paid stocks by five sectors that had been put under zero-rated sales tax regime in the budget.

Speaking at the concluding session of two-day workshop on “Sales Tax”, organized by the Income Tax Bar Association Karachi (ITBAK), the member sales tax said that even after exhausting their stocks they would have to make carry over entries to reconcile their books of accounts.

It is possible that some of the industries will not be able to exhaust their stocks before the deadline of July 31, 2005 but the CBR will consider to extent the period to facilitate them, he added.

Shahid said that even in routine working a carry over entry had to be effected at the end of the year in the books of accounts and in case these five sectors could not exhaust their stocks further extension could be allowed. He said that for verification a minimum of 10 per cent value addition had to be made to show consumption of these stocks.

The member sales tax said that there was a rapid rise in collection of revenue through sales tax, which presently contributes around 44pc of total collection.

He appreciated the ITBAK for organizing the workshop and welcomed suggestions and recommendation presented in the final session. He assured the bar members that the CBR would continue to remove anomalies or difficulties in the tax law in general and sales tax in particular to facilitate taxpayers.

Responding to a question by a tax consultant about the mode of deduction of sales tax in case the supplier received fund in advance for certain quantity and quality of goods, Mr Shahid said that though there was a law but he would still like to enter into discussion and try to remove difficulty, if any, being faced at the practical level.

While agreeing that present sales tax laws were a combination of VAT and certain presumptive VAT, he said that since the tax base was narrow and only 30 items generated 70 to 80 per cent of revenue through sales tax the government had to compromise on this matter. He added that even removing the five sectors from the sales tax regime was against the VAT spirit.

He did not agree with the suggestion for reducing the sales tax rate to 10 per cent from 15 per cent and said that the same rate was prevalent in Sri Lanka and Bangladesh.

However, Mr Shahid suggested that in case the ST rate had to be lowered it would be advisable to start from services sector and only then GST rate should be lowered. He even did not agree that provisional registration should be allowed and said that in the past a lot of people got them registered under sales tax and started issuing invoices worth millions of rupees to claim refunds.

He said that the sales tax law was clear about the jurisdiction for registration and added that any business or industrial concern having one or more than one setup could be registered at the address of its head office where its books of accounts were maintained.