KARACHI, May 17: The Karachi Sales Tax Bar Association (KSTBA) has asked the Central Board of Revenue (CBR) to reduce sales tax rate to 12 per cent because the present 15 per cent rate is very high and is hampering business activities and also encourages evasion.
In the budgetary proposals given to the CBR, the sales tax Bar was of the view that cut in the rate will help broaden the net as it will attract business community to enter the sales tax regime and will also give an impetus to consumption as it will directly give relief to common man.
While raising a number of issues confronting the registered sales tax payers, the Bar feels that the collector of appeals who performs judicial duty should be independent in taking decisions; therefore, amendment is required to be made in the law to ensure this status which will build confidence between appellate authority and the appellant.
The Bar raised the issue of return forms and stated that sales tax forms are not only complicated, but are even subjected to frequent changes.
It suggested that a standardised return form be developed after taking the stakeholders into confidence.
The filing of nil returns with the collectorate, as provided in Chapter-I of Sales Tax Special Procedures Rules, 2005, may be made optional and banks may also be authorised to receive these returns.
A major anomaly has been pointed out by the Bar is with regard to provision of carry forward of input tax not adjusted in the tax period omitted through the Finance Act 2005 which has been resulting in hardships to taxpayers.
The Bar demanded that necessary amendments be made to allow taxpayers to carry forward input into next fiscal.
Referring to SRO 666(I)/2005, the Bar alleged that even after the elapse of two years, no data base has been maintained to provide an adjustment against excess input which is allowed in next three tax periods.
As a result of this undue harassment is faced by taxpayers because manual checking is being made to allow adjustment of credit.
The sales tax Bar demanded that data-base should be completed without further delay to ensure issuance of credit advice within the prescribed time of 10 days.
The status of those sales tax payers who were de-registered in 2004, but continued to file their monthly returns and paid taxes has been sought from the CBR.
The Bar pointed out that due to lack of information from the department these taxpayers continued to pay tax under old registration number, therefore, their status should be made known.
It drew that attention of the CBR towards problems with regard to registration certificates and suggested that registration of sales tax payers should be de-centralised and concerned collectorate should be allowed to issue registration certificates as was the case in income tax where NTN is issued in 48 hours.
The Sales Tax Bar has suggested to the CBR to increase threshhold for retailers from Rs5 million to Rs10 million and a level-playing field be ensured by fixing tax at the rate of 1.5 per cent (0.75 per cent sales tax and 0.75 per cent income tax) for all categories of retailers having annual turnover above Rs10 million.
The Karachi Sales Tax Bar Association expressed displeasure over the formation of Alternative Dispute Resolution committees.
It demanded that committees should comprise four members – collector of sales tax, tax consultant, chartered accountant, member from chamber or a nominee and member of respective trade association.