PROPOSALS/SUGGESTIONS FOR FEDERAL BUDGET FOR THE YEAR 2009-2010

PROPOSALS/SUGGESTIONS FOR FEDERAL BUDGET FOR THE YEAR 2009-2010 <!--[if gte mso 10]> PROPOSALS/SUGGESTIONS FOR FEDERAL BUDGET FOR THE YEAR 2009-2010 By Mirza Iqbal Beg, Secretary, Sukkur Chamber of Commerce & Industry SALES TAX 1. LEVY OF SALES TAX ON UTILITY BILLS I.E. GAS, ELECTRICITY AND TELEPHONES BE WITHDRAWN The Small Scale Industry is facing great financial hardships due to levy of Sales Tax on Utility Bills. They have therefore, all along been demanding its withdrawal in order to keep their wheels moving. It is, therefore, suggested that Small Scale Units may be exempted from levy of sales tax on utility bills. 2. LIMIT OF RETAILERS SALES (a) For Sales Tax Registration purpose, Retailers sales limited be increased from Rs.5 million to Rs.10 million. (b) Registration of Retailer Under Provisions of section 14 of Sales Tax Act, 1990, a retailer whose value of supply in any period during the last 12 months exceeded rupees five million, was liable to be registered. But in case it is below five million, it should not compulsorily be registered, as it could be registered only in view of the sales tax paid by it during preceding 12 months. Reference is being made to judgment of Customs, Central Excise and Sales Tax Tribunal S.T.A. No.190/2B of 2007, decided on 20th August, 2007. Accordingly, the department should apply this above provisions of the judgment in its letter and spirit. (c) To encourage development of backward area, rate of tax for manufacturers in backward areas should be lower than rate for more developed areas of the country. 3. Progressive Sales Tax Regime Exemption from Audit: In order to promote the sales tax regime, it is suggested that registered person showing increase in payment of sales tax as against preceding year of his business activities should be exempted from Sales Tax Audit. This will encourage the non-registered persons to come in the net of sales tax finding it rewarding for honest disclosures. DRRA officers are not normally conversant into sales tax and excise laws the way PBR officers are. Their audit besides being duplication of the audit is troublesome due to lack of knowledge on their part. DRRA audit should, therefore be stopped. 4. General Sales Tax: It was promised by the Finance Minister that G.P. rate declared by business houses, which will opt for GST system would be accepted. But the Income Tax Department is creating harassment amongst the business houses due to which they are reluctant to come under GST system. The General Sales Tax (GST), which is supposed to be charged from the end-users is not being paid to the suppliers by some Government Departments/Organizations in utter disregard of the provisions of Sales Tax Act and standing instructions of the government. All the Government departments should be instructed to comply with the provisions of Sales Tax Act and standing instruction, in the regard. The system of General Sales Tax (GST) has an inherent need for a certain level of documentation. Most business do keep accounts but they are of a rudimentary nature and cannot meet the standards required under GST. It is therefore suggested that enforcement of value added GST at retail stage, particularly in respect of documentation, be imposed step by step to bring it to its full-fledged level within 3 to 5 years and not in one go. We cannot have comprehensive coverage without proper preparation. Till that time only fixed Sales Tax be introduced. Income tax record should not be allowed to be used for creation of sales tax liabilities. 5. Filing of Sales Tax Return for Importers: (a) Filing period of Sales tax Return should be fixed in three months for importers instead of one month. (b) The registered persons may be allowed to submit revised sales tax return for the period where he himself finds an omission, in sales, carry over or input. (c) In case a factory for business house is closed, it should be exempted from the monthly/quarterly submission of various returns once the information is provided to the Sales Tax Department of this situation. (d) A provision be added in Sales Tax Act providing powers for considering the difficulty in late filing of return for waiver of penalty by Collector Sales Tax. (e) PENALTY ON NON-FILING SALES TAX RETURN (i) On non-filing of return, the department imposed penalty on taxpayer, which is violative of the judgment appearing in 2008 PTD (Trib.) 1841 ST. No.1264/LB of 2005, decided on 10th October, 2007, by Customs, Federal Excise and Sales Tax Appellate Tribunal Special Bench Lahore. (ii) It is, therefore suggested that above referred judgment may be implemented in its letter and spirit and penalty being imposed on non-filing may be abolished. (ii) Penalties should be of specific amounts related with default. These should not be related with amount of tax. 6. FIXED SALES TAX SYSTEM BE INTRODUCED: after thorough study of present deep-rooted business practices, recognition of low literacy rate, continuous decline in business, simplified tax system is very logical requirement and fixed tax be introduced. 7. ZERO SALES TAX RATE ON TEXTILE SECTOR: It is proposed that zero sales tax rate on textile sector, especially on use of sulphur black, Hydro sulphite, sodium hydroxide/ caustic soda, sodium sulphate, maize starch lube oil for capture generators ,paper tube and LOPE shrink film rolls used in textile industry. 8. ZERO PER CENT SALES TAX ON PART (II) TARIFF: There should be zero sales tax on Part (II) tariff of fixed charges of energy supplied by utilities and put a time limit for the sanction of refund claim fixed under section 66 of the Sales Tax Act, 1990. 9. REGISTERED PERSONS BE ALLOWED SELF-CORRECTION IN SALES TAX RETURNS: The registered persons should be allowed self-correction in the sales tax return, where they take find an omission in sales or any other discrepancies. 10. SALES TAX RATES BE MADE ON SINGLE SLAB: It is proposed that the per cent rates of sales tax of 21 %, 18.5%, 16% be managed into a single slab rate of sales tax at 12% only. 11. EXEMPTION IN CHEMICAL INDUSTRY FROM SALES TAX: It is proposed that certain exemption in chemical industry be provided in sales tax, on local manufactured goods which are made only for imports which are already exempted from sales tax to generate cost and competence against similar inputs. CUSTOMS/EXCISE 1. Introduction of 0% duty slab in Tariff. 2. In order to enhance local industrialization, capacity building production competitiveness efficiency and product presentability, duty rates on raw materials, parts and components for manufacturing of some items/products have either been reduced or eliminated. 3. New sectors/sub-sectors has been added under the incentive regime for local manufacturing. Existing exemption regime available to different industrial segments has been deepened. 4. Amnesty scheme for condemnation of delays in submission of installation/consumption certificates etc. may be introduced. 5. Amnesty from payment of fine/penalties and surcharges of payment of principal amount. 6. Discretionary Powers of the Custom Officials be curtailed especially powers of adjudication and confiscated goods in case declared value is under estimated. 7. In order to combat smuggling, the Chamber suggests that on smuggled prone item, the Custom Duty should be levied at the rate of Five Per cent. Valuation rules be amended in accordance with WTO agreements. 8. To encourage manufacturer in less developed areas Custom Duty draw back should be introduced on yearly performance of such units which can be tagged with their sales tax payments. 9. REDUCTION IN EXCISE DUTY: It is proposed that a reduction of FED to zero percent will increase the insurance GDP penetration and promote the growth of insurance industry. One percent special excise duty must be removed. 10. R&D SUPPORT FOR GARMENT AND TEXTILE INDUSTRY: Export tax rebates on textile and garment be increased in line with China, which allows export rebate up to 16%. 11. CUSTOM DUTIES ON IMPORTED RAW MATERIAL OF PHARMACEUTICAL INDUSTRY: Custom duties on imported raw material of Pharmaceutical industry, not manufactured locally, should be reduced to 5%.