Transcript Business 2 Template - Karachi Tax Bar Association

PRE BUDGET SEMINAR ON SALES TAX
Presented by:
Mr. Rashid Malik
ISSUES TO BE ADDRESSED
• Section 8-B
• Notification SRO 647(I)/2007 Dated: 27th June, 2007
• Persons Registered in Electrical Energy Sector
• Importers, Wholesalers, Distributors
• Payment of Sales Tax @ 17.5% and 20% on
purchases
• Persons Registered as Manufacturer-cum-Retailer
• Special Procedure for Commercial Importers
• Audit by the DRRA
• Sales Tax on Utilities
• Refund Related Issues of Industries Zero Rated
• Penalty for Non-Compliance of Section 73
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ISSUES TO BE ADDRESSED
• Issues Related to the Sales Tax Refund Rules issued
vide notification SRO 555(I)/2006 Dated: 5th June, 2006
• Time Limit of 60 Days
• Removal of Objections at the Time of Processing of
Refund Claims
• Adjustment of Sales Tax Refund with Income Tax
Liability
• Time Frame for the Issuance of Orders by Board on
the Recommendations of ADRC
• Manufacturing In Bond Rules
• Levy of 1% Special Excise Duty
• 1% R&D Surcharge
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Section 8-B
Sub-section (1) of newly inserted section 8B in
the Sales Tax Act, 1990 which overrides all the
other provisions of the Act and prescribes that
in relation to a tax period, a registered person
shall not be allowed to adjust input tax in
excess of ninety per cent of the output tax for
that tax period.
PROPOSAL
Registered person may be allowed to adjust his
input tax in total from the output tax as was the
procedure prior to the issuance of notification
SRO 666(I)/2005 dated: 30/06/2005.
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Notification SRO 647(I)/2007 Dated: 27th
June, 2007
OUR VIEW
a) Persons Registered in
Electrical Energy Sector
a)
b) Importers, Wholesalers,
Distributors
b)
c) Payment of Sales Tax @
17.5% and 20% on
purchases
c)
Every registered person who is
producing and supplying
electricity in any capacity will be
covered in the above said
notification .
If a person is engaged in multiple
activities then he will be out of
the scope of section 8-B .
The registered person who is
engaged in procuring goods will
be covered by the above said
notification and hence will out of
the ambit of section 8-B. 5
Persons Registered as Manufacturer-cum
Retailer
• It is not clear that whether a person engaged in
the manufacturing of goods which are zero
rated but are directly sold by him through his
outlets are liable to sales tax at the rates
prescribed in the Special Procedure for
Payment of Sales Tax by Retailers?
• If yes, then is he required to file his return
quarterly as prescribed for retailers or on
monthly as prescribed for the manufacturers?
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Special Procedure for Commercial Importers
• Complications in computing the Sales Tax on Local
Supplies where the Supplies of Imported goods
made by various consignments at different Sales
Tax values.
• Procedure for adjustment of sales tax paid by
commercial importers on clearing & forwarding
charges, utility bills etc has not been provided in
special procedure for payment of sales tax.
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Audit by the DRRA
Board vide its letter C.No. 1(26)STAS/2004 dated:
8th November 2004 has suspended the audit till
further notice but sales tax department has been
directing the registered persons to submit their
sales tax record in the department for its audit by
the auditors of the DRRA.
PROPOSAL
Board may pass necessary instructions to field
formations to immediately stop the practice of
calling sales tax records from the registered
persons for the purposes of audit by the auditors
of DRRA.
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Sales Tax on Utilities
The Federal Government has tried to extend the
scheme of zero rating of raw materials/ goods
used in the exports in the Budget of 2005-06. In
order to minimize the element of refund sales tax
on utilities has also been zero rated through
various notifications
PROPOSAL
Sales tax on utilities may be zero rated across
the board instead of allowing zero rating to
individual registered persons.
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Refund Related Issues of Industries Zero Rated
Federal Government has directed registered
persons to charge sales tax on number of products
mentioned in various notifications at the rate of
zero percent. However, as the raw materials
consumed in the above said products were not
zero rated, therefore, huge amounts are stuck in
pending refund claims.
PROPOSAL
Sales tax on the raw materials consumed for the
manufacturing and supply of zero rated products
may also be zero rated so that that the benefit of
zero rating may be enjoyed in true sense by the
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ultimate consumers.
Penalty for Non-Compliance of Section 73
Penalty of Rs. 5000/- or 3% of tax amount
has been added in the amended section
33 for violation of provisions of section 73
of the Sales Tax Act, 1990.
PROPOSAL
We, therefore, would like to propose that
the above said penalty may be imposed
only where a registered person fails to
make the payment within 180 days,
however, his refund may be sanctioned 11
Issues Related to the Sales Tax Refund Rules
issued vide notification SRO 555(I)/2006 Dated:
5th June, 2006
SUGGESTED PROPOSALS
a) Time Limit of 60 Days
b) Removal of Objections at
the Time of Processing of
Refund Claims
c) Adjustment of Sales Tax
Refund with Income Tax
Liability
a) Remove the un-necessary
limitation of 60 Days on filing
of his supportive documents.
b) Board may do a profiling of
the registered refund
claimants
c) Simple and unambiguous
procedure may be notified
for adjustment sales tax
refund with the income12tax
liabilities
Time Frame for the Issuance of Orders by
Board on the Recommendations of ADRC
No time limit has been prescribed for the officers
of the Board to issue an order on the
recommendations of the committee
PROPOSAL
A time limit of 15 days from the date of receipt
of the recommendations from the committee
may be prescribed for the issuance of the order
by the Board, which may be extended by
another 15 days where Board may need any
clarification from the committee
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Manufacturing In Bond Rules
Manufacturing in bond rules issued vide notification
SRO 450(I)/2001 wherein a manufacturer is allowed
to import/ purchase input goods without payment of
leviable customs duty, excise duty and sales tax as
the case may be, for the manufacture of goods
primarily meant for export.
PROPOSAL
Keeping in view the economic situation prevailing
in the country Board is requested to grant a two
year extension in the time limit provided in the
notification SRO 450(I)/2001 for the utilization of
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input goods in the export.
• Levy of 1% Special Excise Duty
• 1% Special Excise Duty on Machinery, Raw
Materials/ Packaging Material for Industries Zero
Rated Under Various Notifications
• Refund of Special Excise Duty
PROPOSAL
• Kindly withdraw the above said duty with immediate effect
• Amend the notification and include the raw material and
packaging material of the industries zero rated as well as
add machinery imported or purchased under notification
SRO 530(I)/2005 in the serial number 25 of the notification
SRO 655(I)/2007 dated: 29th June, 2005
• Issue a procedure for processing and sanctioning of the
pending as well future drawback claims of the exporters.
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1% R&D Surcharge
• 1% Surcharge was levied on all imports at the
time of announcement of Budget of 2007-08
PROPOSAL
Board may be requested direct the relevant
Customs Authorities to process and sanction
the pending refund claims of registered persons
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