ISLAMABAD: The upcoming budget for 2014-15 likely to feature increase in ‘further tax’ from existing one percent to 2 percent on supplies made to persons have not obtained sales tax registration numbers (STRNs).
According to details, the policy-makers have agreed to the budgetary the FBR proposal to increase 100 percent the rate of ‘further tax’. On the sales tax side, it is a revenue generation measure with estimated revenue to the tune of Rs6 to 8 billion in 2014-15. Simultaneously, it is a documentation measure increasing cost of doing business of unregistered units as unregistered buyers including wholesalers, dealers and retailers are expected to pay the proposed 2 percent ‘further tax’ during the supply chain.
To promote documentation and create an incentive for unregistered persons to get sales tax registration, a new sub-section (1A) was inserted in section 3 of the Sales Tax Act, 1990, to impose further tax at 2 percent on supplies made to persons having no osales tax registration number. Later the rate was reduced from 2 percent to one percent. The supplies made to registered persons are not affected by the said measure. The RTOs/LTUs were expected to effectively use CREST and SMART computerised systems to prevent and curb such malpractices like fake/flying invoices used to claim bogus refunds.
‘Further tax’ at the rate of one percent remained applicable during current fiscal year to impose penalty on non-compliant manufacturers, wholesalers and retailers to force them to get sales tax registration to avoid payment of ‘further tax’.
