ISLAMABAD: A comprehensive study is being conducted to weigh up benefits of lowering rate of sales tax and expected increase in revenue by decreasing sales tax rate from the existing 17 percent.
IAs per details, sales tax expert Ashfaq Tola, a senior partner of Naveed Zafar Ashfaq Jaffery and Co, Chartered Accountants is voluntarily carrying out a study on scientific lines along with a team comprising economists and mathematicians.
The experts would submit the study to the Federal Board of Revenue (FBR) for consideration. In this regard, two proposals are being drafted for lowering sales tax rate. Under the first proposal, there should be a single stage rate with no facility of input tax adjustment. At each stage, the sales tax paid would become a part of cost within the supply chain till manufacturing stage. The lower sales tax rate may range between 7 to 7.5 percent. As per second proposal, the government should introduce the concept of consumption tax presently prevailing in more than 50 countries of the world. The rate has been proposed as per the classification of items, i.e essential items, many semi-luxurious goods and luxurious goods. Consequently, the rate for each category has been suggested from 7 to 20 percent. Three rates may be suggested. Zero percent sales tax for zero-rating export; basic necessity items be subjected to 8 percent lower sales tax rate and luxury/non-essential items be liable to higher rate of 20 percent.
