Vital changes likely in sales tax regime on ghee

The Federal Government may bring about some vital changes in the collection of sales tax to provide level playing field in the entire ghee industry in the country.
According to industry sources, the Government has not benefited at all by imposition of 20 percent GST at import stage of edible oils and 15 percent at the time of production of ghee, with adjustment allowed on value-addition. Some change is likely to be brought in this system..
In fact, the formula has created a lot of refund claims which are pending with the Central Board of Revenue (CBR). This measure was announced in the last budget but it has not only failed in proper revenue collection. It has seen no improvement in the documentation of economy.
Further, there has been no revenue generation on account of 3 percent additional GST if oil is sold to unregistered buyers. This is mainly because of trade being carried out without proper documentation.
Industry sources believe that the Government may reduce GST from 20 to 15 percent at import stage and maintain the same 15 percent at the time of production and sale. This will generate more revenue as there will be no adjustment allowed on value-addition. This would also discourage the filing of refund claims.
Pakistan Vanaspati Manufacturers Association (PVMA) has once again represented to the Government to withdraw the exemption of sales tax given to FATA and PATA ghee units. This exemption, according to the association, is being misused and is responsible for deterioration of ghee industry in Pakistan.
The Association has also asked the Government to review its decision of removing ghee and cooking oil from the negative list of Afghan Transit Trade (ATT).
The industry believes that it is a mockery on the part of the Government to disallow DTRE for ghee export which was a right decision. But on the same stroke it allowed import of ghee and cooking oil under ATT. The result is that Afghan companies are importing ghee and cooking oil directly in pack products which is being sold in Pakistan particularly in Frontier region.