Increase in agriculture and real estate and services sector tax rates suggested

The Sarhad Chamber of Commerce and Industry (SCCI) has called for increase in the rates of taxes on agriculture, real estate and services sectors to enhance the present 9 percent tax-GDP ratio to 20 percent.
The industrial sector is contributing almost 70 percent of the tax while agriculture, real estate and services sectors are under-taxed with just 9 percent ratio in total revenue collection. The demand has been made in the proposals for 2007-08budget. A copy of the proposals has already been sent to the Central Board of Revenue (CBR).
In sales tax-related matters, the chamber has proposed amendment in SRO 666(1), under which the excess input tax is either refunded or adjusted against output tax liabilities. Under Rule 3 of the SRO (Scope of claim), the words "on payment of sale tax during the relevant tax period" should be substituted with "on fulfilling the conditions of section 73".
The chamber has suggested that in this way the contradiction in the Sales Tax Act would be removed as the above-mentioned words bind the claimant for payment during the relevant tax period only, while in Section 73 there is 180 days period for the payment of sales tax amount.
Similarly, in the same SRO Rule 5(2), the chamber has suggested replacement of the words "has fulfilled" with "will fulfil", as the amendment would bring harmony in law and remove the confusion a given in this SRO with Section 73 of the Act.
The chamber has called for amendment in Section 8. In the Finance Bill 2006-07, it said, a clause was inserted which provided that a registered person shall not be entitled to claim input tax on goods in respect of which sales tax has been deposited in government treasury by the respective suppliers.
It said that as it is not possible for the purchaser to have access to the record of supplier to ascertain the fact whether tax has been deposited by him or not, this insertion should be deleted and an amendment made in Section 3(3) and responsibility of depositing tax should rest with the supplier.
Most importantly, the purchaser cannot be charged as collaborator. The chamber has also called for withdrawal of revised return section 26/3, saying that it has only increased the discriminatory power of sales tax officials.
Before the amendment, the proposal said, there was neither time limit nor prior permission was required from the collector of sales tax. It has also suggested amendment in Section 66 (Refund Claim), proposing that the time period for filing of refund claims must be extended from one year to four years. The condition of Section 73 compliance before giving any refund is also contradictory. In Section 73, it also proposed to facilitate the exporters.
The SCCI said that pharmaceutical industry pays sales tax on imports of inputs other than the basic raw materials for the locally manufactured medicines. On the other hand, there is no sales tax on the import of finished goods ie medicines and drugs. This situation puts the local pharma industry in a disadvantaged position vis-à-vis importers of finished products of foreign medicines and drugs. The chamber has called for rectification of the anomaly to relieve the local pharma industry of an unjustified burden.
Regarding, audit, the chamber has suggested end to the practice of multiple audits and until completion of departmental audit; the record of the taxpayer should not be handed over to any other agency. It said that audit should be based on some information and profile of the taxpayer. A sixty-day notice must be given to compile and present all required documents in an orderly manner.
For increase in the number of taxpayers, the SCCI has suggested conducting of survey in big cities through a private agency, and its report should be submitted to the collector of sales tax of the area to take necessary measures to bring them into the tax net. It has also called for establishment of a permanent survey cell in all collectorates under the control and supervision of Additional Collector.
The chamber has suggested that by promoting export sector it can increase the volume of income tax collection. The NWFP, it said, could earn billions of dollars by exporting to Central Asian Region, if facilitated by the government. Export of vegetable ghee and cooking oil has been drastically reduced due to reduction in rebate over these items export resulting in reduced revenue collection.