Change in zero-rating regime boosts ST registration

A major change in the zero-rating regime of five export sectors through SRO.231(I)/2011 has encouraged a number of persons to obtain sales tax registration for availing of the benefits of zero-rating facility.
It has been reliably learnt here on Friday that the FBR exercise for documentation of economy may suffer a serious setback on the sales tax side due to delay in processing of applications for sales tax registrations by new taxpayers. The new applicants are facing serious problems in obtaining sales tax registration numbers due to physical verification of the business premises.
The FBR has restricted the sales tax zero-rating facility of five export sectors - textile, leather, surgical, sports and carpets to only registered manufacturers-cum-exporters or exporters. However, the Central Registration Office of the FBR is taking several weeks in physical verification exercise, causing a great concern for the new applicants.
Details revealed that to get the benefit of zero-rating facility, a number of taxpayers have started getting themselves registered with the sales tax department. It has been reported by the taxpayers and tax consultants these days that almost every case of sales tax registration is being sent for physical verification by Pral/Central Sales Tax Registration Office of FBR, which is causing delay and unnecessary hassle for genuine taxpayers during the process of physical verification by the Regional Tax Offices. It has been further reported that now-a-days sales tax registration and even change in particulars of already registered persons takes 4-6 weeks. There are cases, which are stuck up for more than 2 months.
This is a great cause of concern and blockage for broadening the tax base on sales tax side for which the FBR should take immediate corrective measures for redressal of taxpayers problems, who want to get themselves registered with the sales tax department. At the same time, the FBR should issue clear instructions and guidelines stating under which conditions physical verification is required instead of merely relying on the discretion of Pral and FBR Sales tax Wing for selection of cases for physical verification. There has to be a specified time limit, like time notified for issuance of NTN within 48-72 hours, etc, for issuance of sales tax registration numbers in cases where no physical verification is required as well as those where physical verification is necessary. Now, the taxpayers have come to know that due to registration with ST department they can get benefit of input tax adjustment of consumed utilities like electricity and natural gas, sources added.