Now that the Central Board of Revenue (CBR) has de-registered all retailers and manufacturers, following the ten time raise in the exemption threshold of sales tax from Rs 0.5 million to Rs 5 million, thereby also allowing immunity from audit to over 40,000 small and medium entrepreneurs, little wonder it has been promptly hailed by the Federation of Pakistan Chambers of Commerce and Industry President, Riaz Ahmed Tata, and other captains of trade and industry.
Pointing out that the welcome gesture would immensely benefit such a large number of small traders and manufacturers from the hassles associated with the tax and the process of its enforcement, he attributed it to the wisdom and magnanimity of Finance Minister (now also the prime minister in waiting), Shaukat Aziz.
According to a news report, the CBR has also announced a new de-registration and audit procedure for the collectors, according to which retailers and manufacturers who filed returns in the past but now fall below the exemption threshold, would be automatically de-registered without going through sales tax audit.
Again, since those who did not file sales tax returns in the past were given an opportunity to voluntarily do so up to August 15, 2004, would also be entitled to exemption from audit and subsequently would be de-registered.
Tax officials hope that the retailers and manufacturers would avail of this opportunity by filing the returns by the prescribed date.
According to the instructions the CBR has issued to the collectors of sales tax, consequent to the abolition of the turnover tax/enrolment scheme and the rationalisation of exemption threshold, over 40,000 enrolled and registered manufacturers and retailers would no longer be required to register and discharge their liabilities as postulated under the provisions of the Sales Tax Act, 1990.
More to it, with a view to sparing the collectorates of the burden of mobilising resources for de-registration and to safeguard the tax payers from procedural requirements, they have been told that the retailers and manufacturers earlier enrolled would stand de-registered with the dawn of the new financial year.
As such, those among them whose annual turnover during the last twelve months was below Rs 5.0 million, but were registered under section 14 of the Sales Tax Act, 1990 on own accord, stand de-registered and that they would no longer be required to maintain record as prescribed under section 14.
Mention, in this regard, may also be made of the Revenue Board's directive for setting up a dedicated cell for de-registration in each collectorate in order to ensure speedy disposal of cases.
All this will appear to be quite in tune with the sales tax plan, which the Finance Minister unfolded in his budget speech, identifying it as the tax of the future, which he said was already the largest contributor to the country's revenues.
It will also be recalled that he had then made a pointed reference to the government having devoted itself to simplifying procedures for the administration of this tax in the true spirit of a value added tax and for using the principles of risk management.
Moreover, the measures proposed for further improvement in the sales tax administration, besides reform of the refund system, included introduction of an automated risk-based module for sales tax registration with a view to minimising contact between the department and the prospective sales tax payers, posing minimal documentary and physical verification requirements.
Later, addressing the post-budget press conference he said that the losses on this count would be covered through expanding the tax base, and that the negative impact would be nullified due to increase in GDP growth, to which the small retailers and manufacturers can rightly be expected to contribute substantially from the boost they should get in the new scheme of things.
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