The Central Board of Revenue (CBR) on Monday temporarily suspended implementation of SRO 315 (I) 2005, which barred the millers from selling sugar to unregistered dealers/wholesalers, and invited the Pakistan Sugar Mills Association (PSMA) to work out practicable formula to bring sugar business into tax net, on Wednesday. Tax authorities told Business Recorder that instructions have been issued to collectors of sales tax to temporarily stop the implementation of the said SRO. As a result of issuance of the SRO last week, dealers and wholesalers sharply reacted and refused to lift stocks from the mills.
Market sources said that dealers/wholesalers stayed away from sugar buying throughout Monday when they were told by the millers that the new sugar deals would be covered under Sales Act 1990, to meet the CBR demand.
Sources said the dealers/ wholesaler rejected the SRO outright. Sugar loading from the mills remained suspended throughout the country. In some areas the dealers/ wholesalers refused to lift stocks and asked the mill-owners to cancel previous deals.
The CBR move was meant to register the dealers and wholesalers under Sales Tax Act 1990 and to plug tax evasion.
The step was also needed to expand the tax net to enhance revenue collection and to meet the conditionality of IMF and World Bank for documentation of the economy.
It may be noted that the government had provided an outlet to the dealers and wholesalers to stay outside the tax net by opting for the category of unregistered buyers. By opting as unregistered, they were to pay three percent additional tax.
Almost 100 percent dealers and wholesalers opted for unregistered buying of sugar by paying additional tax.
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