Reformed GST to be introduced in two phases

To ensure implementation of the reformed GST from October 1, 2010, the Federal Board of Revenue (FBR) would introduce reforms in the sales tax regime in stages by withdrawing sales tax exemptions and zero-rating through a Presidential Ordinance and subsequently move a reformed GST Bill in the Parliament to introduce legislation for sales tax on services sector.
Sources told Business Recorder here on Wednesday that all four provinces have to also introduce provincial sales tax legislation for collection of sales tax on certain services. The provinces would introduce legislation's in their respective laws as per understating reached between the federation and Sindh government.
Sources said the FBR would introduce reformed GST in two phases to withdraw exemptions and bring services sector into the sales tax net through legislation from the Parliament. The phase-wise implementation of the reformed GST would ensure withdrawal of exemptions, zero-rating, special procedures and other distortions in the sales tax regime from October 1.
One of the options is to first withdraw the sales tax exemptions from the Sales Tax Act, 1990 and statutory regulatory orders (SROs) by October 1, 2010. At the same time, zero-rating facility would be withdrawn on local supplies available to different sectors. The special sales tax procedures and distortions in the sales tax regime would also be abolished under the reformed GST. The withdrawal of exemptions and zero-rating would be done by October 1, 2010 through a Presidential Ordinance.
In the next phase, the FBR will move a reformed GST Bill-2010 to the Parliament for legislation in the Sales Tax Act, 1990 for bringing reforms in the sales tax laws. The reformed GST Bill-2010 would amend the Sales Tax Act to rescind procedures, which are against the concept of the Value Added Tax (VAT). Similarly, the provinces would introduce bills in their respective provincial assemblies for collection of sales tax on services sector. The stage wise implementation of the reformed GST would ensure withdrawal of exemptions and zero-rating by the deadline announced by the government for introducing reformed GST by October 1, 2010.