The Federal Board of Revenue (FBR) on Thursday started drafting the Reformed General Sales Tax (RGST) Ordinance as the government has to promulgate it before September 20 in view of the fact that the President is not empowered to sign any Ordinance when the National Assembly is in session that is starting from September 20, 2010.
It is learnt here on Thursday that the government would promulgate the Ordinance before October 1, 2010. But as per timelines drafted by the FBR in consultation with the international VAT experts, the government is expected to give 6-8 weeks to the FBR to discuss the Ordinance on the RGST with the stakeholders including business men and traders.
Tax authorities are well aware of the fact that the Ordinance could not be signed by the President during upcoming National Assembly session, which would continue for two weeks period starting from September 20. Therefore, the drafting of the Ordinance has been started by the FBR with the help of international VAT experts. The Ordinance to be issued before September 20 would not have immediate effect.
Within 6-8 weeks, the FBR will familiarise the stakeholders about the reforms being introduced in the sales tax regime. During this period reformed GST Bill would be moved in the Parliament for legislation pertaining to sales tax on services, sources added.
Sources said that the government may not be able to receive first tranche of the remaining two instalments of Augmented Stand By Arrangement (SBA) of the International Monetary Fund before mid or end December 2010. The compliance report to the conditions of reformed GST, reforms in power sector and granting autonomy to the State Bank of Pakistan (SBP) as agreed would be submitted to the IMF prior to release of the next tranche.
Sources said that the plan is that an Ordinance would be issued for implementation of reformed GST ahead of fifth review of the economic performance of the country in the next month while the compliance report would be submitted in November 2010 and the first tranche would possibly released by the IMF in December 2010.
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