The government may not increase sales tax from 16 to 17 percent in Budget (2013-14) toeing the new policy for maintaining existing standard tax rates for business community during the next fiscal year. Sources told Business Recorder here on Wednesday that the Federal Board of Revenue (FBR) had proposed increase in the standard rate of sales tax from 16 to 17 percent.
It was one of the major revenue generation measures to have additional revenue of Rs 25-30 billion without any effort by the tax machinery. During recent budget preparation exercise, Ministry of Finance had directed the FBR to increase sales tax collection in 2013-14 by improving efficiency and expanding the tax-base instead of further enhancing the rate of the sales tax. Finance Ministry has also directed the FBR to bring new persons, liable to be registered, into the sales tax net in the next fiscal year. It has been further informed that the tax rates would not be enhanced in the coming budget. The prevailing tax rates would remain intact with removal of some unnecessary exemptions. However, rationalisation of tax rates would be done with removal of distortions in the taxation system.
There is a strong possibility that the key budgetary measure to enhance the sales tax rate from 16 to 17 percent would be dropped in coming budget. The FBR would continue with the policy of imposition of sales tax on items subjected to domestic zero-rating.
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