Monthly sales tax returns to be field by registered persons for July 2014 till August 15 would enable the Federal Board of Revenue (FBR) to work out the actual impact of budgetary measures, pertaining to sales tax and federal excise duty (FED), taken in budget (2014-15).
Sources told Business Recorder here on Wednesday that the revenue impact of taxation measures regarding sales tax and FED in the first month of current fiscal year would be finalised in August 2014. The sales tax and FED budgetary measures have been implemented from July 1, 2014.
However, the effective date of charging revised rates of sales tax would not be July 1, 2014 in cases where the amendments have been made to the Schedules of the Sales Tax Act, 1990 for the purpose of charging new taxes or enhanced taxes. All such changes in rates were enforced from June 26.
The exact revenue impact of these measures would be worked out on the basis of monthly sales tax returns to be field by August 15, 2014. On filing of returns, the FBR will be able to specify the exact enhancement in sales tax and FED collection as a result of taxation measures announced in budget (2014-15).
Out of Rs 231.255 billion new taxation measures taken in budget (2014-15), direct taxes measures were of Rs 149.200 billion whereas sales tax and federal excise duty measures totalled Rs 47.700 billion. For example, customs authorities are charging sales tax at standard rate on all imports of finished articles falling under SRO 1125(1)/2011 wef 04.06.2014, excluding used and worn clothing, which remain chargeable to sales tax @ 5% under SRO 657(1)/2013 dated 11.07.2013. Large Taxpayer Units and Regional Tax Offices are charging 17 percent sales tax on the subsequent supplies of such imported finished goods.
Similarly, effective from July 1, 2014, FED on cement has been converted from the specific rate of Rs 400 per MT to 5 percent of the retail price. The concerned LTUs/RTOs are ensuring that retail prices are printed on the cement bags, FED is properly charged on the retail price, and no underreporting/sales suppression takes place.
At the same time, from July 1, 2014, aerated waters manufacturers have been reverted to the normal tax regime, where FED is chargeable on beverages concentrate @ 50 percent of its value, and FED @ 9 percent and sales tax @ 17 percent is chargeable on aerated waters. Immediately on withdrawal of the scheme, concerned RTOs/LTUs are conducting stock taking and monitoring the production and sales of aerated waters' manufacturers. The already available information regarding production capacity and major input materials have been used as benchmark to prevent under-reporting of production and sales suppression, if any. The FBR sources were confident that all the sales tax and FED measures have been timely enforced as per law and impact would be visible on compilation of data during current month.
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