Federal Board of Revenue (FBR) is contemplating to increase the rate of sales tax from eight percent to the standard rate (17 percent) on white crystalline sugar in next budget 2018-19. According to details, the proposal to charge sales tax at standard rate (17 percent) on white crystalline sugar from next financial year 2018-19 was forwarded by the Large Taxpayers Unit (LTU), Karachi through its budget proposals.
The large revenue collecting arm was of the view that this reduced rate was imposed in view of high price of the sugar and now the price has come done hence standard sales tax at 17 percent on supply value is to be applied.
Moreover, it said that current rate of sales tax for steel-melters is much lower than the standard rate. The FBR, which is presently charging Rs 10.50 per unit electricity consumption (considering 800 units of electricity are required for conversion of one metric ton of steel), is proposed to increase the same to Rs15 per unit to maintain revenue collection at standard sales tax rate.
Similarly, the LTU, Karachi has also suggested the board to impose additional sales tax on non-essential or luxury items, recommending additional sales tax at 5 percent or seven percent on luxurious items including cosmetics, chocolates, shampoos, juices, etc being imported by the commercial importers. Furthermore, it is also proposed to increase one percent withholding tax on unregistered person to 17 percent in order to encourage more sales tax registration.
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