Chairman Federal Board of Revenue (FBR) Sohail Ahmad said here on Tuesday that all the four provinces developed a consensus on Reformed General Sales Tax (RGST) and a date of its imposition would be finalised after the return of the Federal Finance Minister from abroad.
Imposition of RGST was delayed, as there was lack of consensus amongst the provinces and the federation regarding levy of RGST on the services. It is the constitutional right of the provinces to levy tax on the services and collect it or authorise the Federal Board of Revenue (FBR) for its collection, Sohail said while speaking at a ceremony arranged by the Regional Tax Office (RTO) for distribution of 'sales tax refund cheques' amongst 37 selected companies under the newly introduced expeditious refund system.
He said that now a system has been agreed by all the four provinces and a draft of the RGST will soon be brought out with the details of its rate, how to collect the tax on services and how to distribute it amongst the provinces etc. He said that the government has two options either to enforce it through an Ordinance or a bill approved by all the four provincial assemblies and the National Assembly. 'Even if it is enforced through an ordinance, it would be passed by the parliament within 120 days,' said Chairman FBR.
He also announced that the export sector would remain zero-rated under the new GST system. He said that imposition of RGST would help increase tax-to-GDP ratio of Pakistan from existing nine percent to 12 percent in next five years. It means another Rs 200-300 billion to the national kitty, he added.
Regarding flood tax, he said that there were many proposals lying on the table of the federal government regarding enforcement of this tax. However, he said, we have to take a final decision before 'Pakistan Development Forum' due to be held in November this year. He said that Pakistani authorities received a message from all the forums, it approached for getting financial assistance to help flood affected people, that what would our rich and influential people would be contributing towards this cause. He said that the FBR had suggested that 10 percent of the tax liability of every taxpayer should be charged for minimum of one year or maximum of two year in this regard.
Earlier talking about the improvements in 'Sales Tax Refund' system, he said that they were constantly working for improvement in the system. He said that they wanted to make refund system expeditious and gradually going towards a stage, where payment and refund system would become fully automated. He said that they were striving that there should be least human interaction between taxpayer and tax collector as it reduces the chances of corruption.
He said that now refund claims would be filed electronically and cheques after decision would be printed at Islamabad and would be sent through courier, while at a later stage these refunds would directly be deposited to the bank accounts of the claimants.
Sohail Ahmad also assured that the FBR was trying to resolve the pending refund cases and two task forces had been constituted to look into these cases and clear this backlog. He said that it was also wrong that the Board did not give refunds and said that it issued refunds of Rs 60 billion in the year of 2007-08, which increased to Rs 80 billion last year. 'We are all focused to make our system expeditious, transparent and corruption free,' he vowed.
The Chairman FBR also claimed that corruption had decreased in the Board during the last seven to eight years. He said that according to a public perception survey carried out by the Transparency International, FBR (both Customs and Income Tax) were at 4th level some seven to eight years back but now they were at 9th or 10th level and eight other departments including police and others were ahead of it.
Earlier General Manager Pakistan Revenue Automation Limited (PRAL) Imtiaz Ahmad threw light on the efforts being made to automate the tax return filing, refund claim filing and expeditious refund system. He said that now refund claims would be filed electronically, RTOs would process these and cheques would be printed at Central places and then sent to the claimant.
He said later from March next, instead of issuing a cheque, refund would directly be deposited to the bank account of the claimant and he would be intimated through an email or Short Messaging Service (SMS). He said that as a pilot project it would be taken up with account holders of the National Bank of Pakistan (NBP) and later four other banks HBL, ABL, MCB Bank and UBL would be taken on board and gradually this system would be applied to all the banks operational in the country.