Chairperson National Assembly's Standing Committee on Finance and Revenue, Fouzia Wahab, on Friday told business community that all exports have been made zero rated under Reformed General Sales Tax (RGST). Addressing members of Karachi Chamber of Commerce and Industry (KCCI), she said that local consumption of sectors like textile, leather, surgical and sports goods have been subjected to tax, which were enjoying exemption earlier.
She explained that all exporters have to deposit tax on export stage of goods and the same would be refunded after export within next 6 weeks. She advised business community to go through RGST draft bill and give suggestion to improve it.
Replying to a question, she said that life saving drugs, books and other printed materials including newspapers and periodicals have been exempted, while other pharmaceutical products have been taxed under the RGST regime. She said that the government has to take difficult decision to improve system and to broaden tax to GDP ratio.
Fouzia Wahab said the country is in dire need to increase its tax revenue by implementing a board-based modern form of RGST on goods and services. The Sales Tax Act 1990 was broadly designed on the lines of Vale Added Tax (VAT) but due to political compromises and revenue exigencies, it increasingly become distorted and narrow-based because of ever expanding exemptions.
Resultantly, not only the tax base of sale tax and income tax has been eroded but lack of documentation of the national economy has proved to be a big hindrance in the development of effective taxation system. Fouzia Wahab stated that under RGST regime, standard rate of 15 percent has been proposed instead of the present rate of 17 to 23 percent sales tax rate.
She disagreed with the business community that RGST would prove to be a drone attack on the economy of the country. She said that RGST will replace the existing regime of sales tax and added RGST will apply on both at import and local supply stage.
She said that RGST would be implemented. However, she sought suggestions from business community for improvement in it, its implantation, refund system and reforms in Federal Board of Revenue (FBR). Member of the Standing Committee, MQM MNA, Abdul Rasid Godial opposing the RGST said that out of 11 billion population of the country 9 billion was living blow the poverty line. Implantation's of RGST will increase this number, he added
Former president KCCI Siraj Kasim Teli said that RSGT is another name of VAT and its implementation will have serious negative impact on industries and prices of local and imported goods will go up. Teli was of the view that RGST bill may be passed from the National Assembly but it cannot be implemented due to corrupt bureaucracy.
He alleged that bureaucracy is corrupt and with this bureaucracy RGST can not be implemented. Implementation of RGST will increase corruption manifold, he added. Former President KCCI, Majid Aziz clamed that food inflation which is 40 percent at present will increase tremendously with the enforcement of RGST.
He said if the present government call it a Awami government then it must impose tax on all segments of the society including agriculture. Former President KCCI, Tahir Khaliq demanded that pharmaceutical products and infant milks should be exempted from RGST .
Advisor to Chief Minister Sindh for Investment, Zubair Motiwal criticised imposing RGST on defence stores, stationary items, dairy products, pharmaceuticals, agriculture inputs, agriculture machinery. He was of the view that imposition of RGST on five zero-rated sectors will generate additional revenue. President KCCI Saeed Shafiq said that imposition of 10 percent surcharge on income tax of salaried class is addition burden on them and it must be withdrawn. He suggested that the government should curtail its non-development expenditures.