The powers of the Federal Board of Revenue (FBR) to increase or decrease rates of general sales tax or federal excise duty have been taken away under the 'reformed general sales tax' (RGST) bill. Sources told Business Recorder here on Saturday that the powers to change sales tax rate has been surrendered to the Parliament under the RGST Bill 2010.
After implementation of the revised sales tax, the Parliament would be the authority to increase or decrease sales tax rates. This is one of the most important features of the RGST bill that the FBR has voluntarily surrendered the powers of rationalising tax rates on its own.
The RGST Bill 2010 would only authorise the Parliament to grant sales tax exemption or enhancement of tax rate through amendment in the First Schedule (Exemption Schedule) of the Bill. Therefore, the FBR would not be empowered to grant sales tax exemption through a notification, order, or SRO. This is a major change in the existing Sales Tax Act, 1990 and RGST Bill 2010 which has drastically curtailed the powers of the tax authorities for granting exemptions.
The FBR has taken this step voluntarily to avoid pressure of powerful lobbies and influential groups who managed to obtain exemptions in the past. Now, anybody having intention to obtain sales tax exemption has to approach the Parliament in view of the fact that the FBR would no more be empowered to grant such concessions/exemptions. Sources said that the board wanted to surrender its powers to issue exemption orders and SROs pertaining to exemptions and concessions to the Parliament under the proposed RGST Bill 2010.