TRC recommends GPS mapping of shops in big cities
The Tax Reform Commission (TRC) has strongly recommended that the Global Positioning System (GPS) mapping of shops in major cities of Pakistan may be carried out and implemented on an urgent basis. Role of the Federal Board of Revenue (FBR) field officers should be minimised in the process of issuance of refunds and scheduled banks receiving export proceeds should issue refunds based on the quantity exported, it added.
According to the final report of the TRC issued here on Monday, the TRC recommended that the standard input and output ratio should be designed in consultation with export oriented industry/sector on the basis of which export rebate should be determined. Input and output ratios for all other sectors irrespective of being zero rated or taxable should be fixed and notified. Anti-avoidance provisions such as section 8A, 8(1)(c) and (ca) and 21(3)of Sales Tax Act 1990 needs to be rationalised in line with the judgement of superior courts. This rationalisation will definitely support the buyer in claiming the legitimate input tax. Annual return of sales tax should be certified by the auditor in respect of the consumption of input with the notified limits.
In cases where the consumption falls out of the ambit of the notified limits should be subject to audit by specialised audit cell. In order to enhance the transparency the audit report should be placed on website, it recommended. To curb the menace of under invoicing, minimum import value should be notified for different goods/products on periodic basis. Role of the FBR field officers should be minimised in the process of issuance of refunds.
The TRC recommended establishment of a commission empowered to recommend measures to harmonise the sales tax law in respect of both Federal and Provincial Sales tax, dealing with issues of services to avoid double taxation and bring about ease in doing business.
Provisions of section 40 of Sales tax Act, ie, electronic monitoring shall be enforced on urgent basis. As all the Sales Tax Registered persons have been prescribed as Withholding Agents, many of them do not have the capacity to follow the laws; rather many have got registered to be qualified as suppliers. We recommend that the small scale tax payers should be excluded be the withholding agents.
The TRC recommended that FED paid on purchases should be allowed on accrual basis in line with Sales Tax Act, 1990. Certain goods are chargeable to FED on manufacturers’ retail price which includes all duties, charges and taxes other than sales tax. We recommend that FED should be computed on the retail price exclusive of FED so as to avoid the imposition of duty on duty. Presently, under Rule 14A of the FED Rules, debit/credit notes can only be issued for dutiable goods. TRC recommend that a procedure should also put in place for issuance of debit credit notes in respect of dutiable services, the TRC added.
It said that there is a need to reform/rationalise the tariff keeping in view certain determined parameters. The TRC is currently working on the proposed parameters for rationalisation of custom tariff. The proposed parameters and the related recommendations would be finalised in due course. The delay has mainly been caused due to non-availability of data on time.
However, certain recommendations in respect of customs are being included in the report to facilitate bona fide importer and exporter and to reduce the abuse of powers by the Customs officials. The TRC recommended that all the cases in the region should be resolved at Chief Collectors’ level and only those cases should be referred to the FBR by the Chief Collectors where a policy decision is required.
