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Sales Tax Instructions

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<strong>Sales</strong> <strong>Tax</strong> <strong>Instructions</strong>, 2009<br />

consumers / buyers (not registered with the sales tax department) have to bear the 3%<br />

further tax.<br />

[Issued by the CBR, Islamabad, under the signature of Mr.Muhammad Tahir, Secretary<br />

(STP), being addressed to Mr. Nasser Kamal, General Manager Marketing, General Tyre &<br />

Rubber CO., of Pakistan Ltd., Karachi.]<br />

********<br />

U.O.No.1/16-STB/99 DATED 22 ND DECEMBER, 1999<br />

SUBJECT:-<br />

LEVY OF GST ON RETAIL TRADERS.<br />

Please refer to the Summary for the Cabinet on the subject noted above and the<br />

decision of the Cabinet thereon (copies enclosed).<br />

2. The Member (<strong>Sales</strong> <strong>Tax</strong>) has directed that appropriate action may be<br />

initiated by the concerned sections of the <strong>Sales</strong> <strong>Tax</strong> Wing to implement the Cabinet<br />

Decisions.<br />

[Isssued by the CBR, Islamabad under the signature of Mr. Abdul Basit Chaudhry,<br />

Second Secretary (<strong>Sales</strong> <strong>Tax</strong>), addressed to C(ST-I)/C(ST-II)/ S(STP)/S(STT)/S(STR)/<br />

S(STE)/S(STJ)/S(STM)/S(STC)/S(STA)/S(ST.Int.Audit)/ S(ST.Ext.Audit),]<br />

********<br />

SUMMARY FOR THE CABINET<br />

SUBJECT:-<br />

LEVY OF GST ON RETAIL TRADERS.<br />

Eversince conversion of sales tax into a VAT like GST in 1995, its application has been<br />

gradually expanded. Presently, GST is applicable to the entire manufacturing sector with few<br />

exceptions (fertilizer, cement, etc) and also on gas and POL products since 16.08.1999. The<br />

decision for levy of GST on electricity w.e.f. 16.8.1999 was also taken but the modalities for<br />

implementation are being finalized.<br />

2. The extention of GST to retail traders has posed serious difficulty since efforts were made<br />

to extend the same during last two years. The agitation by traders in September 1999 resulted in a<br />

virtual surrender by the Government. Hence in place of 2% turnover tax for smaller traders with<br />

turnover between Rs.1 and 5 million per year, a Development <strong>Tax</strong> was introduced on 14.9.1999.<br />

Government‘s tax collection function was virtually abdicated as it was agreed that neither any<br />

records will be maintained nor any tax official could inspect or even visit the retailers paying<br />

Development <strong>Tax</strong>. A fifty member traders‘ Committee was formed to administer and collect the tax<br />

to the exclusion of Government functionaries. The promised tax yield of Rs.14 billion per year was<br />

obviously impossible to realize given the size of retail business. On two previous occasions tax<br />

yields of Rs.5 and Rs.7 billion were promised under broadly similar circumstances but the<br />

collection was Rs.0.3 billion on each occasion. It is added that Development <strong>Tax</strong> is<br />

unconstitutional.<br />

3. Since the government wishes to pursue the objective of tax reform in right earnest, the<br />

GST system has to be introduced in letter and spirit. This is the only way for promoting<br />

documentation and broadening the tax net.

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