The FBR has proposed an increase in sales tax rate from the current 19pc to 20pc for unregistered persons. However, the secretary finance is resisting the proposal, terming it as inflationary and highly unpopular.
Presently, the government is charging a standard sales tax rate of 17pc. Over and above this rate, the government charges 2 pc ‘Further Tax’ from the unregistered sales tax persons. The FBR has tabled the proposal to hike up the Further Tax rate to 3pc, which will bring the effective rate to 20pc. Only about 150,000 people are currently registered with the sales tax department and rest may have to pay the revised 20pc tax rate.
As per the promises of the Prime Miniter Nawaz Sharif, sales tax rate should have been brought down to single digit. However, the FBR is considering pushing it up to 20pc by the inclusion of Further Tax. However, in order to achieve the next year’s fiscal target of about Rs3.9t, the FBR needs to ensure additional measures.
