LAHORE - A lot of shareholders’ money could be saved if corporate sector prefers doing purchases from documented suppliers instead of seemingly cheaper non-documented suppliers as it would not only enable them to claim for GST refunds but will also ensure that government is getting its due share in the form of GST.

Taxation experts have pointed out that the corporate sector and documented smaller entities end up paying higher taxes by purchasing many small items from non-documented suppliers throughout the year which deprived them of the sales tax adjustments.

Citing the example of a big corporate firm having fleet of 50 vehicles to illustrate their point, they said that while purchasing lubricant oil and filters that has to be changed at least four times a year, usually to save cost, they end up purchasing these items from non documented suppliers that do not charge sales tax.

“Though they do try to ensure that they buy genuine parts but usually go for the suppliers quoting 10-16 percent less price than the price offered by the documented suppliers as they think the deal is lucrative but in final analysis, these firms end up as losers,” they added.

They said that on purchase of engine and brake oil, spark plug, oil and air filters annually needed for one vehicle, the buyer pays the documented supplier around 18000 rupees.

The same items if purchased from non documented sector without sales tax receipt usually cost Rs15000 per vehicle per year which is 16 percent less than the amount paid to the documented sector for the same genuine items, they added.

They said that for the normal maintenance of 50 vehicles the company would pay Rs 0.88 million per year to documented supplier while its cost would reduce to Rs. 0.75 million if these items were purchased from the non documented sector which looks a handsome saving.

He said the ultimately a corporate entity with documented purchases would pay less taxes after sales tax adjustment of around Rs 121,000 while filing tax return whereas there would be zero sales tax adjustment on purchases made from the non documented sector and the taxable amount would remain the same as the original purchase amount.

They said that corporations should consider purchasing from documented suppliers, which besides providing tax benefits, would also help them contribute to the national exchequer by encouraging documented economy. Most importantly, they said, corporations will have a peace of mind as they make purchases of genuine parts from genuine sources.