Tax exemptions likely to go in budget

ISLAMABAD - Apart from keeping standard General Sales Tax (GST) at 17 per cent, the government would likely to eliminate tax exemptions on fertilizers, pesticides, pharmaceutical, poultry feed, tractors and others under the Plan-B against Reformed General Sales Tax (RGST) in the upcoming budget 2011-2012. As agreed with International Monetary Fund (IMF), the government would adopt Plan-B against the non-introduction of RGST in the annual budget for next financial year. The government would keep standard GST at 17 per cent that goes up to 25 per cent on different items. Similarly, government would have to eliminate the tax exemptions and zero-rated facility in the finance bill 2011 as committed with the IMF. While in Reformed General Sales Tax, the GST was to be down to 15 per cent and it would be unique rate for all sectors. Sources told The Nation that the government has already eliminated several tax exemptions in March by announcing mini-budget for stabilisation of the economy. However the government would include all such tax exemptions measures in the finance bill 2011. The government had already withdrawn the tax exemption of sales tax on fertilizers, pesticides and tractors in March 2011. Meanwhile, the government is likely to withdrawn sales exemptions on pharmaceutical products and poultry feed in the upcoming annual budget. The Chairperson of National Assembly Standing Committee on Finance, Revenue and Economic Affairs, Fauzia Wahab already said that the government would also eliminate sales tax exemptions on imports and local supply of defence stores apart from other exempted defence items. According to the sources, government could also withdraw the zero-rating facility on five major export-oriented sectors including textiles, carpets, leather, sporting goods and surgical items. However it could be only for registered exporters and manufacturers-cum-exporters. The facility of zero-rating on plant, machinery and equipment including parts thereof has also been withdrawn. Similarly the government could also withdraw zero-rating facility on dairy products and stationery items in the coming budget.

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