Presidential Ordinance to be issued would considerably expand the scope of the Third Schedule of the Sales Tax Act 1990 by including a number of new items including bottled water and fertilisers for imposition of sales tax on the basis of printed retail price.
Sources told Business Recorder here on Tuesday that the draft of the Presidential Ordinance has proposed amendments to the Third Schedule of the Sales Tax Act 1990. The Finance Ordinance has proposed to charge sales tax on the basis of printed retail price of 22-24 items including paints/varnishes, shaving foam, washing powder, spices having brands names, fertilises, bottled water and paper & paper board, etc.
Through the Presidential Ordinance, amendment has been proposed in the Third Schedule of the Sales Tax Act 1990 to include a large number of items on which sales tax would be charged on the basis of printed retail price. The government wanted to charge sales tax on the basis of printed retail price of these items in order to generate extra revenue from these sectors.
Presently, items chargeable to sales tax at the retail stage included fruit juices and vegetable juices, ice cream, aerated waters or beverages, syrups and squashes, cigarettes, toilet soap, detergents, shampoo, toothpaste, shaving cream, perfumery and cosmetics, tea, powder drink, milky drink, toilet paper and tissue paper, spices sold in retail packing bearing brand names and trade marks and shoe polish and shoe cream.
Sources said that the manufacturers have to pay sales tax on all the stages of value addition of consumer items having printed retail price. Under the Value Added Tax (VAT) regime, the tax is to be paid on value addition attributed to each stage, starting from manufacturing down to retail sale to the end consumer. A number of dealers, distributors and wholesalers of different consumer items are still out of tax net despite efforts to bring the intermediate linkages in supply chain into the taxation system and resultantly the tax actually chargeable at each stage on value addition is not being recovered, sources added.