Budget proposals 2014-2015: apex body urges to enhance turnover limit of cottage industry to 10 million, utility limit to 1.2 million

KARACHI: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has urged the tax machinery to enhance turnover limit of cottage industry to Rs 10 million from existing rate of Rs five million and utility limit to 1.2 million from 0.7 million in order to counter the rise in inflation and utility tariffs.
The apex body said that prevailing limit of turnover for cottage industry stands at Rs five million or for utility consumption of Rs. 0.7 million. These limits are considering high utility tariff and inflationary pressure are outdated.
It is evaluated that unnecessary taxation is one of the irritant for growth of Small Medium Enterprises (SMEs) sector.
It is believed that it would achieve sustainable growth of SME sectors and generate business activity and jobs in the country.
FPCCI has proposed an idea that sales tax withholding of one percent should be withdrawn or be given treatment of input tax in line by using analogy of value added tax (VAT) to set-off burden of additional sales tax on registered persons.
The federation said that sale tax withholding of one percent on purchases from unregistered persons is not adjustable as input tax and requires to pay in addition to the output tax thus payment of sales tax withholding to the extent of one percent is tantamount to double taxation.
The FPCCI has suggested the tax offices that formalities and verification for registration in Sales Tax Act Should be completed within 30 days and on provisional basis registration office should issue temporary certificate to the person or entity.
It said that the registration office should issue temporary certificate immediately after filing of application on the basis of basic documents i.e. CNIC, NTN, trade membership and bank certificate to avoid hassle in initiating business operations.
The federation has suggested that tax office may complete detailed verification within 30 days after issuance of temporary certificate.
The apex body said that simplification of laws and procedures will remove unnecessary irritants and hassles.
At present sales tax registration process involves minimum 30 to 60 days and time varies from category of registration. The process involves at-least following steps after submission of application and necessary documents: FBR marks the case to Regional Tax Office (RTO) for physical verification; after physical verification concern tax office submits is report to Central Registration Office; after receipt of CRO report, FBR issue registration certificate to tax payer.
It added that delays are being identified in getting sales tax registration and for initiating business activity.
FPCCI has demanded the tax machinery that separate sales tax registration should be given to each and every separate business of a proprietorship or either software be amended to address the problem.
According to the federation, it is proposed for better documentation of the economy and maintenance of a taxpayer’s record.
The FPCCI said that a proprietorship concern if operates two or more different businesses, requires to do so within single sales tax registration. Likewise single combines sales tax return is requires to be filed. There is no provision in FBR’s electronic system to distinguish transactions of both the entities or to reflect data/particulars separately. E-System only reflects data of any one entity.
Consequently buyers cannot trace, confirm or verify, second or other entity of a proprietor- ship concern having combined single sales tax registration number.

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