Pakistan advised to increase sales tax rate to 18% for fashion textile

Pakistan advised to increase sales tax rate to 18% for fashion textile

In its proposals for the budget 2023-2024, Adam Smith International’s REMIT (Revenue, Mobilization, Investment, and Trade) program for Pakistan has recommended an increase in the sales tax rate on textile fashion retailers from 12 percent to 18 percent.

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The advisory firm suggests that raising the sales tax on textile fashion retailers would be beneficial for the country. Additionally, they propose several changes to the sales tax laws. One recommendation is to make the condition of Computerized National Identity Card (CNIC) mandatory for Business-to-Business (B2B) transactions, with the suggestion to extend this requirement to Business-to-Customer (B2C) transactions as well. The scope of Point of Sale (POS) should also be expanded to include all B2B transactions.

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The firm further advises making digital invoicing compulsory for the entire value chain and linking Sales Tax Registration with POS installation. Moreover, they propose the exclusion of certain administrative orders (ss. 38, 40, 40B, 40C under Sales Tax Act, 1990) from the regular appeal system and the introduction of administrative relief for such actions.

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These recommendations aim to enhance revenue generation and streamline the sales tax system in the fashion textile sector. The proposed changes, if implemented, would have an impact on retailers, businesses, and the overall economy. It remains to be seen how these suggestions will be considered and integrated into the budget planning process.

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