Finance Ministry says VAT only on taxable goods


The Finance Ministry says despite the value-added tax (VAT) increase proposed through the VAT Amendment Bill, the retail and wholesale merchants, who have opposed the VAT hike, will have to pay a lesser VAT quantum. The VAT Amendment Bill proposes to increase the VAT rate to 15% from the current 11%. The retail and wholesale merchants, whose daily turnover exceeds Rs.138,000, will be brought under the VAT payment threshold. However, the Finance Ministry in a statement said the amendments to the bill will ensure VAT being only charged on the revenue accumulated on the sale of goods on which VAT has to be paid, eliminating the hidden payment existing in the present VAT system.

Accordingly, supermarkets and other trade outlets engaged in retail and wholesale business with a daily turnover above Rs.2.8 million were brought under the tax net and a 12 percent VAT was imposed on such business institutions. However, this threshold was reduced to Rs.1.4 million in 2014. A limited number of VAT payable goods were included in the turnover but the traders were compelled to pay VAT for the total turnover during that period.