Businesses will get relief from tax-on-tax on supply of goods following a change in fiscal measure.
Under the order, issued on Wednesday, payment of VAT at ideal rate 15 per cent by a supplier will not require tax deduction by the authorities concerned.
The National Board of Revenue (NBR) issued a gazette in this regard.
However, the businesses have to comply with two conditions to avail the benefit of the Statutory Regulatory Order (SRO).
The businesses will have to submit VAT returns through an online platform and submit a VAT honour certificate showing proof of regular submission of VAT returns.
Md Daud Faraizy, an NBR listed VAT consultant, said the change was required as businesses have to pay VAT on VAT now as VAT is deducted as per law even after paying at ideal rate.
Any suppliers will be able to enjoy exemption from VAT deducted at source at the time of supply of goods if they pay 15 per cent VAT and mention it in VAT form-6.3, he said.
As the refund process is cumbersome in public entities, capital of many of the businesses remained stuck due to delay in processing documents, he said.
The cost of funds for businesses goes up in this way and the ultimate burden of prices is put on consumers, he added.
From now on, the businesses (suppliers) paying VAT at 15 per cent rate will get relief from deduction of VAT at source on supply of goods.
