The process is all but complete to postpone enforcement of the new VAT and Supplementary Duty Act 2012 at the instruction of the prime minister, amid raging criticism of its possible fallout.
Officials said the National Board of Revenue (NBR) completed all necessary groundwork to defer enforcement of the new law that bears some fiscal measures, including a uniform 15 per cent rate of VAT, which sparked off protests.        
The implementation of the new value-added tax (VAT) law may be postponed for one or two years, sources said.
They said the revenue board had done a number of exercises to find alternative ways of implementing the new law but the PM preferred sticking to the existing VAT law, framed in 1991.
"A high-level meeting among the PM, the finance minister, the finance secretary and the National Board of Revenue (NBR) chairman decided to continue with the existing VAT law after analyzing all possible alternative exercises of the NBR," a high official said.
However, he said the decision might be changed anytime as the government has yet to make any official announcement jettisoning execution of the new law or on continuation of the existing one.
Revenue-board sources said three Statutory Regulatory Orders (SROs) by increasing the multiple rates of VAT and some other changes were vetted by the law ministry Wednesday to incorporate those into the existing law.
They said the government high-ups became worried when they foresaw possible hike in prices of products, services, and electricity and gas tariffs with the implementation of the new law.
The businesses and lawmakers in Parliament also opposed the law that imposes 15 per cent VAT on all services and products.
Businesses demanded truncated-base or multiple rates of VAT for the sectors that would not be able to claim rebate.
NBR officials said they have to cancel or suspend two SROs issued on June 01, 2017 with the proposed budget for the upcoming FY.
Some changes have to be incorporated into the existing law to increase revenue collection as the highest target has been set for the VAT wing for FY 2017-18 on the basis of new VAT law, they said.
The NBR did some exercises including incorporation of some provisions of the existing VAT law into the new law but the proposals were all ruled out by the government high-ups.
There will be no basic difference between the new and existing VAT law if multiple rates were interpolated into the new law, sources said.
The government already kept the SD rates unchanged in the proposed budget to retain protection of local industry. Experts found the change in SD as a major distortion of the new law.
Implementation of the new law was one of the major conditions set by the International Monetary Fund (IMF) against disbursement of funds under Extended Credit Facility (ECF).
The raging confusions over the VAT law left the officials puzzled as a series of preparatory programmes have been carried out by the NBR to make aware and motivate people on the nitty-gritty of the new law.
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Source: The Financial Express