Abstract:
Sales tax is a tax on the supply of goods and certain services . It is charged at the time o f sale and then deposited in the Government treasury . The sales tax was introduced in Pakistan in 1990 . In 1990, t he law was made but it was implemented i n 1994-1995. In turn, when a person buy goods or avail taxable services, he will be charged sales t a x . If he i s importing goods, he will pay sales tax at the time of importation. This study has been completed after carrying out a detail literature review on the subject . The research method used in the study is descriptive in nature. The goal of t he descriptive study is to offer a profile or to describe relevant aspect of phenomena of interest to researcher from an industry oriented • or other perspective. The instruments used in this study are structured interviews and discussion with customer, businessmen and tax officers. The target audiences of this thesis are the sole proprietor in the Rawalpindi and Islamabad. The rate of sales tax is too high. If pilferage of sales tax is effectively plugged, the rate of sales tax can be brought down to 5%• This will generate more business activities and more demand for goods and services, which may result in higher collection of total revenues. The reason is that they were used to run their businesses without any sales tax, and when it was imposed in 1994-1995 businesses men resisted too much. In order to avoid full payment of sales tax, they give bribe to the auditors so that they • can be free from paying the full amount of the tax.
