News Paper: Business Reorder
KARACHI (July 27 2010): The rate of sales tax on services, which has to be uniform in all provinces, has individually been increased in Punjab through Punjab Finance Act 2010, creating problems especially for banking, insurance, and telecom sectors in complying with the law.
In an exclusive talk with Business Recorder, Adnan Mufti, partner, Shekha & Mufti Chartered Accountants and member of Alternative Dispute Resolution Committee said the government of Punjab has increased the rate of sales tax from 16 percent to 17 percent through Punjab Finance Act 2010, creating problems especially for those taxpayers who are rendering services in two or more provinces.
Despite the rate of sales tax on services remaining unchanged in Sindh, the government of Punjab has amended the clause 5 (a) of Punjab Sales Tax Ordinance 2000 through Punjab Finance Act 2010. He said the government of Punjab would now charge sales tax at the rate of 17 percent on taxable services rendered in Punjab; however, the tax remains 16 percent in Sindh.
He regretted that the businesses operating and rendering services in Sindh and Punjab simultaneously might face problems in complying with the law, due to this change. Moreover, he said several services such as banking, insurance, shipping, telecommunication, brokerage houses and advertisement on cable TV are liable to Federal Excise Duty (FED) on a VAT mode meaning thereby, there is sales tax leviable on such services.
But, the Punjab government has again included the aforesaid services in its list through the amendment made to clause 5 of Punjab Finance Act 2010, Mufti added. Resultantly, these service providers are liable to pay double sales tax ie one under the FED Act (a federal legislation) and the other under the Punjab Sales Tax Ordinance 2000 (a provincial legislation), he said, adding that the said amendment would result in taxation to the tune of 33 percent and 36 percent in certain cases, which is extremely harsh and impossible to comply with.
In an exclusive talk with Business Recorder, Adnan Mufti, partner, Shekha & Mufti Chartered Accountants and member of Alternative Dispute Resolution Committee said the government of Punjab has increased the rate of sales tax from 16 percent to 17 percent through Punjab Finance Act 2010, creating problems especially for those taxpayers who are rendering services in two or more provinces.
Despite the rate of sales tax on services remaining unchanged in Sindh, the government of Punjab has amended the clause 5 (a) of Punjab Sales Tax Ordinance 2000 through Punjab Finance Act 2010. He said the government of Punjab would now charge sales tax at the rate of 17 percent on taxable services rendered in Punjab; however, the tax remains 16 percent in Sindh.
He regretted that the businesses operating and rendering services in Sindh and Punjab simultaneously might face problems in complying with the law, due to this change. Moreover, he said several services such as banking, insurance, shipping, telecommunication, brokerage houses and advertisement on cable TV are liable to Federal Excise Duty (FED) on a VAT mode meaning thereby, there is sales tax leviable on such services.
But, the Punjab government has again included the aforesaid services in its list through the amendment made to clause 5 of Punjab Finance Act 2010, Mufti added. Resultantly, these service providers are liable to pay double sales tax ie one under the FED Act (a federal legislation) and the other under the Punjab Sales Tax Ordinance 2000 (a provincial legislation), he said, adding that the said amendment would result in taxation to the tune of 33 percent and 36 percent in certain cases, which is extremely harsh and impossible to comply with.
-www.brecorder.com
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