News Paper: Business Recorder
ISLAMABAD (July 24 2010): The service providers in Sindh province are in a fix, as the sales tax rate on services rendered in Punjab and Khyber-Pakhtoonkhwa is 17 percent as compared to 16 percent in Sindh, a clear anomaly of having different rates in different provinces. Sources told Business Recorder here on Friday that the provincial governments of Punjab and Khyber-Pakhtoonkhwa have levied 17 percent sales tax on services, whereas Sindh government charges 16 percent sales tax on services.
According to sources, Sindh provincial government itself wanted to collect sales tax on services and does not wanted to authorise the Federal Board of Revenue (FBR) to collect sales tax on services. Sindh has not increased the rate of sales tax on services in budget (2010-2011) as compared to Punjab and Khyber-Pakhtoonkhwa where rate of services has been enhanced from 16 to 17 percent.
Due to different rates of sales tax, the service providers will have difficulty and consumers in Punjab and Khyber-Pakhtoonkhwa will be paying more on these services. Sources said that the anomaly of different rates of sales tax has to be resolved, otherwise there would be confusion in application of sales tax on services. In case of federal government, the Federal Board of Revenue (FBR) has imposed federal excise duty in sales tax mode on services providers under Federal Excise Act.
When contacted, a senior FBR official told this scribe that the federation would continue to collect federal excise duty on services under the Federal Excise Act. The existing arrangement for collection of the FED under sales tax mode on services would remain intact as per legal position of June 30, 2010. The FBR would collect FED on these services as per Federal Excise Act till implementation of the reformed general sales tax (GST) in October 2010. The official further specified that so far provinces have no basic infrastructure for collection of sales tax on services. In case any agreement has been reached between the federation and provinces on services, the provincial laws would be subsequently amended.
Till implementation of the reformed GST, there would be no change in existing system of collection of excise duty in sales tax mode on telecommunication and other services, as the government cannot impose double taxation on the consumers, FBR official added.
According to sources, Sindh provincial government itself wanted to collect sales tax on services and does not wanted to authorise the Federal Board of Revenue (FBR) to collect sales tax on services. Sindh has not increased the rate of sales tax on services in budget (2010-2011) as compared to Punjab and Khyber-Pakhtoonkhwa where rate of services has been enhanced from 16 to 17 percent.
Due to different rates of sales tax, the service providers will have difficulty and consumers in Punjab and Khyber-Pakhtoonkhwa will be paying more on these services. Sources said that the anomaly of different rates of sales tax has to be resolved, otherwise there would be confusion in application of sales tax on services. In case of federal government, the Federal Board of Revenue (FBR) has imposed federal excise duty in sales tax mode on services providers under Federal Excise Act.
When contacted, a senior FBR official told this scribe that the federation would continue to collect federal excise duty on services under the Federal Excise Act. The existing arrangement for collection of the FED under sales tax mode on services would remain intact as per legal position of June 30, 2010. The FBR would collect FED on these services as per Federal Excise Act till implementation of the reformed general sales tax (GST) in October 2010. The official further specified that so far provinces have no basic infrastructure for collection of sales tax on services. In case any agreement has been reached between the federation and provinces on services, the provincial laws would be subsequently amended.
Till implementation of the reformed GST, there would be no change in existing system of collection of excise duty in sales tax mode on telecommunication and other services, as the government cannot impose double taxation on the consumers, FBR official added.
-www.brecorder.com
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