Banking, insurance, advertising and construction: SRB starts sales tax collection

Due to delay in reaching an agreement between Federal and Sindh governments, Sindh Revenue Board (SRB) has started collection of sales tax on banking and insurance, advertising, construction and franchising along with other services, official sources told Business Recorder.
In FY2010-11, the Federal Board of Revenue (FBR) on behalf of Federal government had collected sales tax on all services with mutual agreement with provinces made on September 28, 2010. But, in FY2011-12, Sindh government pleaded that the previous record note between Centre and provinces was only meant for FY2010-11, which had expired automatically.
However, a new record note would be drafted between centre and Sindh if the matter of collection of sales tax on certain services was finalised. In this connection, a number of meetings between Centre and Sindh were held, but this matter has not been finalised yet, sources said.
Keeping in view the said situation, SRB has started the collection of sales tax on banking and insurance, advertising, construction and franchising along with other services of telecommunication, hotels, restaurants, marriage halls, lawns clubs and caterers, courier, services provided or rendered by persons engaged in contractual execution work or furnishing supplies and services provided by terminal operators except terminal fee charges.
The Legal and Co-ordination wing of SRB has written letters to all taxpayer companies and individuals including the providers of services in order to take immediate necessary action to enrol and register as service providers at SRB as per the requirement of law.
A letter available to Business Recorder states that "this is to brief you on enactment of the Sindh Sales Tax on Services Act 2011, providing and prescribing for levy and collection of Sales Tax on Services (SToS) rendered, provided, received, initiated or consumed in Sindh. Under the law and rules made effective from 1st July 2011, the service providers are required to enroll, register with Sindh Revenue Board (SRB) and pay monthly sales tax in account Head No B-02382 of the SToS Government of Sindh."
The letter further states that there was also news circulating in press that Government of Sindh may assign the collection rights pertaining to certain services including those by Banks and Financial institutions to FBR but no such delegation of power for collection of sales tax rights to FBR has been notified by Sindh government.
Even if such an arrangement is to be made in future, the levy and chargeability of tax shall remain with Sindh government as under Sindh Sales Tax on Services Act 2011, and rules (including companies) the resident persons shall be required to enroll, register with SRB.
In this connection, while talking to Business Recorder, Chairman SRB Nazar Hussain Mehar said that SRB has a well-established system so that it can collect sales tax on services on banking and insurance, advertising, construction and franchising along with other services. According to him, work has begun in this regard and people pertaining to all services are co-operating with the department and paying their taxes on a daily basis.