Section-4 of Punjab Sales Tax: Punjab assures Sindh to look into its reservations

YASIR BABBAR

KARACHI: Punjab has assured Sindh to look into its reservations over Section 4, "Application of principles of origin and reverse charge in certain situations," of Punjab Sales Tax on Services Act 2012.

Informed sources told Business Recorder that the assurance came from a high official of Punjab Revenue Authority (PRA).

They added that a high official of Sindh Revene Board (SRB) telephoned an official of PRA and conveyed to him Sindh's reservations over Section 4 of Punjab Sales Tax on Services Act 2012.

The SRB official told him that the Section-4 was illegal and unconstitutional, adding that with its implementation, the service providers, rendering services in Sindh would feel unease.

"If PRA would look into the matter, the issue would be resolved amicably, otherwise Sindh government would approach Federal government, which would turn the issue into a national-level controversy," he was quoted as telling the PRA's official.

Upon this, the PRA assured that the authority would look into the matter and the issue would be resolved as per the constitution of the country.

It may be noted here that Punjab Assembly has recently  approved Punjab Sales Tax on Services Act 2012.  Section 4 of the Act states that 1) Where a person is providing taxable services in a province other than the Punjab but the recipient of such services is resident of the Punjab or is otherwise availing such services in the Punjab and has charged tax accordingly, the person providing such services shall pay the amount of tax so charged to the government. 2) where the recipient of a taxable service is a person registered under the Act, he shall deduct the whole amount of tax in respect of the service received and pay the same with the government. 3) Where a person is providing taxable services in more than one province or territory in Pakistan including the Punjab, such person shall be liable to pay tax to the government to the extent the tax is charged from a person resident in the Punjab or from a person who is otherwise availing such services in the Punjab. 4) Where rendering of a taxable service originates from the Punjab but terminates outside Pakistan, such person shall be required to pay tax on such service to the government. 5) Where a taxable service originates from outside Pakistan but is received or terminates in the Punjab, the recipient of such service shall be liable to pay the tax to the government. 6) The persons who are required to pay the tax to the government in terms of subsections (1), (2), (3), (4) and (5) shall be liable to registration for purposes of this Act and the rules, sources said while quoting the Punjab sales at on services act 2012."

Sources said that with the implementation of the act, every resident of Punjab who ever rendered services in any province, has to deposit sales tax on services at PRA.

Earlier Sindh had decided to take up this issue with Federal government but it is waiting for the result of the negotiations between the officials of tax collection bodies of both the provinces. Chairman SRB Shakaib A. Qureshi has apprised Chief Minister Sindh Qaim Ali Shah of the development during a meeting at CM House a few days back, they said.

If the officials of PRA failed to address the reservations of Sindh, the provincial government would write a letter to Federal Finance Minister initially, followed by a letter to Prime Minister Raja Pervez Ashraf in this regard, they added.