FBR, SRB sort out key issues: Joint audit of service providers in Sindh agreed

RECORDER REPORT

ISLAMABAD: The Federal Board of Revenue and Sindh Revenue Board (SRB) mutually sorted out some key issues like input tax adjustment/audit of service providers here on Wednesday and agreed to jointly conduct audit of service providers in Sindh with the help of the experienced tax officials of the FBR.

Sources told Business Recorder here on Wednesday that Chairman SRB Shakaib Qureshi met the FBR Chairman Ali Arshad Hakeem at the FBR House to discuss important issues relating to the services providers in Sindh. This is the first meeting of the newly appointed FBR Chairman which resolved a number of key issues pertaining to the services’ sector of Sindh.

Firstly, the FBR has informed the SRB that the opinion of the Law and Justice Division has been sought on the legal status of the restaurants and hotels. The SRB has asked the FBR to treat the restaurants as service providing units whereas the FBR opined that partially the restaurants should be treated as goods. The FBR has assured the SRB that the legal opinion of the Law and Justice Division would be implemented in its true spirit. If the Law and Justice Division declares the restaurants as services, the FBR will give these units treatment under the prevailing tax laws.

Secondly, both the sides agreed to jointly conduct audit of the service providers of Sindh. As the FBR officials have ample experience of audit, they would assist the tax officials of the SRB in conducting the audit of the service providers of Sindh. The FBR will help the SRB in conducting result oriented audit of the service providers.

Thirdly, both the tax administrations have reassured to exchange the data for broadening of their tax bases and conducting taxpayer’s audit. The FBR has already allowed the SRB to have full access to its data relating to customs and regarding the sales tax matters of service providers.

On the issue of input tax adjustment by the buyers of services obtained from the service providers of SRB, the FBR and the SRB have agreed to provide this adjustment so that the taxpayers throughout the country are facilitated and be able to get the input tax adjustments in their returns as well as in the refund claims.

The meeting between heads of both the tax administrations i.e. FBR and SRB has proved to be very productive which will resolve long outstanding issues of input tax adjustments and refund claims. This mutual cooperation of the tax administrations will help in generating more revenue and plunging the leakages through the joint audit.