Sindh Consolidated Fund account: Murad approaches Hafeez against 'illegal' deductions by FBR

ISLAMABAD: Sindh Chief Minister Murad Ali Shah has approached Abdul Hafeez Shaikh, Adviser to the Prime Minister on Finance, against unauthorised deductions by the Federal Board of Revenue (FBR) from the Provincial Consolidated Fund account of the Government of Sindh.

In this regard, the Ministry of Finance has received a letter from Murad Ali Shah on the issue of "Sindh Cabinet Decision regarding collection of withholding tax under Section 231B and 234 of the Income Tax Ordinance 2001".

Murad Ali Shah's letter states, "I would like to draw your kind attention towards Excise, Taxation & Narcotics Control Department letter on the subject matter, whereby concerns of the Provincial Cabinet meeting held on Feb 19, 2020 regarding irresponsible attitude of FBR towards reconciliation of unauthorized deductions of Rs8,054.5 million was not only conveyed but the federal tax collecting agency was also asked to respond as to why government of Sindh ET&NC Department should continue collecting the tax, as no consent of the Provisional government as provided under Article 146(1) as reproduced below was ever obtained in this regard:" "146. Power of federation to confer powers etc on provinces, in certain cases:-

(1) Notwithstanding anything contained in the Constitution, the federal government may, with the consent of the government of a Province, entrust either conditionally or unconditionally to that government, or to its officers, functions in relation to any matter to which the executive authority to the federation extends."

The letter said that the Federal Board of Revenue (FBR) has still not responded to the said letter despite lapse of considerable time, it has also failed to fulfil its commitment made during the proceedings of 41th Council of Common Interest (CCI) meeting held on December 23, 2019 to resolve the issue. The Sindh government has been agitating at various fora i.e. Inland Revenue Department and Income Tax Tribunal etc, against unilateral, unjustified, unconstitutional and unauthorized deductions by the FBR from the Provincial Consolidated Fund account of Government of Sindh.

The FBR has deducted Rs861.3 million during 2014-15; Rs6, 127.1 million during 2015-16; Rs294.89 million during 2016-17 on account of withholding tax and Rs76 million during 2016-17 on account of sales tax.

Besides the Excise, Taxation and Narcotics Control Department also claims a refund of Rs695.235 million, which has already been determined by the FBR in respect of excess deductions made by the FBR during the year 2012-13, it stated.

The recent Cabinet meeting has taken a very serious view of this lacklustre behaviour of the FBR, and has asked for discontinuing the collection of WHT on behalf of the FBR by Excise, Taxation & Narcotics Control Department from July 1, 2020.

The Sindh government; therefore, request that the FBR may be directed to make arrangements for collection of this tax from start of new fiscal year i.e. 2020-21, the letter of the Sindh chief minister added.

Copyright Business Recorder, 2020