From 2011 till to date: notices issued to collect FED from KSE members

Federal Board of Revenue (FBR) has started issuing notices to the members of Karachi Stocks Exchange (KSE) to collect Federal Excise Duty (FED) from 2011 till to date; raising disenchantment among them over double taxation; it was learnt here on Tuesday. According to sources, Shahid Hussain Asad, member tax policy during recent visit to Regional Tax Office (RTO) had discussed the said issue with the officials in RTO-I and advised not to collect FED from stock brokers, which he termed as double taxation. He also opined that it may attract a legal action against the department.
However, officials in RTO-I remained unconvinced and rationalised that although the tax on services had been transferred to the provinces after 18th amendment, the provision regarding the collection of FED from the members of KSE is extant. Therefore, the exercise being practised by RTO-I to collect FED from stock brokers is legally justified.
Consequently, the notices are being issued to squeeze the necks of the members of KSE for collecting FED from 2011 till to date, sources maintained. When the issue was discussed with a high FBR official in Islamabad, he confirmed that issues related to tax on services were still unresolved and both federal and provincial revenue authorities have to sit together to find best way out to facilitate the taxpayers. Replying to a question, he said that the FBR had powers to collect FED from KSE members as provision in this regard was not omitted from the Act.
Meanwhile, the KSE Stock Brokers Association said that their members were receiving notices to pay FED from 2011 till to date, which due to public pronouncement of the FBR was never collected. The association said that they had explained the chief commissioner RTO-I and the Commissioner Zone I that the notices for FED was illegal and unconstitutional as members were paying sales tax on services to the SRB after 18th Amendment. Besides the said action by RTO-I is tantamount to double taxation, which increases the tax on services to 34 per cent. The association has also urged the Federal Finance Minister to look into the matter and take remedial measures to avoid said action against their members.