The Friends of Business and Economic Reforms (FEBR) has demanded harmonization between Federal Board of Revenue (FBR) and Punjab Revenue Authority (PRA) with a view for simplification of tax returns, reducing burden of filing extra returns from the taxpayers.
FEBR President Kashif Anwar submitted recommendations to Punjab Revenue Authority (PRA) Chairman Zain-ul-Abidin Sahi to highlight the problems faced by the persons registered with the PRA as service provider. In his recommendation letter, he demanded a single return which enables the taxpayers to claim the input of sales tax paid against goods sold and services retired in any of the provinces.
"Currently, in order to claim the input tax of services rendered in other provinces, an individual or company has to get themselves registered with revenue authority in that province to claim the input. Otherwise, they have to forgo the tax which is a financial burden for that business," he said.
He also requested to keep the sales tax rate of services align with the sales tax rate of other provinces on the lower side. The sales tax rate on services in Punjab is higher than that of Sindh which gives them an edge over the service providers of Punjab, he said and added that it also stimulates Punjab service providers to shift their business to those provinces where tax rate is low which is again a revenue loss of Punjab, he said.
Furthermore, a person registered in Provincial Revenue Departments and FBR has to file separate sales tax monthly returns of province and FBR, a single return will reduce their burden and save them from penalties in case of late filing and non-filing, he added.
Kashif Anwar said in recommendations that in case of human resource provider companies, they act as a middleman, only provide human resource to their clients and charge a nominal amount being their "service charges" for the services rendered as per agreed contract.
"It is demanded to pay sales tax on the "service charges" and as well as on the reimbursement of actual expenses being incurred towards salary / wages / EOBI / Education Cess / Income Tax deducted and paid to provincial and federal government. In other words, PRA enforce human resource companies to pay sales tax on the gross amount including the perks of the individuals and the "service charges" which is unjustifiable, being the double taxation and instigate the tax payers to go for litigation," he said.
It is recommended in this regard to charge sales tax on the "service charges" received by the companies and not on the gross amount of the bill to reduce their financial burden and save this sector from closure which is a great source of providing employment to the masses.
He said that 0.9 percent Punjab Infrastructural Development Cess (PIDC) is a double tax for importers who clear their consignments in Punjab. "Initially, the importers have to pay Excise tax in Sindh province when the goods reach at Karachi port. Then again they have to pay 0.9 percent PIDC when they clear their consignments in Punjab. It makes the imported material costlier and is one of the reasons that importers of Punjab desire to clear their consignments in Sindh which is again a revenue loss of our province. It is recommended that this tax should be levied at the time of clearance of consignment or charged in any one of the province," he added.
The FEBR President said that it is a bitter reality that besides low literacy rate of our country which is a major obstacle in the expansion of tax base, political instability, inconsistent policies of the government, penalties, fines, punishments and unlimited powers to tax collectors given by law also refrain unregistered persons to come into the tax net. "However, it is our mutual struggle as a nation to provide facilitation to taxpayers, convince non registered persons to get register, file their returns and contribute their due share to enhance our low tax to GDP rate," he said.
He called for early re-dress of the businessmen issues through consultation to bring a soft image of the PRA. It will be considered a positive step towards ease of doing business and reduce the burden of unnecessary taxes from the entrepreneurs, he added.
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