Karachi Tax Bar Association (KTBA) has expressed concerns over the implementation of Sindh Sales Tax Act 2011 in haphazard manner. In a statement, issued here on Saturday, KTBA said the same is going to be implemented without proper awareness and education of the taxpayers, which is always needed in case of fiscal laws.
A comparative analysis of the taxability of services revealed that there are several services, which have now become taxable at the rate of 16 percent in Sindh but such services are not taxable in other provinces. Islamabad Capital Territory, also, has not brought these services in the ambit of taxable services; therefore the taxable services should be at par with other provinces. However, there are several issues in the implementation of the Sindh Sales Tax Services Act, 2011. The issues, which required to be clarified by the competent authority, are as follows:
--- Notification for transfer of services which were initially taxed under Federal Excise Act, 2005 and now are appearing in schedule II of SSTSA 2011
--- Gazette copy of Rules must be available to the taxpayers
--- Definition of Market value of supply should be restricted otherwise it will lead to misuse of discretionary power.
--- Definition of resident should be rationalised so that cannot be misused between the resident of different provinces.
--- Charge-ability of franchise fee must be removed from the law, as the same is taxable under Sales Tax Act 1990.
--- The implementation of Sindh Sales Tax on Service Act 2011 must be defer for 90 days and no additional tax/default surcharge and penalty shall be charged for till June 2012 for any discrepancy or offence if the actual tax liability is paid.
--- Any order passed by the Tribunal ex-party must be on merits as the same is provided under the other tax laws.
--- Section 57 needs to be amended as sections mentioned in this section are not relevant as no orders are required to be passed in these sections.
--- Mechanism of input adjustment in case of tax paid in other province need to be notified.
--- Rate on Sales Tax on Services must be reduced from 16 per cent to 7 per cent.
--- In case of tax payer having income liable to be tax and as per Provincial levy and Federal levy, no mechanism has been notified for multiple return filers.
The release said the provincial government, by implementing the Sales Tax on Services without considering the proper implication of the said law, is going to commit similar mistake as it was done by the federal government in 1990. It said the KTBA always supports every step towards documentation but the same should be done wisely and carefully to get meaningful results.-PR