The Sindh Revenue Board (SRB) has already given its inputs to Federal Board of Revenue (FBR) in writing regarding the issues which would be discussed in a meeting, scheduled to be held on 16th August 2011 at FBR House Islamabad.
Official sources told Business Recorder on Saturday that SRB has provided its opinion about those issues which have been raised with FBR through a letter and these issues had also been discussed in a last meeting between the officials of FBR and SRB, held in the first week of August 2011.
Sources claimed that SRB is well aware of all the issues and has the solutions as well, but these issues would be more clarified with the mutual discussion and clarification would likely be issued by the FBR soon after the said meeting. Many of them are the questions of taxpayers and SRB is willing to resolve these issues with mutual discussion with FBR as the taxpayer could continue their practice of paying the tax with relax-mind, sources added.
According to documents available with Business Recorder, the first issue which was raised with FBR was the Head office at Lahore and outlets all over the country; major portion of business (service providing/rendering) is at Sindh. All purchases where input can be claimed has been made at Lahore. What will be the position about input tax adjustment on the invoices of purchases from Lahore against the service providers in jurisdiction of Sindh for which the return has been filed with SRB?
The SRB itself provided the solution of above-mentioned issue to FBR on same letter that input tax adjustment is admissible under section 15 read with rule 22 unless it is specifically disallowed under the laws/rules. Regarding purchases at Lahore same would be apportioned accordance with its use/consumption and its admissibility against output made in Sindh.
Second issue raised by SRB was regarding the filing of return of sales tax on services, letter mentioned that where return of sales tax on services is filed with SRB with entire activities in Sindh, would FBR require filing or returns, because RPs were earlier registered with the FBR.
SRB in its input stated that where the RPs activities exclusively related to the providing and rendering of service in Sindh and file return with SRB, PRAL may provide interfacing data of the return filed with the SRB and reflects such data in the FBR master index so that ATL status of the RP is not disturbed and taxpayers do not face any difficulty.
Third issue, if RP files return with SRB and also files return with FBR for services provided in any of the three provinces or ICT, how the FBR would reconcile figures with the PRAL? SRB in its input/solution stated in same letter that a mechanism would be devised in this regard. PRAL has to be taken on board to develop interface between SRB and FBR so that figures are available at FBR and SRB level for reconciliation.
The Fourth issue, where RP is involved in multiple activities, a separate return for Sindh service would be filed, and for goods with the FBR, how the statistics would be reconciled by the FBR? Solution furnished above for the third issue is also applied for this fourth issue as well, the letter added.
The fifth issue was about the sales tax and income tax returns/statements reconciliation. The SRB in its reply mentioned that sales tax return filed in the provinces and with the FBR for the relevant period, may be taken in to account for the purposes of comparison and calculation, and the PRAL may provide interface of such data.
Sixth issue was whether SRB would give input adjustment of the services. The SRB provided the answer that input adjustments shall be given by SRB, in accordance with section 15 and rule 22 to the extent for the goods or services are used or consumed in respect of tax on goods and services.
Seventh issue was purchase of fixed assets by registered persons. How should Sindh verify and co-ordinate with FBR to allow the input tax claim? How much input credit be given by the SRB, should it be proportionate basis? The SRB stated in this regard in same letter that it would be allowed on proportionate basis for goods and services actually utilised in Sindh by RPs outlets and purchased after 1st July 2001.
Eight, What about pending refunds and input adjustments/ credit? The SRB furnished solution that the process was initiated prior to the Sindh enactment of Sales tax on services Act 2011, it should be completed by the FBR. The Ninth issue was, about those service providers having countrywide jurisdiction, registered outside Sindh province, will have to file two returns, one with FBR and one with SRB. FBR should provide provision in its return for reflecting the SRB filed return data and inputs/output values.
The SRB mentioned in this connection that since the SRB registered persons which have countrywide operations also file at FBR, they will require the provision in the National Sales Tax Return for showing the component they have declared at SRB, as the interfacing of data for national results should be available by the PRAL. However, the FBR will not process the services related tax assessments or data or tax collection in respect of jurisdiction of change collection remains with the SRB. Service related data in such matters will be only for the purpose of data comparison or the data bank.
SRB has also raised more issues with FBR that SRB and FBR should share the filer's data w.r.t to ATL status listing of their agents after return filing with SRB. Whether, FBR would give adjustment of input sales tax paid on the services, in Sindh and claimed against output tax on goods.
The remaining issues, mentioned in said letter, were regarding the withdrawal of FED on services by the FBR, directives would be issued to Telecommunication service providers by the FBR to file their returns to SRB as per Sindh sales tax on service act 2011, clearing house cell would be established to discuss the issues between the SRB and FBR and the deputation of FBR officers in SRB and SRB should make arrangement with FBR for sharing the filer data (of service providers) for the provision of input adjustments of their clients at FBR. The SRB has also provided inputs to FBR about above-mentioned issues in same letter, sources added.