The Sindh government believes that Centre is still creating hurdles in collecting Sales Tax on Services (SToS) because Federal Board of Revenue (FBR) has not issued notification of withdrawal from Federal Excise Duty (FED) despite passage of more than two and half months, Business Recorder learnt.
FBR had to withdraw from FED because of the fact that the subject has been devolved to the province after being duly recognised in 18th Constitutional Amendment and 7th NFC Award. Following this, Sindh government had established its own tax-collection-body with the name of Sindh Revenue Board (SRB) and made Sindh Sales Tax on Services Act 2011 in order to start the work of collection of SToS.
However, SRB has started its work successfully but the matter of non-withdrawal of FED by FBR has created confusion and uncertainty among the large number of taxpayers of certain services about the state of double taxation, sources said. In this regard, a meeting was held in Lahore on September 16, in which SRB's official Mumtaz Ahmed has again asked FBR officials to issue withdrawal notification from FED, sources said.
SRB officials briefed them that SRB is working successfully; it had collected Rs 1.7 billion in the month of July 2011, and enrolled more than 2,800 taxpayer companies and individuals as well, sources said. They told them that SRB team has answered about 4,000 queries of taxpayers and there was no any legal and technical issue during the process of collection of SToS, sources said.
It is pertinent to mention here that many meetings had also been held between the officials of FBR and SRB in Islamabad but the matter has not yet been resolved, sources said. One meeting was held in the month of July 2011, second was on August 2, third was on August 16-17 and fourth meeting was held on September 16 in Lahore, sources informed.
Sources were of the view that FBR is not willing to resolve the issue of FED and deliberately pending the issue under the carpet. They estimated that Sindh might suffer up to Rs 17 billion financial losses during the current financial year if the matter of FED is not resolved, sources informed.
Sindh Chief Minister Syed Qaim Ali Shah had also written a letter to Prime Minister Syed Yousuf Raza Gilani to direct federal-tax-collection-body to issue a notification of withdrawing from the FED. But so far, Federal government has not taken this issue seriously and turned blind eyes towards it, sources said. Sources concluded that one more meeting would be held in Islamabad very soon between the officials of FBR and SRB, in which pending issues including FED would be discussed.