The Khyber Pakhtunkhwa Revenue Authority, set up last week, will start collecting sales tax on services and receive returns from August 15. The KP Sales Tax on Services Act 2013, enacted earlier, authorises the provincial government to administer the sales tax on services in the province. The KP Sales Tax Ordinance 2000 was repealed. The authority will follow the Federal Board of Revenue (FBR) rules until it formulates its own rules. While the sales tax on services is passed on to the end consumers, the government has the power to exempt any person or sector from the levy under the Act. KP turned out to be the third province in a row, after Sindh and Punjab, to establish its own authority for the collection of sales tax on services, which was devolved to provinces after the 18th amendment in April 2010. Sindh took the lead from July 1, 2011, followed by Punjab from July 2012. In both cases, the collection of sales tax on services witnessed a robust growth and yielded additional revenue for these provinces. Their collections were a marked improvement over the FBR’s performance. To begin with, the KP government has kept the coverage only to the 14 categories of services that were covered under the repealed ordinance of 2000. These services are hotels, clubs, caterers, advertisements on TV and radio (including cable TV), customs agents, ship handlers, stevedores, telecommunication, insurance and re-insurance, banking companies, non-banking financial institutions, stock brokers, shipping agents and courier services. Sales tax on these services was earlier collected by the FBR for the KP government.
Posted on: Mon, 12 Aug 2013 19:52:22 +0000
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