Cross-adjustment of ST: FBR, SRB and PRA ink MoUs March 14, 2014 RECORDER REPORT 0 CommentsE-mailPrintPDF The Federal Board of Revenue (FBR), Sindh Revenue Board (SRB) and Punjab Revenue Authority (PRA) Thursday signed Memorandum of Understandings (MoUs) on the cross-adjustment of sales tax on goods and services levied by the federal and provincial governments. A signing ceremony was held at the FBR House here on Friday in the presence of Finance Minister Ishaq Dar. The MoUs were signed by Chairman FBR Tariq Bajwa, Chairperson Punjab Revenue Authority Iftikhar Qutab and Chairman Sindh Revenue Board Tashfeen Khalid Niaz. With the signing of these MoUs, a long outstanding issue regarding cross-adjustment of sales tax on goods and services levied by the Federal and Provincial Governments has been resolved. Chairman FBR signed the MoU regarding adjustment of sales tax on services against sales tax on supplied goods with Sindh Revenue Board and Punjab Revenue Authority. When contacted, Arshad Shehzad, a prominent sales tax expert explained that a prolonged dispute over inter-federal/provincial input tax adjustment has now been settled amicably after mutual understanding and signing of MoU between the Federal Board of Revenue and respective sales tax collecting authorities of provincial government. Details revealed, after the 18th Amendment, Federal government delegated/transferred powers for collection and levy of sales tax on services to the respective provincial governments. Sindh was the first province which formed an independent revenue collection body and legislated the provincial Sales Tax Act along with Sindh Finance Bill 2011. Later on, Punjab and Khyber Pakhtunkhwa governments followed suit and established their sales tax authorities in 2012 and 2013, respectively. In spite of this revolutionary development, federal and provincial governments were unable to enlarge mutual understanding for intra federal/provincial input tax adjustment. The issue was debated threadbare among the highest sales tax collection authorities over last couple of years and settled today with the singing of MoU. Arshad Shehzad termed the MoU as a landmark achievement. He said sales tax on services is a new subject in Pakistan. After provincial autonomy and independent administration multi-dimensional and complex administrative, jurisdictional and legal issues arose between federal and provincial governments. Intra federal/provincial input adjustment was one of it with serious difference of opinion among the stakeholders. He said though details has to be released after issuance of notifications, expectedly one thing is pretty much clear that taxpayer would now be able to claim input tax adjustment in sales tax mode without any hassle through filing of sales tax returns in their respective jurisdictions of FBR, SRB, PRA or KPRA. Electronic link among Federal and provincial boards would be established for smooth and real time basis cross-matching of sales tax input and output. This is one of the major problems which caused non-adjustment of sales tax paid on services to taxpayers registered with FBR. He informed that due to this single issue more than 126 petitioners approached Sindh High Court alone, the numbers are increasing after each passing day. The petitioner taxpayers are filing manual sales tax return since last couple of months after securing interim orders from the honourable High Courts. The amicable settlement of the issue by the government entails ultimate disposal of all these petitions. Arshad Shehzad said since there appears a principle understanding among the federal and provincial government, they may specifically notify with retrospective effect to avoid unnecessary litigation as well as to facilitate the taxpayers. He further says in that case one time condonation under section 74 would require for reporting of all such unreported purchases since under section 7 of the Sales Tax Act 1990 such reporting of purchases could only be done with six tax periods whereas this issue is looming over more than 8 months. The agreed principle for intra sales tax adjustment between Federal and provincial government is based on transfer of revenue to the extent of actual amount of adjustment claimed by taxpayers in sales tax return filed either with the FBR or SRB/PRA/KPRA. The same would be monitored and verified by the committee consisting the Federal and provincial authorities hence there remain no dispute / concern for excessive or lesser distribution of sales tax collection to any stakeholder, therefore the agreement can also be termed fair and equitable, Arshad Shehzad, concluded. Copyright Business Recorder, 2014
Posted on: Fri, 14 Mar 2014 07:57:05 +0000
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