With clear instructions from the Finance Ministry, the Sindh government has finalised arrangements to collect the general sales tax (GST) on services in the province after the upcoming budget of 2011-12, sources told Pakistan Today on Tuesday.
Under the National Finance Commission (NFC ) Award, all the provinces have been empowered to collect sales tax on services as the collection of tax on services by the centre, according to the sources, was sheer injustice to the provinces. The Sindh government, last year, was restrained from collecting the GST on services after the Finance Ministry had asked it to delay the process of collecting the tax for a period of three months until October 2010, said the sources.
At that time, the centre’s sudden move had caused shock to the Sindh authorities and it was said that the move would deprive the province of its fundamental and constitutional right. It was also considered a violation of the recently announced NFC Award, they said. But recently, the federal government forwarded a letter to Sindh’s Finance Department asking it to complete the process and start GST collection after the forthcoming budget, the sources said.
Earlier, the centre wanted to impose the value-added tax (VAT) to ensure early release of tranche by International Monetary Fund (IMF), the sources said. However, Sindh and Punjab were against the new tax system, hence the transfer of GST collection powers to provinces was delayed, they added. The Sindh government had decided to get two bills – Sindh Revenue Board Bill and GST on Services – they said, adding that only the bill for the establishment of Sindh Revenue Board was approved in Sindh Assembly’s recent session while the other bill was deferred.
The sources said that Sindh’s Finance Bill would be approved before the announcement of the provincial budget for 2011-12. After the approval of the bill, Sindh would start collecting the GST on services from July 1. The structure of the Sindh Revenue Board was finalised a few months ago and it had started working on gathering the data for GST on services.
It had approached the Federal Board of Revenue to share the data with the provincial authorities in this regard.
