With the initial target of tax collection on various services set at Rs 25 billion in the next financial year, the Sindh government would start collecting levies from as many as 4,500 taxpaying firms in the province from July 1, 2011 and the companies providing telecommunications and internet services are expected to pay up to Rs 15.75 billion.
After a consensus was reached on the 7th National Finance Commission Award, the provinces were given the rights to collect taxes on services last year; however, the Sindh government was restrained from doing so for an initial period of three months, starting from July 1, 2010, which was arbitrarily delayed for the remaining period as well. The government has been fighting this case since.
Well-placed sources in the Sindh Finance Department told Pakistan Today that the tax collection body – Sindh Revenue Board – has also worked out the details of the taxpaying companies, after the Federal Board of Revenue (FBR) recently shared the data of sales tax on services.
Financial experts of the Sindh government have too worked out the tax collection target from various firms operating in the province and set the initial tax collection target at Rs 25 billion that would gradually be increased.
According to initial estimates, the province would collect at least Rs 1 billion sales tax from banking and non-banking financial companies in the financial year 2011-12.
The break up reveals sales tax collection of Rs 750 million each from services provided by hotels, restaurants, marriage halls; insurance companies; and persons authorised to transact money.
Moreover, the Sindh government expects to earn Rs 500 million each from taxes collected on services provided by hiring, leasing and purchasing companies; port and terminal operators; professional consultants; property developers and promoters; specialised agencies; specified persons or businesses; and specialised workshops.
Additionally, around Rs 250 million each will be collected in taxes from services provided by architects, town planners and interior decorators; persons engaged in contractual services; courier and logistic companies; event managers and organisers; laundries and dry cleaners; medical diagnostic laboratories; pathological laboratories; beauty parlours; and services provided for specified fields or purposes.
At least, Rs 100 million each are to be collected in sales tax on services from non-banking sources such as advances and loans; brokerage; commodity leasing; equipment leasing; financial leasing; foreign exchange transactions; guarantees; letters of credit; and Musharaka financing.