In line with its old tradition, the Federal Board of Revenue (FBR) is reluctant to share taxpayers’ data with the newly-established Sindh Revenue Board (SRB), despite bring approached several times by the provincial authorities.
The FBR had earlier claimed that provinces would not be able to manage collection of general sales tax (GST) on services, however, the performance of the latter, particularly Sindh, has proved it wrong.
Sindh’s tax collecting body has achieved the tax collection target of around Rs 14 billion from July 2011 to February 2012; however, the FBR had managed only Rs 4 billion in the same period last fiscal year, well-placed sources within the SRB told Pakistan Today.
Pursuant to the 7th NFC Award, the Sindh government had decided to impose, assess and collect sales tax on services.
Accordingly the Sindh Revenue Board Act, 2010 was promulgated on June 24, 2010 vide Gazette Notification No: PAS/Legis-B-12/2010 having duly received the assent of the Sindh Assembly.
The act provides for the creation of a board to manage, supervise and take all actions necessary towards the administration of sales tax on services. The board is being headed by Nazar Hussain Mahar, former federal sports secretary, who is being assisted by four members, each being the functional head of operations, legal affairs and coordination, support services and audit.
The board is responsible for the overall policies and general administration of the services, while commissionerates have been charged with the task of registrations, de-registrations, assessments and collection of sales tax on services.
A separate appellate forum has also been proposed i.e., the forum of commissioner (appeals) to address taxpayers’ grievances.
Presently, registered persons paying taxes on services to the FBR are doing so in a practically paperless system. Any regression in this regard would be detrimental to the initiation of and eventual success of this venture. Therefore, the system has been incorporated automated registration, e-filing of all tax returns and other statements including collection of revenue through automated bank transfers.
Besides, the management information system would also be computerised and regular information would be furnished to external agencies.
The SRB would maintain a comprehensive database of all registered persons including their nature of business, taxes paid and other related information in order to generate timely and credible statistics for use in framing sustainable tax policies. The board would create and maintain a data bank containing information from third parties necessary to perform the objects and purposes of the act. The data would be used for increasing the taxpayers’ base and to ensure accuracy of information submitted by existing taxpayers and for the financial analysis leading to proper economic assessments, audits, detection of tax evasion and policy decisions as may be necessary.
The taxable services groups as shown in the Second Schedule to the Sindh Sales Tax on Services Act, 2011 are: telecommunications; hotels, restaurants and clubs; advertisement, port related services, shipping agents, stevedores, ship management services, freight forwarding agents, customs agents and ship chandlers, property developers, courier services, contractual execution of work, banking and non-banking services, insurance, stockbrokers, moneychangers, franchise services, construction services, port and terminal operators.
Furthermore, the scope of activities has been enhanced further by adding capital value tax and collection relating to Workers Welfare Fund and Employees Old Age Benefit Institution as provincially controlled laws as a result of devolution.
After Sindh started collecting tax on the services, it time and again approached FBR authorities asking for taxpayers’ data. However, the FBR has been hesitant to share it with the provincial authorities
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