Despite all hurdles allegedly created by the federal bureaucracy and the apprehensions of the naysayers, Sindh is all set to start collecting the general sales tax (GST) on services from today; ushering in a new era of tax collection for the province. Reliable sources in the Sindh Revenue Board (SRB) told Pakistan Today that at least 34 branches of the National Bank of Pakistan (NBP) have been authorised to collect the GST on services starting from July 1.
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; advertisements; port-related services, shipping agents, stevedores, ship-management services, freight-forwarding agents, customs agents, ship chandlers, port and terminal operators; property developers, construction services; courier services; contractual workers; banking and non-banking services, insurance, stockbrokers, moneychangers; and franchise services.
Furthermore as a result of devolution, 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. Pursuant to the 7th National Finance Award, the Sindh government had decided to impose, assess and collect sales tax on services and accordingly the SRB Act, 2010 was promulgated on June 24 last year, vide the gazette notification no PAS/Legis-B-12/2010, after due assent from the Sindh Assembly. The law provided for the creation of a board to manage, supervise and take all such actions as necessary for the administration of sales tax on services.
The board had to be responsible for overall policies and general administration of services, while the commissioners have been charged with the task of registration, deregistration, assessment and collection of GST on services. A separate Appellate Forum was also proposed as the forum of commissioner (appeals) to address the tax payers’ grievances.
The board is currently being headed by former federal sports secretary Nazar Hussain Mahar, who is being assisted by four other members; each being the functional head of Operations, Legal Affairs and Coordination, Support Services and Audit, respectively.
Presently, the registered persons (RPs) paying taxes on services to the federal board of revenue (FBR) are doing so in a paperless system virtually. Therefore, the new system has been incorporated with automated registrations, e-filing of tax returns and other statements, including collection of revenue through automated bank transfers, as any failure would be detrimental to the initiation and the eventual success of this venture.
Accordingly, regular information will be furnished through the computerised Management Information System (MIS) to the agencies concerned for example the Accountant General-Sindh, Finance Department, Sindh government, etcetera.
The SRB would maintain a comprehensive database of all RPs, including the nature of their businesses, 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 objects and purposes under the law. Such data would be used for increasing the taxpayer-base and ensure accuracy of information submitted by existing taxpayers and for the financial analyses leading to proper economic assessments, audits, detection of tax evasion and policy decisions.
