Daily Times

ISLAMABAD: Differences have surfaced between the federal and the Sindh government on the issue of discontinuation of input tax adjustment on provincial services in the finance bill of 2016-17. The matter remains unsolved.

A meeting of the Senate Standing Committee on Finance was held at the Parliament House on Monday, which was presided over by its chairman Senator Salim Mandviwala . During the meeting the representatives of the federal and Sindh governments opposed each other’s viewpoint on the stopping of tax on provincial services.

Member in land revenue FBR Rehmatullah Khan Wazir said that it was proposed in the budget that all the provinces would act as a withholding agent on behalf of the federation as non filers are getting out of control and to manage them the cooperation of provinces is a must. He told the meeting that Punjab had accepted the role of a withholding agent.

He said that after the 18th Amendment the provinces had made the federation poor, as 57.5 per cent of the revenues goes to the provinces on the second day of every calendar month.

Under the proposed arrangements, the provinces will not accept the sales tax returns from those filers, until they do not submit the income tax return to the FBR.

The chairman Sindh Revenue Board said on the occasion that the transfer of tax adjustment on services to the federal government would be a sheer violation of the 18th Amendment in the constitution.

He said that the federation was robbing the rights of the provinces.

He said that the Sindh Revenue Board was an independent institution which does not fall under the jurisdiction of the provincial government. He told the meeting that the Sindh Revenue Board had some 13000 sales tax payers, from which the SRB had collected about Rs 61 billion as sales tax. The target set is Rs78 billion in the next fiscal year with the addition of 5000 more people in the sales tax net.

Senator Saud Majid said that if the provinces would be made withholding agents, then the people who were paying sales tax, would evade it. He said that a subsidiary company of the FBR, PRAL was collecting the tax instead of the provinces.

“If the FBR shift its responsibility to the provincial revenue boards , then it would also fail like the FBR. As a matter of fact the FBR is putting its failure on the shoulders of the provinces . If this proposal was included in the finance bill then the FBR would succeed, but provinces would fail”, renowned economist Qaiser Bangali added.

Member Custom FBR told the meeting that customs duty had been reduced on 2300 items, whereas one per cent customs duty had been enhanced on 1400 items, in the next budget.