The Federal Board of Revenue (FBR) has estimated that its tax collection will suffer an astronomical loss of Rs1 trillion in revenue if it accepts the position of the provincial revenue authorities in the disputed areas of goods and services sales tax collection, including restaurants, the transportation of petroleum products, the production of tolls and the construction business.
According to sources who talked to Business Recorder, the FBR made this claim during the last meeting of the chief Committee of the National Tax Council (NTC), which was held last month within the Finance Division, Islamabad to review progress on the GST harmonization. The chief Committee of the NTC decided to constitute a Technical Committee representing the FBR and therefore the provincial revenue authorities to review and settle disputes within the gray areas.
During the meeting, the FBR Member IR Operations stated that the Board had performed the required calculations and determined that if it were to simply accept the stance of the provincial revenue authorities on these disputed areas, it stood to lose a huge one trillion rupees in revenue generation.
Since the revenue generated by the FBR is ultimately shared between the federation and therefore the provinces under the NFC award, the Board will find yourself severely denting the shares of the smaller federating units (due to insufficient business activity) if it transfers this right to the provinces.
Upon hearing the claim, the chairman Sindh Revenue Board (SRB) proposed that a Technical Committee be found out to review and settle the disputed areas. This proposal was unanimously prescribed by the meeting participants.
The special secretary for the Finance Division suggested that the meeting plan to identify the aforementioned gray areas of dispute and check out to develop an agreement on them.
He stated that as discussed with the FBR, the most gray areas of nuisance tax on goods and services are restaurants, transportation of petroleum products, toll manufacturing, and therefore the construction business.
He added that the most goal was to enhance simple doing business in Pakistan and maximize the complete potential of commercial activities within the nation.
When asked for views on the gathering of nuisance tax on restaurants, the FBR Member IR Operations acknowledged that the harmonization of GST is exclusive to India and Pakistan. In Pakistan, nuisance tax on goods has been assigned to the federal while nuisance tax on services is collected by the provinces.
It was agreed that GST harmonization is critical permanently governance and a conducive business environment. The meeting concluded with agreements that the FBR can start collecting sales tax on construction business at any time, although deeper consideration and debate on the issue of toll production is needed
