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Sindh Revenue Board sorts out major issues with FBR

KARACHI : The Sindh Revenue Board has sorted out major issues with Federal Board of Revenue on the matter of services taxation in Sindh.

This was stated by Nazar Hussain Mehar, Chairman, Sindh Revenue Board, while addressing a workshop organised by Southern Regional Committee (SRC) of Institute of Chartered Accountants of Pakistan (ICAP) on Sindh Sales Tax on Services Act 2011 (SSTSA) at ICAP House, Karachi.
He informed the audience that in a recent meeting with Chairman FBR and his team, it has been decided that SRB shall authorise FBR to access its database; thus no such taxpayer, who has started filing tax returns with SRB, will be classified as Non Active Taxpayer by FBR.

The provincial top tax official also talked about a number of issues / questions raised by the participants which mostly related to withdrawal of excise duty on services, withholding tax, rules, returns, etc. and said that SRB is working closely with all stakeholders in better administration of sales tax on services and will address all distortions in due course of time.

He highly appreciated the initiative taken by ICAP in organising a full day workshop for its members and business community and was of the view that SRB and ICAP would jointly work together for facilitation of taxpayers conducting business in Sindh and paying sales tax on services.
Earlier, Asif Kasbati, Director, A.F.Ferguson & Co., spoke on scope of services tax. His presentation was focused towards taxable services, economic activity and tax exemptions granted under the statute.  Saud-ul-Hassan, Senior Manager, Ernst & Young Ford Rhodes Sidat Hyder gave a detailed outlook on mechanism of determination of tax liability. In his presentation, Ghazanfar Siddiqui, Manager, Shekha & Mufti gave an insight of the withholding tax provisions of the Services Tax Regime.

He also highlighted various anomalies vis.a.vis federal and provincial rules for withholding sales tax. The legal provisions relating to registration, book keeping & audit was dilated upon by Mazhar Saleem Shah, Senior Manager, KPMG Taseer Hadi & Co.
In an impressive presentation, Mr. Mumtaz Shaikh, Member (Legal), Sindh Revenue Board spoke at length about low tax to GDP ratio and constitutional position of sales tax on services. He explained the salient features of NFC award which empowered provinces to levy sales tax on services rendered from their respective geographical territories. He informed the audiences that upto date 5,000 queries have been resolved by SRB while tax worth Rs. 6 Billion has been deposited in the account of SRB by service providers.
In his concluding speech, Mr. Adnan Mufti FCA, Chairman ICAP Southern Regional Committee highlighted various anomalous provisions in SSTSA and requested the SRB to address them to avoid litigation with taxpayers.

In particular, he highlighted towards the definition of resident vs. non resident, value of supply, overlapping provisions of withholding tax, paid basis of input tax adjustments and refund of sales tax which, he said, were creating problems for the service providers based in Sindh. Mr. Mufti also called for constitution of valuation committee to tackle potential issues regarding under assessment of services.
The workshop was largely attended by members of ICAP & ICMAP, lawyers, businessmen and individuals handling tax functions in their organisations.

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