Cellular phone services: Sindh government incurs Rs 10 billion loss due to SST withdrawal by SC

The withdrawal of Sindh Sales Tax (SST) on pre-paid and post-paid cellular phone services by the Supreme Court of Pakistan caused Rs 10 billion loss to the provincial government. Sindh Revenue Board (SRB) chairman Khalid Mahmood disclosed this in a meeting at the CM House where Chief Minister Syed Murad Ali Shah presided over on Monday.
The SRB chairman said that due to withdrawal of SST on pre-paid and post-paid cellular mobile service by Supreme Court of Pakistan, the loss to the tune of about Rs 10 billion has been calculated, so far. He also pointed out that due to depressed economic conditions during the current financial year a reduction in corporate and government advertisements has also caused a loss amounting Rs 3 billion to Sindh government.
The chief minister said he was well aware of the financial conditions of the country; therefore, the SRB must be facing problems in achieving the targets. "I am quite satisfied that the SRB is showing the best performance," he said.
He reviewed the collection of SRB, Excise & Taxation, Board of Revenue, Energy Department, Mines & Mineral departments. All the departments have almost achieved their targets and by the end of financial year they would successfully achieve them.
The SRB chairman Khalid Mahmood presented him annual report of 2017-18 that stated that 2017-18 had been significant in several respects. The SRB met the target of Rs 100 billion, posting an increase of 27 percent year-on-year. This include collection of Rs 8 billion for Sindh Workers Welfare Fund (WWF) and Sindh companies profits (Workers Participation) Fund that SRB has been mandated to collect for the province.
The SRB report stated that standard rate of sales tax has been maintained at 13 percent during the year which is the lowest in any tax domain in the country, whether federal or provincial.
The collection effort has met challenges from the slow economic recovery, exacerbated by the impact of political transition in the last quarter of the year. The Sindh government's consistent support and taxpayers trust played an equally vital role in witnessing a growth of 27 percent.
It noted that telecommunication, ports & operators, banks, insurance executions and franchise services remained major contributors. Sizeable growth was posted by other services, including business support and labour and manpower. Top ten sectors contributed 57 percent of the total collection compared with 63 percent last year. It emphasised consistent effort was needed to tap the services hitherto escaping enforcement. The renewed emphasis by national and subnational tax domains on documented transactions is likely to ameliorate the task.
Chief Minister Syed Murad Ali Shah said that the Sindh government took a policy decision to neither impose new taxes nor enhance the existing for the year 2018-19 providing a space to the businesses in tight economic conditions. The good will of this decision envisaged apart, the target of Rs 120 billion set for the year 2018-19 becomes a daunting task given, in particular, the heightening challenge of litigation.