SST withdrawal on cell phone service causes Rs10bn loss to Sindh

KARACHI: The withdrawal of Sindh Sales Tax (SST) on pre-paid and post-paid cellular mobile services by the Supreme Court of Pakistan caused a Rs10 billion loss to the Sindh government.

This was disclosed by Chairman Sindh Revenue Board (SRB) Khalid Mahmood in a meeting held under the chairmanship of Chief Minister Syed Murad Ali Shah here at CM House.

Chairman SRB said that due to withdrawal of SST on pre-paid and post-paid cellular mobile service by Supreme Court of Pakistan caused about a Rs10 billion loss 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 had also caused a Rs3 billion loss to the provincial government.

The chief minister said that he was well aware of the financial conditions of the country; therefore, SRB must be facing problems in achieving the targets. “I am quite satisfied that SRB is showing best performance,” he said.

The chief minister 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 Sindh chief minister said that during 2018-19, no new tax was imposed or enhanced just to provide a space to the businesses in tight economic conditions, despite the fact that SRB was going to achieve its revenue collection target.

This he said while talking to Chairman Sindh Revenue Board (SRB) Khalid Mahmood who presented him annual report of 2017-18.

The report says that 2017-18 has been significant in several respects. SRB met the target of Rs100 billion, posting an increase of 27 percent year on year. This include collection of Rs8 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 chairman SRB in his report says that standard rate of sales tax had been maintained at 13 percent during the year which was 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.

According to annual report, telecommunication, ports & operators, banks, insurance executions and franchise services remained major contributors. Sizeable growth was posted by other services, including business support and labor & manpower.

Top 10 sectors contributed 57 percent of the total collection compared with 63 percent last year. Consistent effort is 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.

The chief minister 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 Rs120 billion set for the year 2018-19 becomes a daunting task given, in particular, the heightening challenge of litigation.

FINANCIAL POSITION OF SINDH:

Meanwhile, the chief minister presided over another meeting of the finance department to assess the  financial position of the provincial government.

According to the finance department as per budget estimates, the federal government has to transfer Rs605.3 billion during the current financial year. The 10-months estimates comes to Rs504.4 billion, but they had transferred only Rs380 billion to Sindh government. This shows a shortfall of Rs123.5 billion.

The chief minister decided to curtail non-development expenditures and axed releases to slow moving on-going development schemes so that the schemes going on at fast track could be completed. He also directed finance department to release budget to the essential services.