GST on services: provincial budgets to define FBR power, says Salman

Federal Board of Revenue Chairman Salman Siddiq said on Monday the passage of provincial budgets (2011-12) would clear the situation about the empowerment of the FBR in relation to collection of GST on services involving input tax adjustment.
The top tax manager was responding to a question whether FBR will collect GST on services on behalf of provinces from July 1, 2011, during a press conference held at the FBR Headquarters. "Let the provincial governments announce the GST on services in their budgets, which would clear the situation," he added.
FBR Chairman further stated that the GST on services was the domain of the provinces and keeping in view the intention of Punjab, KP and Balochistan the FBR would be asked to collect GST on services on their behalf till the time they would be ready to collect it. On telecommunication services, he said, the cellular companies would distribute due share of taxes on the basis of origin of the call and then some money would be deposited into the FBR system to clear input adjustments.
He added that the provinces especially Sindh would impose GST on those services which don''t involve any input tax adjustment. Other three provinces have already agreed to allow the FBR to collect GST on services and it is the intention to wait for the outcome of the provincial budgets. The FBR can collect GST on services on behalf of the provinces where input tax adjustment is involved.
To another question, he said that the tax proposals prepared by the Revenue Advisory Council but not included in the budget would not go waste and the Council would continue guiding FBR on taxation matters and reforms. From July 1, 2011, we will re-convene the meeting of the RAC, which is an important forum on policy matters. The meetings of the RAC would be a continuous process for obtaining input on tax policy issues. If some proposals of the business and trade have not been accepted, it does not mean that the same have been permanently dropped. The proposals would be again considered and input and guidance of the RAC would be obtained on regular basis.
The FBR Chairman said that FBR is finalising risk-based parameters of for selection of returns for audit on the basis of tax profiles of the taxpayers. The risk-based criteria would be published for the taxpayers. To another query, FBR Chairman said that the collection of the Capital Gain Tax on stock market would be visible in September when income tax returns would be filed. The rules of the CGT were not timely notified and it is necessary that the rules be notified along with the enforcement of the any new law. Similarly, corporate sector would file its returns by December. Without analysing final results of the CGT on stock market, a sudden policy shift in the shape of allowing any exemption on CGT is not possible for the government, he added.