Where to file ST return: insurance companies, banks seek FBR clarification

The insurance companies and banks have requested the Federal Board of Revenue (FBR) to immediately clarify whether they would file sales tax returns with the FBR or Sindh Revenue Board (SRB), as the SRB is strongly pursuing the service providers to pay provincial sales tax.
An FBR official told Business Recorder here on Wednesday that the insurance companies and banks are confused whether they would have to pay the federal excise duty in value-added tax (VAT) mode or provincial sales tax. In this regard, the insurance companies as well as banks have approached the Board for guidance and clarification. These companies are not clear on the issue about the filing of returns with the FBR or the SRB.
The FBR has asked the taxpayers to maintain status quo till all issues have been resolved between the FBR and the provinces, the FBR official added. In a letter issued to the FBR dated August 10, 2011, the Insurance Association of Pakistan (IAP) has informed the Board that the insurance services till June 30, 2011 were subjected to federal excise duty (FED) at 16 percent. In June 2011, all provincial governments have imposed levy of 16 percent sales tax on insurance services effective July, 2011. The FED levy has not been withdrawn by the Federal Government so far.
The IAP further said that all insurance companies are collecting 16 percent levy which is due to deposit latest by August 15, 2011 in the national exchequer. The FBR should immediately clarify whether the amounts should be deposited in the account of federal government or provincial government.
The Insurance Association of Pakistan has further stated that the Sindh Revenue Board is very actively pursuing the insurance companies to get enrolled, which means that the tax charged by the insurance companies in the province of Sindh be deposited for credit in provincial government account. "As the matter is of utmost urgency, please advise on urgent basis with copy to the provincial governments". The FBR should advise the insurance companies on this matter as the last date of deposit of sales tax is August 15, 2011, the association added.