Sales Tax on Services Bill becomes law

The Sindh Assembly on Saturday passed the Sales Tax on Services (Amendment) Bill, 2011 into law with a view to harmonising the mode of collection of tax on services. Now, Sindh has become the first province to collect tax after the passage of 18th Amendment, which devolved the power to provinces in the country. Previously, the federal government had to collect tax on services and disburse a sizeable amount out of the total accumulation to provinces.
The tax is 16 percent on services. Now, the Sindh government will be able to collect sales tax on services in several categories including insurance, reinsurance, financial, commodity equipment, hire purchase leasing, modaraba and musharika financing, building contractors (water and gas supplies and sanitary works) electrical and mechanical works (air conditioning), multidisciplinary works (turn-key projects) and similar other works.
Moreover, the tax is applicable also on property developers, and promoters, besides services of port operators, airport operators, airport ground and terminal operators. The law also enshrines services provided on construction, management (including funds and assets management services), airport, tracking, security alarms, motels and guest house. In addition, the tax is also applicable on other services not specified elsewhere.
"The Sindh province in the first six months of the current fiscal year collected Rs 11 billion under the sales tax on services," Sindh Law and Parliamentary Affairs Minister, Ayaz Soomro told the House during the assembly session which Speaker Nisar Khohro chaired.
He said federal government had disbursed Rs 4 billion to Sindh province out of the total sales tax on services collection during last fiscal year, adding that after the devolution of tax collection authority, province are better placed in terms of financial resources. He said the government had so far enlisted 3300 taxpayers.
Sindh Information Minister Shazia Mari said tax on services under the new constitutional amendment ensuring the devolution of powers to provinces, making it the provincial affair. She said if any other province did not want to avail the tax collection right it could be its own decision but Sindh province would however avail the constitutional right.
MQM''s parliamentary leader Syed Sardar Ahmad hailed the law, saying that collecting Rs 11 billion in the first six months was a great achievement of the government''s revenue board. He said there had been no problems, which the authorities had faced in the tax collection, so far.
Sindh Education Minister Pir Mazhar-ul-Haq and Culture Minister Sussui Palejo also expressed their views on the law. The House however deferred the consideration of the setting up of the office of ombudsman for the province of Sindh (Amendment) Bill, 2012 for the next Thursday session. Lawmakers participation was thin during the session and at one time the total member of MPs present inside the House was around 32 while the rules say there should be minimum 42 MPs to complete the quorum. The house was adjourned till Tuesday, January 10.