Tussle between FBR, provincial revenue authorities: taxpayers compelled to face spectre of double taxation

A tug of war between Federal Board of Revenue (FBR) and provincial revenue authorities over collection of tax on services is putting excessive financial burden of double taxation on banking, aviation and other service sectors; it was learnt on Thursday. According to sources, FBR is collecting Federal Excise Duty (FED) on the services of banking, aviation, franchise, shipping and other service sectors. However, taxpayers from aforesaid sectors are also forced by the provincial revenue authorities to pay sales tax on services.
They said that FED was imposed on non-fund banking services including all non-interest based services provided or rendered by the banking companies or non-banking financial institutions against a consideration in the form of a fee or commission or charges. However, provincial revenue authorities are also collecting 16 percent sales tax on these services from banking sector.
Similarly, FBR is collecting fixed amount of FED on the tickets of international passengers. Conversely, the airlines are also compelled to pay sales tax on services to the provincial revenue authorities on similar account. Moreover, sources said that franchises, shipping companies and other service sectors were also facing double taxation, due to conflicts between federal and provincial revenue authorities over the collection of tax on services.
Meanwhile, tax experts said that both federal and provincial revenue authorities are reluctant to relinquish its powers of collecting tax on services as if the taxpayers from any of these sectors refuse to pay tax on services to any of the revenue authority then non-compliance notices are issued against them no matter either they have already paid their tax liabilities to the other revenue collecting authority.
The tax experts are of the view that this unending tug of war between FBR and provincial revenue authorities over collection of tax on services was not only putting taxpayers in double taxation regime but also discouraging potential taxpayers to get enrolled in tax departments. Keeping the said issue in view, the tax experts have urged both revenue authorities to develop a consensus on this issue, which would help providing relief to the taxpayers.