The Federal Board of Revenue (FBR) is expected to meet officials of Punjab Revenue Authority (PRA) here on Saturday (June 11) on the issue of disallowing input tax adjustment through Finance Bill 2016. Sources told Business Recorder here on Friday that a delegation of PRA would visit the FBR House on Saturday to discuss implications of Finance Bill 2016 on the provinces. The meeting is part of the negotiations with the provinces on the situation arising out of the Finance Bill 2016.
It is expected that the next meeting would be convened between the FBR and Sindh Revenue Board (SRB) on coming Monday. In budget (2016-17), the right to claim input tax adjustment on provincial sales tax is proposed to be withdrawn in Finance Bill (2016-2017).
A tax expert said that after 18th amendment the powers to collect and levy sales tax on services were delegated to provincial governments, who had made their own revenue collecting authorities. In the absence of harmony of sale tax law between federal and provincial government, the controversies over jurisdiction and interpretation of sales tax law on services were apparent from day one and now it has increased to the new level. By virtue of amendment in section 2(14) of the Federal Sales Tax Act, the Federal government has excluded provincial sales tax levied on services from the scope of input tax and accordingly the taxpayers are no more entitled to seek adjustment of input tax on services in the sales tax returns filed with the federal government. The proposed amendment may have serious repercussion for both the federal and provincial authorities, he added.
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