The Federal Board of Revenue (FBR) has informed the National Finance Commission (NFC) that the federal government is trying to take provinces into confidence with the objective to reach a consensus on imposition of sales tax on services through necessary amendments in the Provincial General Sales Tax (GST) laws.
Sources told Business Recorder here on Friday that the FBR has drafted its comments on the implementation of the NFC recommendations. According to the FBR communication to the Finance Division on the NFC recommendations, in order to broaden the tax base, the General Sales Tax Bill, 2010 was introduced in the National Assembly in 2nd week of November, 2010.
"Most of the political parties represented ha opposed the reforms in the sales tax regime proposed through the GST Bill 2010. At the same time, the government is holding talks with all major political parties to reach a consensus on RGST. The federal government is taking provincial governments into confidence with the objective to reach consensus regarding services to be taxed via necessary amendments to the provincial GST laws," it added
The last such meeting was held in Finance Division on January 19, 2011 and the decision was taken that a separate meeting on the issue of RGST will be convened in Finance Division in few weeks, to finalise the remaining issues. The World Bank consultant, who has drafted the RGST law, will be invited to clarify some of the provisions of the draft law. The FBR is currently working on reorganising its workforce as well as restructuring its functions in line with global best practices to achieve efficiency, plug leakages and increase revenue, FBR added.
When contacted, sources said that the issue of GST on certain services including shipping and courier needs to be resolved among provinces. The first issue is to simplify some of the provisions of the GST Bill 2010 as the same are unclear to provincial governments. Secondly, the issue of GST collection on some provincial services has yet to be resolved. The FBR has to invite the original foreign drafters of the GST Bill, who assisted the FBR is finalisation of the new law. This would be instrumental in further simplifying the provincial GST laws.