The State Bank of Pakistan (SBP) has proposed uniform rates of sales tax and Federal Excise Duty (FED) under federal and provincial laws. The SBP has pointed out lack of uniformity in FED/Sales Tax Rates & Exemptions given by federal and provincial tax laws.
Presently, different rates of FED/Sales tax are being applied by FBR, PRA, SRB, KPRA and BRA for same type of services received in different territories. Furthermore, exemptions available under different laws are not uniform e.g. a customer is enjoying exemption on same services in one territory; while, the same are made taxable in other territory. Uniformity should be brought in FED/Sales Tax rates being charged and exemptions available under Federal/Provincial Laws. Lack of uniformity in tax rates and exemptions is creating reconciliation problems for customers, SBP added.
Through an amendment in Sales Tax Rules 2006, additional sales tax at rate of 5 % was imposed over and above the sales tax of 17% on electricity and gas bills on unregistered person. This additional sales tax should not be charged to a bank's branch, SBP proposed. The banks are registered person under Sale Tax/FED; however, branches are located across the country. Further, most of the branches are on rented premises where utility connections are in the name of the landlord. Accordingly, bank is treated unregistered person for these premises and additional sales tax is charged, which is against the fact. The banks are burdened with additional tax; therefore, it should not be charges to a bank's branch.