SRB, PRA and KPRA make forceful request: FBR declines to suspend operation of new provision in law The Federal Board of Revenue has not agreed to a request of Sindh Revenue Board (SRB), Punjab Revenue Authority (PRA) and Khyber Pakhtunkhwa Revenue Authority (KPRA) to suspend the applicability of new provision in the Sales Tax Act 1990, which disallows input tax adjustment to provinces, till an alternate mechanism is evolved. On the conclusion of the meeting between FBR and SRB, PRA and KPRA at the FBR House on Thursday, sources told Business Recorder that the heads of the SRB/PRA and KPRA requested the FBR to allow input tax adjustment against provincial sales tax laws. In the meantime, the FBR and SRB, PRA and KPRA can jointly work out alternate mechanism to deal with the issue of the input tax adjustment. Till finalisation of the new procedure, the FBR should suspend the operation of the newly-introduced provision in the Sales Tax Act through Finance Act, 2013. Responding to this, sources said the FBR is not ready to suspend the provisions of the Sales Tax Act, 1990 till a new mechanism is devised in consultation with the provincial revenue authorities and boards. However, the board has maintained its stance on the issue of input tax adjustment against provincial sales tax laws as per Finance Act, 2013 under which amendment was made to the definition of provincial sales tax, sources added. Sources said that the provincial revenue authorities and boards have common issues of taxation like input tax adjustment and deletion of certain excisable services from the relevant Schedule of the Federal Excise Act to avoid duplication of taxation on services. When contacted, FBR Chairman Tariq Bajwa told this scribe that the FBR, Sindh Revenue Board (SRB), Punjab Revenue Authority (PRA) and Khyber Pakhtunkhwa Revenue Authority (KPRA) Thursday agreed to jointly workout a mechanism to resolve tax related disputes between federation and provinces particularly denial of input tax adjustment to provinces. After detailed consultations with the heads of the provincial revenue authorities and boards, Tariq Bajwa told Business Recorder at the FBR House that the heads of the SRB, PRA and KPRA have agreed with the federal tax authorities to facilitate service providers in provinces and resolve all issues including disallowing input tax adjustment by the FBR against provincial sales tax laws. The heads of the provincial revenue boards/authorities and the FBR have also agreed to develop a working paper in the next 10-12 days and another meeting would be convened to finalise all such matters in the light of the working paper covering all issues between federation and provinces. The FBR will also play its role in resolving the issues between two provinces or between FBR and provinces, he said. Tariq Bajwa was confident that the FBR and the SRB, PRA and KPRA would develop some new mechanism to resolve the issue of input tax adjustment to the taxpayers registered with the provincial revenue authorities/board. It has also been agreed to jointly take steps to resolve issues of services providers operating in the provinces, the FBR Chairman added. The FBR officials added that the existing definition of input tax in section 2(14) of the Sales Tax Act, 1990 refers to "Provincial Sales Tax", which is further defined in section 2(22A). The previous definition refers to provincial sales tax ordinances which were promulgated in the year 2000, out of which some have been rescinded. Cross-adjustment of input tax between federal and provincial sales tax requires formal agreement between the federation and provinces. Therefore, the definition of Provincial Sales Tax has been amended to enable the government to allow or disallow input tax adjustment against specified provincial sales tax laws through notification. No notification has been issued so far, they added.
Posted on: Fri, 13 Sep 2013 06:14:16 +0000
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