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Sindh asks centre to withdraw some clauses of Finance Bill

Sindh asks centre to withdraw some clauses of Finance Bill

KARACHI: Sindh has urged the centre to withdraw certain clauses of the Finance Bill as, according to the provincial government, they bar it from collecting provincial sales tax from non-filers of income tax returns.

In a communication to Finance Minister Ishaq Dar, Sindh Finance Minister Syed Murad Ali Shah has warned that the provincial government would not accept any such dictation which is aimed at stopping collection of sales tax from taxpayers who did not file income tax returns.

He said the federal government had failed to gain trust of the people of smaller provinces, particularly Sindh, and the business community by ignoring them in the Finance Bill on one hand and on the other, by paying no heed to Sindh’s concern over delay in release of funds from its NFC Award share.

The federal government’s tactful manoeuvres in the bill would lead to retrenchments in Sindh, he added.

Mr Shah said Clause 3(1)(iii) of the Finance Bill proposed omission of the “provincial sales tax on services” as an input for the purpose of credit/adjustment against federal sales tax on goods, describing it as a significant departure from the long-practised value-added concept of sales taxation.

He said the Sindh government had taken a serious note of provisions of Clauses 3(1)(iii) and 5(45) of the Finance Bill as they were aimed at not only impinging upon the provincial domain of sales taxation on services but would also cause great anxiety and discomfort for the general body of taxpayers.

The provincial finance minister approached the federal finance minister through a letter on June 1, advising the latter not to take any decision without consulting the provinces.

He also drew the federal finance minister’s attention to a similar situation created by the Finance Bill, 2013, which witnessed litigation in the Sindh High Court and Lahore High Court until the matter was resolved through FBR’s notification No. SRB No.212(I)/2014. However, it appears that the letter has gone unheeded.

Expressing concern over certain other clauses of the Finance Bill, 2016, the Sindh government said that Clause 5(45) of the bill required that Provincial Revenue Authority shall collect advance income tax from such income tax non-filers who were liable to pay provincial sales tax on services. It also required that the Provincial Revenue Authority shall not accept the mandatory Provincial Sales Tax Returns unless the advance income tax had been collected and deposited.

The Sindh government feels that this provision is highly derogatory to the provincial authority as it stops collection of provincial sales tax if a person is a non-filer of income tax returns.

Mr Shah said the Sindh government had taken a strong exception to the aforesaid two proposals. The province expected the federation to respect devolutions made through the 18th Amendment (specifically in relation to Entry No.49 of Part-I of the Fourth Schedule) and Article 8 of the 7th NFC Award of 2010. The Sindh government also expected that status-quo, in this regard, shall be maintained until issue was deliberated at the meetings of finance ministers or NFC or CCI, he added.

The senior minister urged the federal finance minister to immediately intervene in the matter in the interest of taxpayers and for the sake of harmonious relationship between the federation and Sindh.

Published in Dawn, June 6th, 2016

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