LAHORE: The Punjab government has asked Federal Finance Minister to release Rs 12.7 billion under cross adjustment of sales tax between federal and provincial taxes.
Reviewing the financial position and budget 2015-16 during a meeting on the first day of new calendar year, Chief Minister Shahbaz Sharif had directed the authorities to take up the issue to the federal finance minister. Later, the Punjab Revenue Authority (PRA) approached FBR for the release of the amount.
Special Assistant to Prime Minister on Revenues Haroon Akhtar Khan has acknowledged that it was lingering issue and recommended to form a high-level committee, consisting of the officials from the federal and provincial governments to resolve this issue amicably.
Haroon Akhtar said that the GST on goods fell under the domain of the federal government under the constitution while GST on services is the jurisdiction of the provincial governments.
Meanwhile, the FBR and Sindh Revenue Board (SRB) are discussing issues for applicability of MoU on adjustment of sales tax on services against sales tax on goods supplied to provincial board/authority.
The sales tax levied under both the federal and provincial laws is in the form of a value added tax (VAT) in which a taxpayer is entitled to deduct the tax paid on inputs consumed for making of taxable supplies/services from the output tax payable on such supplies/services.
In order to resolve the issues arising subsequent to the transfer of collection of sales tax on Services to the Provinces after the 18th Amendment to the Constitution, to facilitate the taxpayers working under the respective federal and provincial sales tax laws and to create a harmonious and conducive business environment, a formal memorandum of understanding (MoU) was inked among Ministry of Finance, Revenue Division/FBR and Punjab Revenue Authority dated 13-03-2014, effective July 1, 2012.
