ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has proposed amend to the Federal Excise Duty Act, 2005 and related rules which are still applicable to service sector including insurance companies despite introduction of Sales Tax on services laws by the Sindh and Punjab and other provinces.
According to the SECP budget proposals submitted to the FBR, after the passage of 18th Amendment to the Constitution in 2010, the Sales Tax on services has been excluded from Federal Legislative List as specified in the 4th Schedule of the Constitution and made it a provincial subject, empowering provinces to levy and collect sales tax on services within their respective territorial jurisdictions.
Now the Sindh, Punjab and KPK have drafted their own sales tax laws. However, despite the fact that the FED on services sales tax are the identical taxes, yet the Federal Excise Duty Act, 2005 and related rules are still applicable to service sector including insurance companies having business in Pakistan.
The SECP, therefore, proposed amendment to Section No 7 & 8 of Column 1 of Table II of First Schedule to the Federal Excise Act, 2005 and related rules to withdraw it from service sector including insurance companies and NBFCs.
