Centre to collect sales tax on seven services

Notification will be issued after meeting with four chief ministers next week. DESIGN: MOHSIN ALAM


The federal government has prepared a notification for collection of general sales tax on seven services from the next financial year, which will be issued after consultation with provinces in a meeting with chief ministers on Monday, a Federal Board of Revenue (FBR) official said.

The Centre and provinces have already agreed that the former will collect 16 per cent sales tax on seven services including financial industry, advertising, construction, customs and commission agents, franchises, courier services and studios. According to the FBR official, if Sindh agrees to allow the federal government to collect sales tax on all services for one to two years, then FBR will collect the tax and distribute it to provinces. However, if Sindh objects to it, then a notification for collection of sales tax on only seven services will be issued.

Except for Sindh, other provinces have given the go-ahead to the Centre to receive sales tax on all services for some time.

The official said FBR had estimated to collect a big amount of taxes from banking, insurance, stock market and other services in Group-III category. In 2011-12, FBR is expected to receive Rs12.22 billion from these services.

It is expected to receive Rs152.68 million from advertising, Rs28.4 million from construction, Rs1.41 billion from courier services, Rs643.3 million from customs agents, Rs44.5 million from shipping agents, Rs1.86 billion from studios, Rs830 million from freight forwarders and Rs304.06 million from stock brokers.

In the case of telecommunications, it has been agreed that telecom companies will directly deposit tax with the provinces on the basis of ‘origin of call’.

Published in The Express Tribune, July 1st, 2011.

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