ISLAMABAD - The Sindh Revenue Board (SRB) on Monday said the Federal Board of Revenue (FBR) was undermining the provincial autonomy by introducing the amendment of sales tax adjustment, which, it said, was against the spirit of 18th Constitutional Amendment.
The Senate Standing Committee on Finance, which met here under the chair of Senator Saleem Mandviwalla, discussed the issue of disallowing input tax adjustment on sales tax against provincial services.
Through the Finance Bill 2016, input tax adjustment against provincial sales tax has been disallowed.
The SRB chairman said that FBR had proposed disallowing input tax adjustment against provincial services and binding SRB not to accept sale tax returns of those who are non-filers of income tax return forms with the FBR.
He further said that SRB was a fully autonomous and automated body. “Making the SRB a withholding agent would lead to corruption,” he argued.
He said that provinces had the constitutional right to collect General Sales Tax on services after the 18th Amendment. “Under which law, the provinces can be made withholding agents?,” he queried.
Speaking on the occasion, FBR’s officials said the issue was related to non-filers. “We want to force non-filers to file returns. Any provincial government department would become a withholding agent under the law,” they contended.
The committee chairman asked why did not the FBR deal with the issue through effective administrative measures instead of declaring them withholding agents in the Finance Bill?
Former Advisor to Sindh government Qaiser Bengali said that FBR had the powers to deal with the non-filers of income tax. The FBR should do its job within the boundaries set for it. “Instead of doing its job, the FBR is putting its failures on somebody other’s shoulder,” he remarked.