ISLAMABAD, May 10: Provinces have urged the federal government to levy general sales tax (GST) on more services in the next budget to enhance overall size of the divisible pool and have maximum share under the interim National Finance Award (NFC).

Informed sources told Dawn on Wednesday that the four provinces had submitted their lists of services to the federal government, wanting more services to come under the 15-per cent GST net for having extra shares in the NFC award.

The sources said the provinces especially wanted to bring into the GST net services of architectures, lawyers, chartered accountants, doctors, financial services, etc.

The CBR currently collects GST from 17 services (13 provincial and four federal services). It also collects GST on behalf of the provinces as they do not have any machinery for the collection of the levy.

The CBR raised Rs13.764 billion from these services during the first half of the current fiscal year as against Rs10.598 billion during the year same period last year, indicating an increase of 29.9 per cent.

Through federal statute, sales tax was collected as federal excise duty (FED) in VAT mode on telecommunication services, travel by air and train, carriage of goods by air, advertisement on CCTV and cable network and shipping agents, while through the provincial ordinances, sales tax levied on advertisement on radio and television, beauty parlours, caters, clubs, hotels, marriage halls and lawns, laundries and dry cleaners, ship handlers, stevedores, customs house agents and courier services.

A senior tax official said the CBR had already received lists of the provincial governments in which they had identified around 50 services for bringing in the GST net last year.

The CBR had evaluated the lists and recommended only six to 15 services to be brought under the GST net, as most of the services did not have any documentary records.

Final decision for the inclusion of services in the GST list will be taken at higher level, the official added.

According to him, the CBR already proposed two ways for the levy of GST on these services: levy directly the standard rate of 15 per cent GST on these services or levy GST on goods used in the supply of these services to consumers.

The official said that it was also under consideration that only those services would be taxed which have the potential of generating revenue for the national exchequer.

However, final decision to this effect could only be made in the last meeting of the cabinet before the announcement of the budget.

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