PESHAWAR, June 26: General sales tax on services, levied on July 1, 2000 in place of certain provincial levies, started showing good results in its second year of introduction in view of substantial growth recorded by the receipts transferred to provinces during the current financial year.

Against the initially set estimates of Rs1969.8m projected to be transferred to the four provinces on account of GST on services during the 2001-02 financial year, a collective amount of Rs2.77bn would be distributed among them under the same head as per the revised budgetary estimates of the federal government.

The revised budgetary estimates reflect that Rs804m more than the initially set benchmark was distributed among the provinces.

Official sources attributed this revenue growth to the improvement in revenue generation this new levy had started showing in its second year of introduction.

GST on services had been introduced on July 1, 2000, abolishing central excise and provincial excise and taxes on certain services.

Federal government had set a target of raising Rs7bn through the new levy in its first year of introduction, i.e. the 2000-01 financial year. But the end-result had, apparently, left Islamabad in a difficult situation after it recorded recoveries much less than the amount it was anticipating to raise under this head.

However, the funds transferred to the four provinces on account of GST on services during the 2001-02 financial year, said the sources, appeared to be quite encouraging as far as growth in terms of revenue generation under this new levy is concerned.

As per the revised budgetary estimates of the federal government for the out-going financial year, Punjab would receive Rs1.6bn on account of GST on services against the initially projected amount of Rs1.14bn, Sindh Rs645m instead of Rs458m, NWFP Rs375.6m instead of Rs266.7m and Balochistan would get Rs147m instead of the initially projected amount of Rs104m.

In view of the revenue growth recorded during the 2001-02 financial year on account of GST on services (provincial), the federal government has projected the amount to be distributed among the provinces under this head during the 2002-03 financial year at higher side.

Against the Rs1.96bn initially set target and Rs2.77bn revised budgetary estimates under the said head for the 2001-02 financial year, the federal government has reflected a projection of Rs3.051bn on account of GST on services (provincial) for the 2002-03 financial year — anticipating further growth of Rs277m under this head during the next financial year.

NWFP’s  share for the 2002-03 financial year has  been calculated to be Rs413m, Punjab would get Rs1.766bn, Sindh Rs710m whereas Balochistan would get Rs161m - as per the initially set projection under the federal budget for the next financial year.