"The province won its right to collect sales tax on services under the 7th Finance Commision (NFC) Award." — File Photo

KARACHI: The newly-constituted Sindh Revenue Board (SRB) is currently formulating rules and procedures to levy and enforce sales tax on services which was hitherto collected by the Federal Board of Revenue (FBR).

The province won its right to collect sales tax on services under the 7th Finance Commision (NFC) Award and hopes to earn Rs25 billion annually from the tax.

The SRB is likely to begin sales tax collection on some of the services that fall under its purview from March or April after the Sindh Assembly approves the draft bill of Sales Tax on Services.

Sources in the board said that “Unlike the other provinces only Sindh has the capacity and capability to levy and collect sales tax on services as it has a fully computerised tax network and hired professional taxmen to run the board,” sources in the SRB said.

The services to come under the net of the provincial tax include telecommunications, shipping, customs related services, banking, stewarding, hotels, restaurants, catering etc.

The board is also busy in laying down rules to levy and collect income tax on workers welfare fund and EOBI devolved under the 18th Amendment to the provinces.

The province has already started collecting Value Added Tax on registration of properties from July 2010 at the rate of two per cent per sale deed.

Meanwhile, the provincial finance ministry has chalked out a plan to revamp the tax collecting machinery in the province to boost revenue generation. The ministry is reportedly not satisfied with the collection of land and water taxes from the growers.