The chief minister had personally approached Dr Hafeez Shaikh to get the issue resolved and the funds released. - File photo

KARACHI Sindh has asked the federal government to release Rs1.5 billion outstanding under the ‘sales tax on services’ collected by the Federal Board of Revenue (FBR) during the first month of this fiscal year.

Official sources told Dawn on Tuesday that Sindh Chief Minister Syed Qaim Ali Shah had written a letter to Federal Finance Minister Dr Hafeez Sheikh seeking his assistance in releasing stuck up funds.

The Sindh Revenue Board (SRB), which came into action in July 2011 but was unable to collect sales tax on services for the same month.

However, as per the past practice the FBR, which had been collecting sales tax on services on behalf of provinces, collected the proceeds for the month of July 2011.

Despite repeated request and reminders to the FBR the funds amounting to Rs1.5 billion had not been transferred to the provincial exchequer so far, the sources asserted.

After a long delay the FBR informed the SRB that since the funds collected had been transferred to the national exchequer it was no longer in a position to accommodate the request.

As the current fiscal year is closing on June 30, 2012, the SRB feels that it will have to square up its books but without including first month’s (July) collection of sales tax on services the accounts would remain inconclusive.

Consequently, the chief minister had personally approached the federal finance minister requesting him to sort out the issue and get the funds released to the provincial kitty at the earliest.

The SRB sources were of the view that if the stuck up amount was not released in time the Rs25 billion revenue target for 2011-12 may fall short and it would be a bad precedent for coming years.

During the first nine months (July-March) of 2011-12, Sindh province collected Rs19 billion as against the total transfer of Rs15 billion from the FBR in the same period last fiscal year.

The SRB claims that an amount of Rs500 million was also outstanding against composite challans with the FBR and this takes total outstanding amount to Rs2 billion.

After adding this outstanding amount the net collection of SRB during July-March period would come to Rs21 billion, official sources said.

A senior SRB official said that data sharing agreement with the FBR would be beneficial and help both boost revenue collection of both organisations.