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Pakistan Post asked to pay FED

May 04, 2012


ISLAMABAD, May 3: The Federal Board of Revenue has declared Pakistan Post as a ‘banking company’ and asked the postal department to levy 16 per cent Federal Excise Duty on its financial services on regular basis.

However, postal authorities have refused to comply with the FBR directives saying that the duty will hit the poor man already burdened with inflation.

In a directive to Pakistan Post, the FBR notified that the banking services being rendered by Pakistan Post to the public come under the purview of Federal Excise Rules 2005.

The financial services of Pakistan Post includes international money transfer, money order, postal order and postal draft, on which currently no FED is charged, sources in FBR told Dawn on Thursday.

Director-General of Pakistan Post Syed Ghulam Panjtan told Dawn on Thursday that the ministry of postal services would resist the levy of FED and raise the issue with relevant authorities.Mr Panjtan said that the postal services are basically for poor people particularly in the rural areas. Pakistan Post has walking customers and the maximum range of money order is Rs20,000 whereas the postal order is valued at Rs100.

On the issue of international money transfer, Mr Panjtan said that Pakistan Post was only handling the incoming remittances.

The FBR has launched a drive to meet its revenue target of Rs1,952 billion for this fiscal year ending on June 30 considering the postal financial services as a large source of revenue by levying FED on money order and postal draft.

Sources in FBR said that the Directorate-General Intelligence and Investigation initiated a probe into non-payment of FED by Pakistan Post on its financial services over the past five years.

The postal department, however, did not provide the data of revenue received from the banking services nor agreed to the view point of FBR on the levy of FED on financial services.The directorate-general took up the matter at senior level and the ministry of postal services in April last year and again the postal department and the ministry contended levy of FED on the banking and financial services rendered by it on the grounds that Pakistan Post did not fall in the category of Banking or Financial Company, therefore, levy of Federal Excise Duty was not justified.

When matter remained inconclusive, the directorate-general forwarded the issue to FBR with the request to issue instructions to Pakistan Post for payment of FED on banking and financial services.

The Inland Revenue Wing  examined the entire case and eventually agreed to the view point of the Directorate General Intelligence.