ISLAMABAD, May 27: Owing to the tight fiscal position, the federal government may delay till July the transfer to Sindh of about Rs1.8 billion it collected as general sales tax on services under two different heads on behalf the provincial government.

A Sindh government official told Dawn that Chief Minister Qaim Ali Shah had requested the federal government about a month ago to transfer Sindh’s share of Rs1.16 billion and Rs600 million the Federal Board of Revenue had collected as GST and federal excise duty on services.

He said the FBR confirmed to the federal finance ministry that it had collected about Rs1.78 billion provincial taxes which needed to be transferred to Sindh.

The official said the issue had also been raised with the federal government on the sidelines of the National Economic Council. He said the Sindh government had been indirectly informed that in view of FBR’s likely failure to meet the annual revenue target of Rs1.952 trillion, the federal government would like to keep with it the amount whose transfer could be delayed till the end of June in order to show collection closer to the target.

A finance ministry official, however, said the Rs1.8 billion or so claimed by the Sindh government was of no significance in the overall context of the revenue target, but the said amount involved a process of reconciliation unlike many other clearly defined taxes that were directly transferred to the provincial governments at the end of each quarter.

But he agreed that even though the FBR chairman was confident of achieving the revenue target, a shortfall of about Rs35-40 billion could not be ruled out. He conceded that the FBR normally sought support from large taxpayers to pay advance taxes and in some cases refunds were slowed down in the last two months of the fiscal year to show higher revenue collection.

The Sindh official said it had been agreed under the 7th NFC Award that as soon as the provincial government started collection of the general sales tax on services, the federal government would abolish federal excise duty on services, including telecom.—Khaleeq Kiani