ISLAMABAD, April 5: The Board-in-Council (BIC) of the Central Board of Revenue (CBR) has approved a new two-stream structure for taxes — Inland Revenue Service (IRS) and Pakistan Customs Service (PSS) — by reducing the number of federal tax authorities as part of the tax administration reforms.

Income tax, federal excise and sales tax would be merged into the IRS, while customs related responsibilities would be assigned to the PSS to make the taxation system in compliance with the international regime.

Sources told Dawn on Wednesday that a BIC meeting headed by CBR Chairman M. Abdullah Yousuf held recently also agreed to send a summary to the prime minister for seeking an approval for the new taxation cadres.

The sources said the customs officials, however, were not ready to accept the proposed merger of sales tax and federal excise into the IRS, fearing that the move would affect their promotion.

With the BIC decision, the CBR chairman was also facing a strong resistance from the customs department that would ultimately delay the reform process committed under the World Bank funded project.

As a first step, the CBR chairman had already posted 26 commissioners of income tax to the sales tax department in October 2004 under section 10 of the Civil Servants Act, 1973, but the decision had attracted a countrywide protest from the customs officers.

To resolve the issue, the sources said, another committee had been constituted to listen to the concerns of the customs officers and recommend measures for its redressel under the new system. They said the decision to move the summary to prime minister had also been postponed for the time being due to the pressure from the customs and excise group.

According to the agreed minutes of the BIC, a copy of which is available with Dawn, it was also decided to process a summary for the establishment division and the Federal Public Service Commission (FPSC) for ensuring that the fresh intake of officers in the year 2007 through the CSS exam was in these new services.

Till the year 1981, the sales tax was collected by the income tax officers. During this period sales tax was chargeable on manufactures and import stage. As the customs officers collected excise duty from the manufactures and import duty on importable goods, the government decided to also assign the task of collection of sales tax to the customs officers.