KARACHI, July 18: The Karachi Tax Bar Association (KTBA) has noted many discrepancies in the Sindh Sales Tax Services Act 2011 that needed to be clarified prior to their implementation by the Sindh Board of Revenue (SBR).
The tax bar has strongly objected to the hasty steps being taken by the SBR in implementing Sindh Sales Tax Act 2011.
The KTBA through a comparative analysis of the taxability of services found that there are many services which have become taxable in the province of Sindh at 16 per cent but such services are not taxable in other provinces of the country.
The bar has raised a number of issues and sought clarification from the SBR and stated that sales tax on many services in Sindh are not taxable in other provinces and Islamabad.
The KTBA demanded that taxable services in the province of Sindh should be at par with other provinces.
The bar has cautioned the provincial government not to commit similar mistake as was done by the federal government in 1990, by implementing the sales tax on services in a hurried manner and without considering proper implication of the said law.
The Karachi tax bar sought clarification from the SBR on a number of issues and demanded that prior to implementing Sindh Sales Tax Services Act, 2011 they should be addressed.
In a sort of rejoinder to the SBR, the tax bar demanded that all services which were initially taxed under the Federal Excise Act, 2005 but are now appearing in schedule II of Sindh Sales Tax Act 2011 should be notified for the information of general public.
It also demanded that gazette copies of Rules should be available for taxpayers and definition of market value of supply should be restricted otherwise it would lead to misuse of discretionary powers.
The Karachi Tax Bar also wants that the definition of resident be rationalised so that it could not be misused between the residents of different provinces. Similarly, it wants to remove chargeability of franchise fee from the said law as the same is taxable under Sales Tax Act 1990.
With so many discrepancies, the KTBA noted, the implementation of Sindh Sales Tax on Service Act 2011 must be deferred for 90 days and no additional tax or default surcharge and penalty should be imposed till June 2012 for any discrepancy or offence if the actual tax liability is paid.
Above all the bar wants the Sindh government to reduce sales tax rate from 16 to 7 per cent and demanded that mechanism of input adjustment in case of tax paid in other province be notified.
The tax bar is also seeking amendment to Sections 57 because many sub-sections of this section are not relevant. Any order passed by the Tribunal ex-party must be on merits as the same is provided under other tax laws.