PPP, MQM agree not to levy GST on more services
KARACHI: The ruling Pakistan People`s Party and the Muttahida Qaumi Movement have decided not to bring, at least for now, hitherto untaxed services into the general sales tax net, as the provincial government is set to take over from the federal government the collection of general sales tax on services from July 1.
Although the draft Sindh Sales Tax on Services Bill, 2011, copies of which have been distributed to the members of the provincial assembly, included several hitherto untaxed services, it was decided at a meeting between the leaderships of the PPP and the MQM that the bill should be passed with some changes in its draft through which services such as rendered by doctors and professionals be excluded.
“It has been decided that from the next fiscal year we [Sindh government] will levy and collect sales tax that has been collected by the federal government on services,” said MQM parliamentary party leader in the Sindh Assembly Syed Sardar Ahmed on Sunday.
A delegation of the MQM led by Federal Minister Dr Farooq Sattar and comprising Syed Sardar Ahmed, Kanwar Naveed and Aamir Moin Pirzada called on Chief Minister Syed Qaim Ali Shah at the CM House on Saturday evening. The PPP side included Federal Minister Syed Khurshid Shah and Sindh Finance Minister Syed Murad Ali Shah.
Sources said the MQM welcomed the provincial government move to impose and collect general sales tax on services on its own from the next fiscal year since it was its constitutional right.
However, the MQM side expressed reservations over the plan to bring previously untaxed services into the sales tax net and informed the chief minister that new taxes would only overburden the common man.
The sources said the PPP side told the MQM delegation that they did not want to overburden the people but eventually everyone who is making money would be taxed.
However, Mr Ahmed, who is also a provincial minister, told Dawn that the chief minister and the provincial finance minister had agreed that the government should impose and collect sales tax only on those services which were already in the sales tax net. “It was decided [at the meeting] that Sindh will not impose any new taxes.”
While the draft of the Sindh Sales Tax on Services Bill, 2011 says that the Sindh government would levy and collect sales tax on telecommunication services at a rate of 19.5 per cent, Mr Ahmed said that the PPP and the MQM had agreed that it should be 16 per cent.
The MQM leader made it clear that from the next fiscal year the Sindh government would collect on its own sales tax on telecommunication services in addition to the sales tax it had levied through an ordinance in 2000 on some services.
The Sindh government in 2000 had allowed the federal government to collect on its behalf sales tax on services rendered by hotels and caterers, advertisement, customs agents, ship handlers, stevedores, courier services, etc.
Mr Ahmed said that till April 30, 2011, Sindh got Rs12 billion from the federal government under the head of sales tax on services Ã¢â‚¬“Ã¢â‚¬“ Rs10 billion from telecom services and Rs2 billion from other services.
The draft bill proposes the levy of sales tax on doctors, engineers, lawyers, accountants, fashion designers, cable operators, internet cafes, call centres, health services, including hospitals and clinics, health medical diagnostic laboratories, including X-rays, CT scan and MRI, at a rate of 10 per cent.
However, the sources said that after some changes in the sales tax on services bill would be easily passed by the assembly during its ongoing pre-budget session.