ISLAMABAD: The Senate Standing Committee on Finance held a hearing of tax collecting bodies of the federal government and the Sindh government to understand the issue of input tax adjustment and deduction of three per cent withholding tax from non-filers.
Sindh had complained that the enforcement of three per cent withholding tax through the Finance Bill would lead to a collapse of their tax collection system. The Senate committee has directed the FBR to resolve the issue.
In its briefing to the committee, the Sindh Revenue Board (SRB) officials said that the Federal Board of Revenue (FBR) has proposed amendments to the Finance Bill 2015 to disallow input tax adjustment, stopping the SRB from accepting sales tax returns of those who are non-filers of income tax returns with the FBR.
The issue of non-filers relates to persons who were not paying income tax, but paying the sales tax. The committee was informed that 57.5pc of deposited tax would be transferred to the provinces.
The SRB officials claimed that their share was Rs32 billion, and alleged that the customs tariff was a breach of the 18th Amendment. They also discussed the matter related to exports and imports of items, such as agriculture machinery and subjects related to fisheries and poultry. The FBR insisted that the move was to force non-filers to file returns.
Speaking as a special guest, former adviser to Sindh government Dr Qaiser Bengali said that the FBR has the powers to arrest non-filers of income tax and refrain from shifting burden of failures to others. The committee members also opposed the amendment in law that grants the power of property valuation to the FBR and termed that such a move was encroachment on the rights of provinces.
Later taking to media, Mr Bengali said that the total sales tax filers would be increased from 13,000 this year to 18,000 next year. This year the SRB collected Rs61bn which would be taken to Rs78bn next year and Rs100bn in the subsequent year.