Devolution in name only: Sindh demands right to collect GST on services
Finance Bill gives Centre the right to collect GST on services.
KARACHI:
The Centre has retained its right to collect GST on services, according to the Finance Bill 2011-12, contradicting the spirit of the 18th Amendment. Sindh has also laid claim to collecting these same taxes, with the passage of its GST on services Bill on Monday.
With the passage of the 18th Amendment, provinces were supposed to acquired the right to collect GST on services as a part of the devolutionary process. However the Finance Bill, didn’t quite carry this spirit forward, saying that the Centre would retain its right to collect tax on services, and then pass on 50% of the collected taxes in Sindh, to the provincial government. Sindh begs to differ, so far the only province that demands that it have the right to collect its own tax, rather than wait for a hand-out from the federal government.
One irritated MPA even went so far as to say that the finance bill presented in the National Assembly, according to which the Centre would collect the tax on services during the next financial year, gives the impression that Sindh was never going to be allowed to do it in the first place.
During the Sindh Assembly session on Tuesday, Muttahida Qaumi Movement parliamentary leader Sardar Ahmed drew the attention of the house towards this point. “We passed the bill on GST services on Monday, which authorises us to collect the tax from July this year. But the same provision is being made in the finance bill presented by federal government,” Shah added.
After the 18th Amendment and seven National Finance Commission awards, the right to collect the tax on services was finally given to the provinces. Under the 18th Amendment provinces will have the right to collect taxes on shipping management services, tour operators, advertising agencies, property dealers, services rendered by architects, town planners, contractors, non-banking financial institutions, professionals and consultants. “It seems as if the federal government was adamant about its old demand and did not want us to collect the tax,” Ahmed said.
Speaker Nisar Khuhro attempted to placate him by saying that the finance bill was drafted before the Sindh Assembly had passed its own bill on the issue — this had created a little confusion. But Sardar Ahmed showed the bill and said: “It is illegal because everyone knows who has to collect the tax after the 18th Amendment promulgated last year. Why did they include the same services in the finance bill?”
The speaker did not have an immediate answer to this valid point but assured him that the issue would be resolved soon.
Published in The Express Tribune, June 8th, 2011.
The Centre has retained its right to collect GST on services, according to the Finance Bill 2011-12, contradicting the spirit of the 18th Amendment. Sindh has also laid claim to collecting these same taxes, with the passage of its GST on services Bill on Monday.
With the passage of the 18th Amendment, provinces were supposed to acquired the right to collect GST on services as a part of the devolutionary process. However the Finance Bill, didn’t quite carry this spirit forward, saying that the Centre would retain its right to collect tax on services, and then pass on 50% of the collected taxes in Sindh, to the provincial government. Sindh begs to differ, so far the only province that demands that it have the right to collect its own tax, rather than wait for a hand-out from the federal government.
One irritated MPA even went so far as to say that the finance bill presented in the National Assembly, according to which the Centre would collect the tax on services during the next financial year, gives the impression that Sindh was never going to be allowed to do it in the first place.
During the Sindh Assembly session on Tuesday, Muttahida Qaumi Movement parliamentary leader Sardar Ahmed drew the attention of the house towards this point. “We passed the bill on GST services on Monday, which authorises us to collect the tax from July this year. But the same provision is being made in the finance bill presented by federal government,” Shah added.
After the 18th Amendment and seven National Finance Commission awards, the right to collect the tax on services was finally given to the provinces. Under the 18th Amendment provinces will have the right to collect taxes on shipping management services, tour operators, advertising agencies, property dealers, services rendered by architects, town planners, contractors, non-banking financial institutions, professionals and consultants. “It seems as if the federal government was adamant about its old demand and did not want us to collect the tax,” Ahmed said.
Speaker Nisar Khuhro attempted to placate him by saying that the finance bill was drafted before the Sindh Assembly had passed its own bill on the issue — this had created a little confusion. But Sardar Ahmed showed the bill and said: “It is illegal because everyone knows who has to collect the tax after the 18th Amendment promulgated last year. Why did they include the same services in the finance bill?”
The speaker did not have an immediate answer to this valid point but assured him that the issue would be resolved soon.
Published in The Express Tribune, June 8th, 2011.