FBR fears revenue loss

ISLAMABAD: The Federal Board of Revenue (FBR) could lose up to Rs60 billion in collections if the power to collect the reformed General Sales Tax (GST) on services is transferred to the provinces.

Meanwhile, an agreement on the rights and methodology to collect the tax on services has been reached between the federal and provincial governments. An announcement in this regard is expected during the last week of this month.

This was disclosed by a senior official of the FBR, who said that the Chairman of the board, Sohail Ahmad, has confirmed that a consensus had been reached between the centre and provinces on the issue. The exact details of the agreement are expected to be announced next week.

The official added that the FBR had prepared a study report which highlighted possible losses of up to Rs60 billion for the organisation if the right of collection is transferred to provinces.

Sources revealed that if the right of collecting sales tax on services is transferred to the provinces than services would be removed from the second schedule of the Federal Excise Act and all these services will be transferred to provinces.

Of the Rs60 billion collected last year under the head of GST on services, Rs40 billion were collected from providers of telecommunication services.

Published in The Express Tribune, July 21^st, 2010.