FBR to discuss Rs5bln tax issue with Sindh

KARACHI: The Federal Board of Revenue (FBR) is expected to hold a meeting with the Sindh tax authority next week to resolve the withholding tax issue that compelled the board in the past to take out five billion rupees from the provincial consolidate fund on controversial short payment, sources said on Friday.

The sources said the FBR has started discussions with the Sindh government to streamline collection of withholding tax in order to avoid any confrontation in future.

In 2016, the FBR recovered around Rs5.2 billion from the provincial consolidated fund through the State Bank of Pakistan over alleged short payment of withholding tax collected from 1.5 million vehicles.

The FBR and the provincial government would hold talks next week related to deduction of withholding tax on various transactions by the provincial departments and subsequent transfers to the federal government.

The provincial government expressed its annoyance over the recovery and threatened to use legal forum. Sindh Chief Minister Murad Ali Shah earlier sent a letter to the FBR chairman, dismaying over “unconstitutional and unauthorised” deductions by the FBR from the provincial consolidated fund.

The FBR sources said the withholding tax collected by provincial excise department was not as per the requirement. “The transactions of motor vehicle registration did not match with the taxes transferred by the provincial authority,” a FBR official confirmed with The News on condition of anonymity.

The provincial government collects withholding tax on behalf of the FBR at the time of registration and transfer of new vehicles. The FBR official said the collection matter belongs to the past years and the provincial authorities failed to provide details of tax collection. The FBR created tax demand on the basis of third party information. The matter is sub-judice before the Appellate Tribunal.

The official said the FBR system has been automated and it receives data of transactions in vehicles and immovable properties on real-time basis.

The sources said the FBR chairman, in response to Sindh chief minister letter, assigned member Inland Revenue operations to resolve the matter. “The FBR is already cognizant of the issue under consideration which is currently sub judice before the Appellate Tribunal of Inland Revenue, Karachi,” the FBR chairman was quoted as saying in a letter.

The FBR sources said member IR (operations) would hold meetings with the Sindh authorities, including provincial finance department and excise and taxation department next week, to discuss the matter.