PRA Chairman Dr Raheel Ahmad Siddiqui disclosed this while responding to a question regarding Punjab Infrastructure Development Cess in a meeting at the Lahore Chamber of Commerce and Industry here on Tuesday. This issue has already been discussed with the Finance Minister. Chief Minister Punjab Shahbaz Sharif is also well aware of the issues being faced by the business community and taking all possible relief measures, he added.
The PRA Chairman called for creating awareness regarding taxation saying that a large number of people have the desire to pay taxes but cannot because of lack of awareness regarding taxation system.
Speaking on the occasion, LCCI President Malik Tahir Javaid has demanded harmonization in the provincial and federal tax collecting agencies to avert double taxation. Double taxation is one of the major issues being faced by the business community. It can be averted through harmonization between the provincial and federal taxes, he added. There are certain major services including toll/vendor services which are still under the ambit of federal government whereas provincial governments also demand tax on such services.
He pointed out that if a service provider is resident of Punjab, and the service delivery to a service recipient is in Sindh, then the service provider is required to deposit sales tax with the PRA. However, the service recipient still remains liable to sales tax recovery by the Sindh Revenue Board (SRB) under the Sindh Sales Tax Services Act 2011, and reverse is true in case the service provider is in Sindh and the service recipient is in Punjab. In this regard, all the revenue boards should agree on jurisdictions and common rules. Issues of 'origin' and 'consumption' on services should also be clarified.
He said currently revenue collections of Punjab fall under the Punjab Revenue Authority (PRA), Excise & Taxation and Board of Revenue (Punjab). It is proposed that that all revenue collections should be merged under one ministry/body. This would add considerably to the ease of doing business (EODB), a matter which should be a priority for all policy makers.
Malik Tahir Javaid said that sales tax on services is being charged at different rates by the SRB and the PRA which creates an environment of competition among the provinces. Uniform rate of sales tax on services should be charged by all the provinces.
The PRA should also follow SRB and charge sales tax on the service revenue only instead of total invoice value. Services related to businesses in Punjab are at a great disadvantage due to imposition of sales tax at very higher rate of 16 percent as compared to 13 percent in Sindh.
He further said that PIDC is an indirect tax as it is being charged on movement of goods including raw materials and has been proved to be an impediment to economic growth of the province. Businessmen have started clearing their consignments in other provinces to avoid this tax which would ultimately hurt businesses of clearing agents and transportation companies that provide employment to thousands of people and contribute sizeable amount to national exchequer. He suggested that all payments related to the PRA should be accepted through credit card/debit card, direct debit or using internet banking.