Centre, provinces agree on 16% GST on professional services

[Naveed Yaseen]

* Provincial governments are expected to authorise tax collection through FBR

By Sajid Chaudhry

ISLAMABAD: The federal and four provincial governments have agreed on imposing 16 percent General Sales Tax (GST) in the budget 2009-10 on services sector falling under provincial purview, Daily Times learnt on Saturday.

These are personal and other services including doctors, lawyers, beauticians, chartered accountants, auto workshops and rent-a-car services.

Although the GST on services is a provincial subject, however, four provincial governments are expected to authorise its collection through Federal Board of Revenue (FBR).

The amount collected from these services and from the provincial jurisdictions would be returned to the same province after deducting service charges by the federal tax authorities.

With the lapse of 60 years, four federating units have failed to develop efficient tax collection machinery and creating their own reliable tax base. Provinces rely on federal transfers as share from National Finance Commission Award.

The broader agreement among federal government and provincial governments would not only help increase provincial revenues, but would also help increase their own tax base and establishing their own tax machinery and tax collection mechanism.

Services sector, which constitutes over 50 percent of the national GDP, is contributing far less than its due share in federal as well as provincial taxes. With the imposition of GST on provincial services the tax burden would be shared among the existing as well as new taxpayers more equitably.

In order to help provinces generate revenue from their own source, services sector has been identified as the most potential sector and services falling under provincial purview would be taxed in the forthcoming budget 2009-10. Services provided or rendered by professionals and consultants etc, medical practitioners and consultants legal practitioners and consultants, accountants and auditors management consultants, technical, scientific, engineering consultants, software or IT based system development consultants and other consultants. Services provided or rendered by persons authorised to transact business on behalf of others. Ship management service, tour operators, recruiting agents, share transfer agent, sponsorship services, business support services and other services and advertisement on cable TV network

Services provided or rendered by property developers and promoters. Services provided or rendered by persons engaged in contractual execution of work or furnishing supplies. Services provided or rendered for personal care by beauty parlours-clinics, slimming clinics and others. Services provided or rendered by laundries, dry cleaners.

Services provided or rendered by architects, town planners, contractors, property developers or promoters, interior decorators. Architects or town planners, contractors of building (including water supply, gas supply and sanitary works), roads and bridges, electrical and mechanical works (including air conditioning), horticultural works, multi-discipline works (including turn-key projects) and similar other works. Property developers or promoters, landscape designers and others. Services provided or rendered by pathological laboratories. Medical diagnostic laboratories including X-Rays, CT Scan, MR Imaging etc. scientific laboratories, mechanical laboratories, chemical laboratories, electrical or electronic laboratories. Other such laboratories, security agency, credit rating agency, market research agency and other such agencies.

Under writers, indenters, packers, rent-a-car, prize bond dealers, surveyors, designers, outdoor photographer, art painter, cable TV operators, auctioneers, public relations services, management consultants, technical testing and analysis service, service provided by a registrar to an issue and others.

Auto-workshops, workshops for industrial machinery construction and earth-moving machinery or other special purpose machinery etc. Workshops for electric or electronic equipments or appliances etc including computer hardware, car washing or similar service stations and other workshops.

Healthcare centres, gyms or physical fitness centres etc, indoor sports and games centres, baby care centres, body massage centres, pedicure centres, Similar other centres. Services provided or rendered for specified purposes. fumigation services, maintenance or cleaning services, janitorial services, dredging or de-silting services and other similar services, franchise services and construction services to be considered for brining them into the tax net.

http://www.dailytimes.com.pk/default.asp...2009_pg5_1