NTC defines taxation jurisdiction of federation and provinces

ISLAMABAD: The National Tax Council after extensive consultative process and deliberations defined the jurisdiction of taxation of the federal and provincial governments.

Federal Minister for Finance and Revenue Shaukat Tarin presided over the meeting of the National Tax Council (NTC) at the Finance Division on Thursday.

In his opening remarks, the finance minister welcomed the participants and emphasised on the need for evolving consensus between the federation and provinces in matters relating to the sales tax harmonisation.

He stressed the need to resolve tax-related issues in a spirit of cooperation between the federation and the federating units.

After due deliberation with all the relevant stakeholders, the National Tax Council decided that the sales tax on toll will rest with the federation, while the taxation rights on transportation business would be vested in the provinces.

Regarding taxation on the construction business, it was decided that the taxation right would be shared as per the constitutional arrangements, and a technical committee consisting of all the revenue authorities would decide the operational modalities.

On the taxation of restaurants, Finance Minister Tarin decided that the provinces will continue to tax restaurants. However, a reference drafted in consultation with the provinces will be sent to the Law Division for their feedback on the decision.

FBR chairman Dr Ashfaq Ahmed made a detailed presentation and outlined areas for further deliberation to work out an arrangement in a collaborative manner relating to harmonisation of the general sales tax (GST) among the federal and provincial governments.

The FBR and the provincial finance ministers narrated their respective positions on the taxation of transportation, restaurants, toll manufacturing and construction.

The meeting also consider various proposals for implementing single portal for filing sales tax returns, which is being developed and is likely to be launched by the first week of October 2021.

The launching of the single portal for filing returns will cut the compliance cost for the taxpayers and will help increase Pakistan’s rating on the Ease of Doing Index.

It was decided that detailed input will be invited from the provincial revenue authorities for the development of single sales tax portal acceptable to all.

Similarly, the FBR would also develop a standardised income tax return form, in consultation with the provincial governments.

All the stakeholders agreed to proceed ahead in the spirit of greater national interest and harmony under the umbrella of the National Tax Council.