News
Sunday, May 09, 2010
President authorises provinces to impose, collect GST on services* Also approves horizontal revenue-sharing formula between provinces based on multiple criteria
* Step taken after concerns raised by Sindh governmentBy Sajid Chaudhry
ISLAMABAD: President Asif Ali Zardari has authorised all four provinces to impose and collect General Sales Tax (GSP) on services and has approved a horizontal revenue-sharing formula between provinces based on multiple criteria, official sources at the Finance Ministry told Daily Times on Saturday.
In order to remove concerns raised by the Sindh government, the president has approved amendments in the Distribution of Revenues and Grants in Aid Order, 2010.
Zardari has incorporated two decisions taken during the finalisation of the 7th National Finance Commission Award relating to the horizontal revenue distribution criteria among provinces and GST on services as a provincial subject, official sources said.
Amendments in the Distribution of Revenues and Grants in Aid Order, 2010 were approved during the president’s meeting with the Sindh chief minister on Friday and it is expected that the Law Ministry would notify the amended presidential order in the next couple of days.
One of the two amendments that have been incorporated in the Distribution of Revenues and Grants in Aid Order, 2010 states that revenues among provinces would be distributed according to the horizontal multiple criteria – 82 percent on the basis of population, 5 percent on revenue generation and collection, 10.3 percent on the basis of poverty and 2.7 percent on inverse population density, the sources added.
The other landmark decision that has been incorporated in the Distribution of Revenues and Grants in Aid Order, 2010 is that the National Finance Commission (NFC) acknowledges GST on services as a provincial subject according to the constitution of Pakistan, and GST on services may be collected by the provinces if they so desire.
The other decisions that had been incorporated in the Distribution of Revenues and Grants in Aid Order, 2010 in the past were ‘Distribution of Revenues’, which states that the divisible pool taxes in each year shall consist of taxes levies collected by the federal government in that year, namely taxes on income, wealth tax, capital value tax, taxes on sales and purchases, export duties on cotton, customs duties, federal excise duties and any other taxes which may be levied by the federal government.
Courtesy www.dailytimes.com.pk