CM Murad alleges FBR of indulging in double taxations

KARACHI: Sindh Chief Minister Syed Murad Ali Shah on Saturday said that the Federal Board of Revenue (FBR) was trying to charge double taxation.

“At the time of payments to suppliers the accountant general Sindh withholds and deposits the same amount to the FBR as `Withholding Agent’ and now the FBR has again been claiming the same amount,” he said while presiding over a meeting here at the CM House to decide the matter pertaining to the FBR, RTO-III, Karachi that has raised a demand of thousands of rupees against various Sindh government departments/offices on account of payment of various taxes.

The FBR, RTO-III, Karachi has raised a demand of Rs4.32 billion income tax and Withholding Tax on Goods against various departments of the Sindh government.

Quoting the case of jute bags for food department, the chief minister said that the FBR had issued notices for recovery of RS260.4 million income tax with regard to purchase of jute bags, PP bags and tarpaulin during tax year, 2010-11 to 2015-16.

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He said that as a matter of fact the jute industry was exempted from income tax according to a SRO issued by the federal government. He said that as regards, the PP bags etc the accountant general Sindh, at the time of payments had already deducted the tax. “This is a double taxation against the Sindh government,” he said.

The finance department officers told the CM that out of Rs4.328 billion tax arrears demanded by the FBR Karachi is principal amount. The principal amount of income tax is Rs435.277 million and Rs1.33 million is penalty and Rs3.89 billion is Withholding Tax on goods.

During the scrutiny and deliberation in the meeting it was surfaced that the demand created by the FBR was on the basis of total budgetary allocation and blanked calculations without considering real time transactions and at-source deduction of the taxes by the office of the Accountant General Sindh.

Murad Shah after going through the FBR orders said that the FBR officers had passed orders ex-parte without hearing the concerned department.

He was informed by different departments that in some cases, orders-in-original, show cause notices and hearing notices were not delivered to the relevant departments due to which the period provided to lodge appeals has become barred by time limitation.

Chief Secretary Rizwan Memon told the chief minister that he had held a meeting with Chief Commissioner and Commissioner RTO-III on April 19, 2018 wherein the finance department was assigned to complete the reconciliation task with the FBR and other stake-holders. Therefore, he has directed all the departments and AG Sindh to be on board to complete the reconciliation task.

The chief minister was informed that on cross verification, the tentative figures given by the AG Sindh indicated that out of total demand of Rs4.328 billion and amount of Rs645.522 million against Income Tax and Rs20.629 million against GST on goods have been deducted at-source by AG Sindh leaving behind a disputed amount of Rs3.662 billion against GST on goods which required reconciliation.

The finance department has approached chief commissioner, FBR for withdrawing attachment orders and simultaneously contacted State Bank of Pakistan (SBP) and national Bank for not entertaining such attachments made by FBR.