ISLAMABAD: The implementation of reformed general sales tax on goods and services has been put off for one month — from Oct 1 to Nov 1 — because of differences between the provinces and the centre over input adjustment and time required for preparation of the new draft of RGST bill, officials of the finance ministry said.
The finance ministry has asked the provinces to present the new draft in their assemblies by October 22.
“A number of changes are needed to be made in the draft submitted to the National Assembly by the finance ministry in May this year, including the title of the tax which has been changed to reformed GST instead of value added tax (VAT),” finance secretary Salman Siddique said. He said the provinces would have to submit the new RGST draft in their respective assemblies in 22 days. However, he said the bill would be approved through legislation.
The government had assured the IMF that VAT on goods and services would be imposed in July this year and to meet the conditionality a draft of the VAT bill was submitted in the National Assembly and four provincial assemblies before May 15.
But because of opposition by political parties and the business community, the government had decided to change the name of the tax to RGST and implement it from the second quarter of the current financial year.
The finance secretary said the delay in implementation of the tax would not annoy the IMF and it would not defer its next tranche of $1.7 billion because of this. “They (IMF) know that we are working on it (RGST) and key milestones have been achieved,” Mr Siddique said. “I am sure that the tax will be implemented before the next IMF review petition.”
A finance ministry official said that in order to save time, the new bill would not be submitted to the standing committees on finance of the National Assembly and Senate.
SNAG: Another snag has surfaced in the ‘Record Notes’ signed by the federal and four provincial governments on Tuesday.
Dr Kaiser Bengali, adviser to the Sindh chief minister, told Dawn that the notes had authorised the Federal Board of Revenue to collect GST on services which had substantial input adjustments. “Now we want to know the meaning of ‘substantial’ because it has open-ended interpretation,” Dr Bengali said.
The finance minister has said the matter will be decided by a committee before Oct 15, but the committee has yet to be formed.