15 percent GST on professionals unlikely in next budget

ISLAMABAD (April 05 2003) : The International Monetary Fund (IMF) proposal to slap 15 percent general sales tax (GST) on professional services may take more than a year to have proper legislation in place, taking into account the opinion of all stakeholders before implementation.

It is not possible to bring these services into GST net in the coming budget (2003-2004).

IMF fiscal affairs department (FAD) report drafted by Richard Highfield, Richard Fulford, Michael Engelschalk, William Mayville and Geoff Seymour strongly recommended imposition of GST on eleven services including professionals.

A senior CBR official working closely with the IMF team told Business Recorder on Friday that imposition of GST on professional service providers like lawyers, accountants, architects, engineers, consultants, contractors, etc does not directly relate to the CBR.

The federal/provincial governments have the jurisdiction of decision-making sans direct involvement of tax authorities.

Even the present services liable to GST were brought under the tax net as per provincial ordinances and CBR collect taxes on behalf of provinces.

The issue of GST on professional services needs mutual understanding of federal government and provinces.

This issue is already pending before the National Finance Commission (NFC) where federation and four federating units ie Punjab, Sindh, NWFP and Balochistan have discussed the levy of GST on professional services. Provinces have demanded of the federal government to bring professional services within the tax net.

The professionals will be brought under the GST regime after reaching consensus among all four provinces and federal government.

However, provincial legislation must empower the CBR to collect GST on professional services on behalf of the provinces.

He admitted that all these professionals must be brought under the GST regime, but the professionals were reluctant to pay GST as once they were registered under the GST regime, they could not evade the income tax authorities.

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