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Govt decides to restructure FBR & introduce centralized collection of GST

Govt decides to restructure FBR & introduce centralized collection of GST

ISLAMABAD: The government has decided to restructure the entire tax machinery and introduce centralised collection of general sales tax (GST) on services and goods.

According to sources, the proposed measures were already approved by PM Imran Khan on Oct 3 with a restructuring plan to convert the incumbent Federal Board of Revenue (FBR) into Pakistan Revenue Authority (PRA) with a deadline of June 2020.

Under the proposal, Ministry of Finance will prepare a comprehensive framework for PRA and centralised GST collection on services by the PRA. These reforms are part of the World Bank-funded ‘Pakistan Raises Revenue Project’.

On the issue of centralised collection of GST on services, it has been decided to constitute a joint committee comprising representatives from Ministry of Finance, the FBR and provincial revenue authorities to finalise a proposal.

The finance ministry will work out the mechanism for the transfer of tax proceeds of GST on services to provinces.

The decision to collect GST at the centralised level was taken on the plea that the collection potential is not fully realised owing to the jurisdiction issues between the FBR and provincial authorities. Cross-provincial jurisdictional and conflict of interest issues also stifle GST collection on services.