ISLAMABAD: The Federal Board of Revenue has notified that the retrospective cross-adjustment of Sales Tax on goods and services levied by the Centre as well as the provincial governments will not be available to the service providers/registered persons of Khyber Pakhtunkhwa.
As per the FBR notification, the federal government has declared the tax levied under the following laws to be provincial sales tax for the purpose of input tax: The Balochistan Sales Tax Ordinance, 2000 (Balochistan Ordinance No 1 of 2000); The Islamabad Capital Territory (Tax on Services) Ordinance, 2001 (XLII of 2001); The Sindh Sales Tax on Services Act, 2011 (Sindh Act No XII of 2011) and The Punjab Sales Tax on Services Act, 2012 (Sindh Act No XLII of 2012).
However, it lacked any mention of the service providers in the KP. It is to be noted the Memorandum of Understanding (MoU) was signed among Federal Board of Revenue (FBR), Sindh Revenue Board (SRB) and Punjab Revenue Authority (PRA). On the other hand, no such MoU has been signed with the KPK Revenue Authority for extending the cross-adjustment facility to the service providers in KP.
Moreover, the Pakistan Revenue Automation Limited (PRAL) has to make necessary changes to software to ensure implementation of the cross-adjustment of Sales Tax on goods and services levied by the Centre and provincial governments. It is expected that the FBR and KPK Revenue Authority will sign an MoU for cross-adjustment of Sales Tax on goods and services soon.