Sindh to tax rented-out commercial properties

 

PA passes Sindh Sales Tax (Amendment) Bill; MQM opposes law saying it will financially burden residents of urban areas

KARACHI: Amid stiff opposition by the lawmakers of the Muttahida Quami Movement (MQM), the Sindh Assembly passed into law the Sales Tax on Services (Amendment) Bill on Monday that would allow the government to collect tax on property rented out for commercial activities.

The MQM opposed the Sales Tax on Services (Amendment) Bill, 2015 on the premise that the provincial government was already collecting a major portion of its sales tax from the urban parts of the province.

The legislators of the opposition party said this new form of sales tax on rented out immovable properties in the province would increase the financial burden on the residents of urban areas.

The bill reads: “The renting of immovable property services means any service provided or rendered, to any person by another person, by renting of immovable property as defined in clause (72B) of this section, or any other service to such renting for use as offices or factories or in the course or furtherance of business and commerce.”

“Notwithstanding anything contained in this Act or any law for the time being in force, or any judgement, decree or order of any court, the notifications issued by the (Sindh Revenue) Board and the notices issued or orders passed by the officers of SRB (Sindh Revenue Board) for the registration of a taxpayer or for levy, collection, withholding, payment or recovery of tax on the renting of immovable property services shall be deemed to have been validly issued or passed under this Act.”

Finance and Energy Minister Murad Ali Shah at the time of the consideration of the bill clarified in the House that no new tax was being levied in the province and only a legal ambiguity was being removed through the amendment.

He said in the year 2000, the then military ruler introduced the sales tax while the Sindh governor at that time through an ordinance had given power to the federal government to collect sales tax.

The minister said an amendment moved by the Pakistan Peoples’ Party at that time for transferring tax collection rights to the provinces from the Centre had been rejected. He added that the credit for empowering provinces to collect sales tax on services went to the previous PPP’s government.

Opposing the bill, MQM’s Khawaja Izharul Hassan, the leader of the opposition in the House, said the urban areas of Sindh were bearing major brunt of the taxes being imposed in the province.

He added that there had been no focus on the development of the province’s cities. Hassan noted that the provincial government had spent development funds to the tune of Rs900 billion in the last seven years of its rule but no mega development programme had been completed in the urban areas.

The opposition leader said he was not expressing any bias or prejudice but only advocating the rightful case of the citizens of Larkana, Hyderabad, Sukkur, and Karachi. MQM’ parliamentary leader Sardar Ahmed said the provincial government was already collecting up to 99 percent of its sales tax from Karachi, Hyderabad, and Sukkur.

Besides, up to 85 percent of the other taxes were also being collected from the urban parts of Sindh. In this situation, he added, these cities should not be overburdened with a new form of sales tax on services.

During the clause-by-clause reading of the bill, the opposition lawmakers vociferously shouted slogans against the legislation while some of them even tore its copies. After the passage of the bill through a majority vote, speaker Agha Siraj Durrani adjourned the house till Tuesday.