@adnanshahid...i hvent got any adequate tim 2 get into a detailed conversation wid dad bt for ur query i hav read a bit ov the details ov the new tax provisions..and ive found that 1..tax imposition on the services sectr has been made miniml..and 2.yeah they r required to get thmselves registered 4 the sales tax..lastly the SRO in detail has been demonstrated at the site...www.fbr.gov.pk...u can also go via the FINANCE act available there as it wud answer all ur queries in an effective manner...!

Thank you so much indeed for your reply and gratitude:

salam everyone.

kinldy share your views as to what would happen after the formation of PRS/IRS. News is that officers from both departments means Customs and Income Tax would be given choice to join the new group which in itself carries income tax, excise and sales tax. Confusion is that after the PRS existence of income tax alone doesn't make sense.
Incase the new group comprises two departments i.e Sales and Excise, what should be the choice of income tax officers-should they stay in income tax or join sales and excise?

regards,

@MKKHAN

I think you are under a misconception here. It is Customs group which would be offered a chance to join PRS and not Income Tax group as the Income Tax group would itself constitute the PRS. We wouldn''t have to make any choice.

__________________
M-M-M

@adnan shahid...during the search 4 ansring ur query,ive learned many a things,myself...so it has really been a pleasure...dnt hav wrds 2 thank u adequately...so mention not plz...and THANKU 2...!

Dear Mumtaz, in fact, i read an article in the Business recorder-pasted below-which became the cause of confusion. Kindly go through the lines highlighted and share what you conclude.



FBR trying hard for establishing PRS
MUHAMMAD ALI
KARACHI (July 27 2009): The Federal Board of Revenue (FBR) is striving to establish Pakistan Revenue Service (PRS), which is one of the conditions of International Monetary Fund (IMF) to acquire the third tranche of the $7.6 billion standby loan.

Sources told Business Recorder on Saturday that the board has given the deadline of September 15 to Establishment Division for its constitution, and added that summary in this regard has been moved to the Prime Minister for approval.

Following the past poor experience pertaining to proposal for Inland Revenue Service (IRS), the FBR has decided to recruit fresh blood for the purpose, sources said.

They said that officials from customs and income tax groups have option to join 'PRS group' or continue the service in their respective groups. Furthermore, they said, the board could also exercise the power under section 10 of establishment rules to depute the officers from any group to PRS for three years.

"FBR is of the view that the existing income tax group was the driving cluster in the tax department; hence no new recruitment would be made in future," they added. They said that PRS is aimed to enhance revenue collection to create positive impact on tax-to-GDP ratio, which was posted at 9 percent in outgoing fiscal year.

They said the taxpayers are presently obligated to enrol in both sales tax and income tax departments, separately, to pay off their tax liabilities, while PRS would simplify the procedure by issuing single identity for both levies and would also discourage tax evasion. However, the officials from customs group are pessimist in this regard, and said that it could not provide any positive results unless the records of both systems would not reconciled in an effective manner.

They expressed apprehension over the issue, saying that records related to sales tax are not properly maintained, which creates difficulties for taxmen to share relevant information with other tax offices and urged the board to take remedial measures in this connection before introducing PRS.

regards,
M kashif khan

@MKKHAN

I am not sure but there must have been some kind of confusion.As the Income Tax Department would be enlarged with the inclusion of Sales Tax and Excise and would be renamed PRS.Therefore the question of Giving Income Tax officers a choice whether to join PRS or not does not make sense. As i have already mentioned it would be upon the Customs Officers to make a choice if they want to join PRS or to remain in their parent department.

Regards

__________________
M-M-M

ISLAMABAD (July 29 2009): The government is likely to promulgate Ordinance for harmonisation of income tax, sales tax, customs duty and federal excise laws through amendments in Sales Tax Act, 1990, Income Tax Ordinance 2001, Customs Act, 1969 and Federal Excise Act 2005.

Sources told Business Recorder on Tuesday that the Federal Board of Revenue (FBR) has constituted a committee, comprising Muhammad Ramazan FBR Member Domestic Operations South, and Khalid Aziz Banth Member Policy Direct Taxes, to examine the legal amendments on harmonisation of tax laws being prepared by FBR Member Legal.

Sources said that harmonisation of income tax, sales tax, customs duty and federal excise laws has been done through Finance Act, 2009. The remaining necessary amendments would be done through promulgation of Presidential Ordinance. The World Bank (WB) review mission has also asked FBR to implement harmonisation of tax laws for all domestic taxes.

The WB has also recommended modernisation of legal framework for revenue laws and to prepare the required legal documents to modify legislation on policy and administrative items; issue SROs and adjust IT systems to reflect the changes in tax laws. According to WB, harmonisation of different tax laws, namely income tax, sales tax, customs and federal excise duty, is one of the objectives of the ongoing reforms.

In this connection, some of the necessary amendments were introduced in the recently approved Finance Bill (2009-10). These amendments mainly related to appellate proceedings, appeal fees, fine, penalties and appointment of special judges.

However, once the new organisation is approved, additional procedures need to be harmonised by amending corresponding legislation pertaining to domestic taxes, the WB added. By harmonising relevant laws of sales tax, federal excise, income and customs duty, the issues related to appeals, litigation, recovery, prosecution, refunds and filing of documents could be similarly treated in all taxes to facilitate the business community, sources added.

Formation of two new service groups in FBR: summary to be moved to Establishment Division

ISLAMABAD ( 2009-07-19 04:45:42 ) :The Secretary, Revenue Division, would move a summary to the Establishment Division for immediate constitution of two new service groups ie Pakistan Revenue Services, and Customs Services, within the Federal Board of Revenue (FBR). FBR Chairman Sohail Ahmed told Business Recorder on Saturday that the FBR has moved a summary to Revenue Division Secretary for constituting two new occupational groups.

Under the reporting mechanism, the FBR Chairman has to move the proposals through the competent authority of the Revenue Division. The Secretary Revenue Division would subsequently forward the proposal to the Establishment Division for setting up new service groups, Sohail said.

Meanwhile, the World Bank has recommended to the FBR to prepare legislation to establish in FBR one or two new occupational groups that would be used in all new recruitment from 2009. The staff working in the Pakistan Revenue Service group will cover income tax, sales tax, excises and eventually VAT. All new recruitment from year 2009 will be done to one of the new groups.

The number of the new groups will be determined after an analysis to minimise the risk of legal challenge by affected parties. The FBR will design a conversion program for all FBR staff to transfer from current to new occupational groups. The FBR and the WB agreed that the functional reorganisation of tax administration, including constitution of new occupational group, necessary changes in all relevant laws and rules and issuance of notifications would be implemented by September 30, 2009.

According to WB, the new members and Directors-General of the revised organisation have been appointed and an integrated organisation is functioning at FBR headquarters. However, new challenges have emerged. The most sensitive and resisted issue is the integration of two FBR civil service groups--CEG and ITG--especially in relation to future career development and promotions.

To remove limitations and restrictions to integration, a number of legal and administrative adjustments have to be made. As recently agreed by top Ministry of Finance and FBR officials in Istanbul, to fully implement the functionally integrated RTO and LTU organisation, the Government of Pakistan will establish one or two new occupational groups--Pakistan Revenue Service, and Customs.

The FBR staff belonging currently to either income tax or customs and excise cadres will opt by a date to be specified to either remain in their current occupational group or join the appropriate new one. This decision will be irreversible. The staff choosing to stay in the current occupational groups will be assigned tasks according to their skills. Finally, the staff will be given a two-week period to decide whether to be transferred to a new occupational groups and the staff will be shifted accordingly.

As an initial step of this process, the Revenue Division will require the Establishment Division to prepare a proposal for the creation of the two new occupational groups indicated above. The Establishment Division will then take necessary actions and/or seek approvals and issue notifications. After this, the Revenue Division, or FBR, will seek changes of all the necessary related laws and rules, and the organisational structures of RTOs and LTUs will be amended, WB added.

Background of the issue showed that the FBR continued moving from co-location to integration, taking measures to complete the modernisation of its organisational structure and business procedures. In January 2009, the FBR took an important step in the direction of its modernisation. It approved an integrated organisational structure that eliminated Sales Tax (ST) and Income Tax (IT) wings and included a single operational Wing at headquarters responsibility of supervising the work of RTOs and LTUs.

The decision to implement a new organisation based on integration of core tax administration functions was made and cross-delegation of power by Commissioners/Collectors in the regional offices (RTOs and LTUs) was put into effect in May 2009. However, the FBR officers belonging to the Customs, Sales Tax and Federal Excise (CEG) group filed a legal complaint in the Islamabad High Court against the cross-delegation of powers and challenged the legality of this decision.

The Court accepted the claim and the FBR was ordered to suspend its application. The FBR followed this mandate and, as a consequence, a number of activities related to the FBR reorganisation were suspended and the integration of Income Tax and Sales Tax operational procedures at RTOs and LTUs was interrupted. Also, several decisions were reversed, including the organisational structure approved in January 2009.

Sources said that the authorities decided to continue the reform process. As a first step, the Income Tax Group (ITG) Officers Association and the CEG officers Association were called to discuss possibilities for an agreement that would allow the integration process to be continued.

As a result, on June 30, 2009, an Office Order was issued to establish a revised functionally integrated organisation at senior management level. This new organisation, headed by the Chairman, has 12 members working along four broad functional categories--Operations, Functional, Policy and Support. The regional formations will be directly supervised by two Members in the Operations Group (North and South). The member positions were equally divided between staff from both groups.

Under the next steps to implement organisational reforms, more steps for the implementation of organisational reforms were discussed in Istanbul (July 3-10 2009) with top FBR and Ministry of Finance authorities, and several agreements were reached. It would not be overemphasised that functional integration is indispensable and central for the modernisation process of FBR. The new and renovated political determination, expressed by the authorities, is critical for a strong drive focused on improving FBR effectiveness in the short term, sources said.

Source: AAJ Tv News.
http://www.aaj.tv/news/Business/141697_8detail.html

FBR trying hard for establishing PRS
MUHAMMAD ALI
KARACHI (July 27 2009): The Federal Board of Revenue (FBR) is striving to establish Pakistan Revenue Service (PRS), which is one of the conditions of International Monetary Fund (IMF) to acquire the third tranche of the $7.6 billion standby loan.

Sources told Business Recorder on Saturday that the board has given the deadline of September 15 to Establishment Division for its constitution, and added that summary in this regard has been moved to the Prime Minister for approval.

Following the past poor experience pertaining to proposal for Inland Revenue Service (IRS), the FBR has decided to recruit fresh blood for the purpose, sources said.

They said that officials from customs and income tax groups have option to join 'PRS group' or continue the service in their respective groups. Furthermore, they said, the board could also exercise the power under section 10 of establishment rules to depute the officers from any group to PRS for three years.

"FBR is of the view that the existing income tax group was the driving cluster in the tax department; hence no new recruitment would be made in future," they added. They said that PRS is aimed to enhance revenue collection to create positive impact on tax-to-GDP ratio, which was posted at 9 percent in outgoing fiscal year.

They said the taxpayers are presently obligated to enrol in both sales tax and income tax departments, separately, to pay off their tax liabilities, while PRS would simplify the procedure by issuing single identity for both levies and would also discourage tax evasion. However, the officials from customs group are pessimist in this regard, and said that it could not provide any positive results unless the records of both systems would not reconciled in an effective manner.

They expressed apprehension over the issue, saying that records related to sales tax are not properly maintained, which creates difficulties for taxmen to share relevant information with other tax offices and urged the board to take remedial measures in this connection before introducing PRS.

link:
http://www.brecorder.com/index.php?i...term=&supDate=