CM recommends revival of abolished taxes to improve recoveries

KARACHI – The Sindh Board of Revenue during the last three years – 2020-21 to 2022-23 – was given a revenue recovery target of Rs100,640 million against which it could recover Rs48526 million, with a deficit of Rs52,114 million, which is why the CM gave it directed to propose a revival of the abolished taxes and improve the e-stamp regime so that recoveries could be improved.

This was announced at a meeting chaired by Sindh Chief Minister Syed Murad Ali Shah at the CM House here. The meeting was attended by Chief Secretary Asif Hyder Shah, PSCM Agha Wasif, SMBR Baqaullah Unar, Finance Minister Fayaz Jatoi, Revenue Board Member Abbas Baloch, Special Secretary Finance Nisar Memon and others.

Initially, Finance Minister Fayaz Jatoi told the CM that during the last three financial years, 2020-21 to 2022-23, the Board of Revenue (BOR) had collected Rs48526 million against a target of Rs100,640 million, which was a shortfall of Rs52114 indicates. million.

The CM said the BOR should bring efficiency in revenue collection. “The SMBR must recommend reforms where necessary, otherwise it must take concrete measures to improve performance,” he said, adding that he was not satisfied with the recoveries. SMBR Baqaullah Unar said BOR collects five taxes. He added that the BOR has a target of Rs55,218 million for the current financial year. The target for a period of nine months is Rs41,414 million, against which 33.57 percent or Rs13,901 million has been recovered.

The CM was told that the target for water tariff recovery was Rs805.309 million, against which Rs74.540 million or 9.2 percent was recovered in 2022-2023. To a query, the CM was told that out of 6,090 Dehs in the province, collection of 2,173 Dehs was done by the Sindh Irrigation Drainage Authority (SIDA). The collection of Rs74.540 million has been made from 3,917 dehs allocated to the Revenue Department. The agricultural income tax (AIT) for nine months is Rs2,723 million, against which the BOR collection is 44.82 percent or Rs1,220 million. The registration collection stands at 24.60 percent or Rs244 million against a target of Rs990 million. Similarly, the target of stamp duty was Rs36,787 million, but its collection was 33.24 percent or Rs12,229 million. The CM pointed out that the threshold for AIT exemption is 1.2 million, which is very high and can be put on par with the FBR threshold of 0.4 million. He said the limit for AIT’s assessment after the previous two assessment years could be changed to six years. Mr Shah said manual crop inspection, assessment and collection procedures should be digitized. To a question on the stamp duty shortfall, the CM was told that the overall economic situation of the country has affected real estate transactions. The negative impact of FBR taxes on real estate such as 3 percent on the petitioner and 10.5 percent on the non-filer-buyer, 3 percent on the petitioner and 6 percent on the non-petitioner-seller and the imposition of a assumed rental price on real estate at a rate of 1 percent.

National Bank’s 142 branches issue e-stamps and Sindh Bank has added 100 branches so far. An agreement has been signed with the Bank of Punjab for issuance of e-stamps for which approval from the SBP is awaited. The Chief Minister directed Chief Secretary Asif Hyder Shah to convene a meeting of the BOR and review the tax collection mechanism, find out its shortcomings and necessary improvements. “The BOR is an important tax collection organization of his government and has achieved achievements in tax collection and service delivery,” he said.

He directed the Chief Secretary to take a detailed briefing from the BOR on the shortage of inspection and IT staff in the Stamp Wing and facilities for the inspection staff and to address their issues. The CM directed SMBR to submit a revision of the old version. tax rates and a revival of abolished taxes for discussion and approval. It is recalled that the Registration Fee for the transfer of immovable property has been abolished in 2020. The Registration Fee covers the documents – Digital Scanning Fee, Power of Attorney, Mortgage Deed, Company Deed etc. The Capital Value Tax (CVT) was also abolished in September 2020 and land revenue (abolished) in May 2000. The land revenue collection consists of various fees such as Fard fee , change compensation, etc.