The National Board of Revenue and the Department of Immigration and Passports are at loggerheads over payment of 15 per cent value-added tax on passport and visa fees, officials of the revenue board and DIP said. They said that the dispute began after the NBR had asked the immigration and passports department to pay VAT on funds it collected from clients as fees for providing passport, visa and other related services.
‘The department was asked to pay the VAT in line with article 5(4) of the Value-Added Tax Act-1991 which says that 15 per cent VAT will be imposed on the total receipts for providing services,’ a high official of the NBR told New Age on Thursday.
The article is applicable for providing passports, renewal of passports and other related services, he said.
He said that somehow the sector remained out of the VAT collection but now the revenue board decided to realise the VAT from the services.
On the other hand, the immigration and passport department has declined to pay VAT saying that it did not collect VAT from the service receivers, officials of the DIP said.
They said that the DIP had sought instruction from the home ministry, the department’s line ministry, in this connection.
‘We have already sought exemption from paying VAT from the finance ministry saying that VAT was not included in the passport fees the government had set through a gazette notification,’ a home ministry official told New Age.
If the government imposes VAT on passport fees, it will increase burden on mass people as most of the service seekers come mainly from the rural areas who seek passports for going abroad for jobs, he said.
‘There is confusion whether the existing fee includes the VAT or the service receivers will have to pay extra in VAT,’ a high official of the NBR said.
According to Value-Added Tax Act-1991, 15 per cent VAT will be imposed on total receipts of providing services that means VAT will always be in addition of fixed fees.
The DIP is declining to pay VAT showing this ground, he said.
The revenue board is discussing the issue and hopefully will give an instruction soon in this regard, he said.
‘But till now our position is that the DIP will have to pay VAT on money it received as fees from clients as it is the DIP’s failure for not collecting VAT. So, it is their problem how they will pay the VAT,’ said another NBR official.
In 2011, the revenue board issued the guideline on VAT deduction at source wherein government agencies, semi-government agencies, autonomous bodies, local authorities and limited companies are entitled to deduct VAT at source on total receipts from the clients at the time of providing and renewing any licence, registration and permit.
The guideline is issued in line with 19 E of Value-Added Tax Rule-1991.
If the government finally exempts the VAT on fees for passports and visas issued previously, the DIP will have to pay VAT for passports and visas it will issue in future, he said.
DIP officials said that as VAT is collected from consumers, imposition of VAT would put additional burden on people.
-With New Age input
