Excise and Taxation department, Government of Sindh

1. 1

2. National Institute of Management
21st Mid Career Management Course
2
RAG-2
Improving Quality of Service in Excise
& Taxation Department
Covering ADS: MR. Abdul Samad Channa
Date: 3-5-2015

3.  Group Members
Imtiaz Bhatti Ex PCS
Ashar shahzad FSP
Tariq Jamil ISI
Afzal Zaidi PAS
Anwar ul Haq PAS
3

4. Sequence
 Introduction
 Functions of Excise wing
 Function of Taxation Wing
 Challenges and Key Performance Indicators
 Impact Analysis
 Recommendations
 Conclusion
4

5. Definition of Excise Tax
 Excise tax refers to an indirect type of taxation
imposed on the manufacture, sale or use of certain
types of goods and products
For Example:
Excise taxes are commonly included in the price of
a product, such as cigarettes or alcohol or license
fee charged from professionals
5
http://www.businessdictionary.com

6.  Provides services for collection of various taxes and
duties and suggests ways and means for additional
resource mobilization in the Province.
 Department aims to
 Mobilize fiscal resources
 Promote automation and outsourcing of functions &
services
 Create tax-paying culture
 Transform HR into professionally Sound, motivated
team to provide better service delivery
Introduction 6

7.  Collection of different taxes
 Different levies of excise.
 The department is also tasked with the
enforcement of Hadd ordinance 1979 which deals
with the prohibition and licensing of liquors,
intoxicants and narcotics.
Functions 7

8. Organizational Structure 8

9. 665
41
ESTIMATE OF RECEIPTS
706 billion PKR
2015-16
Other Receipts 665
Excise and Taxation
Department
9

10. 0
100
200
300
400
500
600
Excise and
Taxation
Department
Sindh Revenue
Board
Board of
Revenue
Other Receipts
41 61 20
584
ESTIMATE OF RECEIPTS
706 billion PKR
10

11. Composition
 There are six Sections in the Secretariat Excise
& Taxation Department.
 1. Administration-I
2. Administration-II
3. Taxes
4. Excise
5. Budget & Accounts
6. General
11

12.  Collection of Excise Duty on
 Methylated & Rectified Spirit
 Liquor
 Administration of following Licenses
 Distillery &Liquor
 Manufacturing of Homeopathic Medicines
 Chemical Work
 Opium Powder
FUNCTIONS OF EXCISE WING 12

13.  Control of manufacturing and sale of intoxicating liquor
and drugs
 The Excise matters are dealt under the following
enactments:
Prohibition (Enforcement of Hold) ordinance 1979
Sindh Prohibition Rule 1975
 The Sindh Abkari act 1878
Sindh Excise Manual Volume-I
13

14. Excise Section
 This Section headed by an Excise and Taxation
officer and deals in:-
 Record of Monthly detection of Drugs.
 Appeal relating to cancellation/suspension of
licenses of liquor and wine shops.
 Complaints against the illegal sale of liquor.
 Malkhanas.
 Court Cases pertaining to Excise Crime & Wine
Shops.
14

15. Functions of Taxation Wing
15

16.  Following taxes/ duties are now being collected and
administrated by the department.
 Property tax
 Entertainment Duty
 Motor Vehicle Tax
 Excise Duty
 Professional Tax
 COTTON FEE
 Infrastructure cess
 Hotel Tax
FUNCTIONS OF TAXATION WING 16

17. Motor Vehicle Registration
 Levied and collected under Sindh Motor Vehicle
Taxation Act, 1958
 Types of Motor Vehicle Taxes/Fees:
New registration fee
Rates of transfer fee
Rate of token tax Motor Car
Rates of other post transaction
Rates of security featured items
Rates of withholding tax
Rates of Motor Tax on Commercial Vehicles
17

18. Property Tax
 Levied and collected under under Sindh Urban
Immovable Property Tax Act, 1958
 Uniform rate of tax on all categories of property
@ 25% of annual rental value
 Valuation table as per Section 5-A
 Exemptions
18

19. 19

20. 20

21. Professional Tax
 Levied and collected under Sindh Finance Act, 1964
and it include
 All persons assessed for Income Tax
 All limited companies with minimum paid up
capital and reserve of PKR 1 million
 All establishments other than limited companies
with minimum annual turnover of PKR 0.5 million
 Establishments not assessed for Income Tax
taxed at PKR 500 per annum
 All petrol pumps and CNG stations taxed at PKR
2500 per annum
21

22. Hotel Tax
 Hotel Tax is levied and collected under Sindh
Finance Act, 1977.
Hotel Tax is collected on ad-valorem
basis @ 7.5% of room rent per lodging
unit per day at the occupancy ratio of
60% & 40%
22

23. Cotton Fee
 Cotton Fee is levied under the Cotton
Control Ordinance 1968.
 The base of the Cotton Fee is the quantity
of Raw Cotton brought for ginning in the
Cotton Ginning Factory.
 The rate of Cotton Fee is Rs. 10/= per
100 K.G. of Raw Cotton.
23

24. Entertainment Duty
 Levied and collected under Sindh Entertainment Duty
Act, 1958
 Entertainment places such as Dramas, Plays,
Amusements, Parks, Sports etc.
 Dramas, plays, variety Programs - 10% of the payment
for admission
 Games and Sports 5% of the payment for admission
 Items of amusement other than above 25% of the
payment for admission
 Presently no duty is being collected from Cinemas.
24

25. Infrastructure Cess
 The Cess is levied and collected @ 0.9% to
0.95% on C and F value of a consignment of
goods entering the province from outside the
country through Air or Sea and on its movement
25

26. Challenges & Key Performance
Indicators
26

27. Challenges
a) Lack of Policy Attention:
 Political commitment absent.
 No solid institutional framework in E,T & N
Department.
 Less collection of taxes and excise duties than its
full potential.
27

28. b) Weak Tax Administration:
 Highly politicized, inefficient and corrupt.
 Could not set a realistic target and achieve the
same.
28

29. c) Weak Base of Own Resource Revenue (ORS):
 Tax revenue collection in the province of Sindh is
concentrated in a few taxes:
 Tax on services 49%.
 Transfer of property taxes 12%.
 Infrastructure cess 27%.
 Property tax less than 2%.
29

30. Source: Finance
Department, GoS.
30

31. d) High Administration and Compliance Costs:
 Complex and intricate laws.
 Weaker human resources.
 Political influences in functioning of E,T & N
department.
31

32. e) Poor Efficiency and Equity of Department
Taxation:
 Tax rates are high and methods of tax collection
encourage tax evasion, this is called inefficient
taxation.
 Taxes equity are also poor i.e. entertainment tax -
irrespective of income level.
 MVT - engine capacity.
32

33. f) Lack of Institutionalized of IT based business
process:
 No automation of record keeping and sales
transactions in the E,T & N department except for
MVT.
33

34. g) No Institutionalized evidence-led tax policy and
coordination mechanism:
 Presently, no system exists for a structured
communication among the three tax collecting
agencies e.g. BoR, SRS & E,T & N department.
34

35. h) Lack of tax facilitation centers and tax payer
education:
 Not a single taxpayer facilitation center.
 Similarly, no efforts were made by the
department for tax payer education.
35

36. Key Performance Indicators
a. Automation of Record and Services
b. Revaluation of Annual Rental Value
( Property Tax)
c. Impartment of Relevant Skills to Employees
36

37. Key Performance Indicators
d. Development of Field Data base through IT for
Professional Tax Collection.
e. Operationalisation of Online Tax payment
Mechanisms.
f. Establishment of Swift Tax facilitation Centers.
37

38. Impact Analysis
38

39. SWOT Analysis
•Strength
•Collection 0f 41 B of tax
•Efficient in tax collection
•Setup all across Province
•
•Weaknesses
•Manual working in some
Departments
•Low motivation level
•Poor Infrastructure
•Opportunities
•Proper training to employee
•Full computerized system
•Tax Awareness
•Threats
•Security system
•Corruption
•Processions or strikes
39

40. Year UIP Tax MV Tax Excise Tax Prof. Tax ETD Rev. Prov. Tax Rev.
2002 332 1089 674 156 2251 7996
2003 529 1404 742 158 2833 9679
2004 599 1636 1160 164 3559 11776
2005 800 2055 1312 176 4343 13642
2006 700 2060 1443 184 4387 14035
2007 800 2300 1650 310 5060 16380
2008 596 2161 1777 209 4743 15675
2009 463 2169 2112 222 4966 21562
2010 839 2964 2948 230 6981 42813
2011 2139 3193 2577 280 8189 60458
2012 1907 3327 3102 265 8601 68697
2013 4000 4880 3300 300 12480 89220
2014 4800 5160 3825 400 14185 107025
In Rs. Millions. (Source: Finance Department Gov. of Sindh)

41. 0
20000
40000
60000
80000
100000
120000
2000 2005 2010 2015
Year
MVT Ttax
Source: Finance Department, Govt. of Sindh.
(Years: 2002 - 2014)
Motor Vehicle Tax Revenue vs. Total Provincial Tax Revenue

42. 0
20000
40000
60000
80000
100000
2000 2005 2010 2015
Year
UIPT Ttax
Source: Finance Department, Govt. of Sindh.
(Years: 2002 - 2014)
Immovable Property Tax Revenue vs. Total Provincial Tax Revenue

43. 0
1000
2000
3000
4000
5000
2000 2005 2010 2015
Year
MV Tax Prof. Tax
UIP Tax Excise Tax
Source: Finance Department, Govt. of Sindh.
(Years: 2002 - 2014)
Comparison of Various Taxes Collected by the Excise Taxation Department

44. Rs.
6,352
million
Rs. 13,843
million
Rs. 73,643
million
Rs. 36,843
million

45. Recommendations
45

46. Refor
m
Strategy Actions Expe
cted
Reve
nue
Time
frame
StrategicPlanning
Strategic
direction and
operational
reforms
1. Organizational
vision
2. Tangible goals
3. Action Plan
4. Restructuring
- 6
Months
46

47. Reform Strategy Actions Expected
Revenue
Time
frame
PropertyTax
1. Revaluation of
ARV
2. IT based field
survey
3. Determination
of fair market
value
4. Exemptions
1. Procurement of
services of an
independent
firm
2. Survey
3. Revaluation
4. Amendment
5. Linkages (BOR,
SRB)
150%*
increase
over the
next 5
years.
2
year
47

48. Reform Strategy Actions Expected
Revenue
Time
frame
Professionaltax
1. Rationaliza
tion of Tax
Rates
2. IT based
field
survey
3. Sharing of
database
1. Third party
to conduct
survey
2. Linkages
200%
increase over
the next 5
years.
2 year
survey
in
major
cities
48

49. Reform Strategy Actions Expected
Revenue
Time
frame
Automation
1. Web portal
2. Web based
payment of
taxes
Through ADP
schemes
Computerized
database
already available
for MVT
1 Year
49

50. Reform Strategy Actions Expected
Revenue
Time
frame
HumanResourceManagement
a) HRM and training
b) Introduce Taxpayer
education and
facilitation services
a)Through ADP Schemes
b) Training of staff
d) Design and operational
Tax Campaigns to create
awareness and boost
voluntary compliance
1
Year
50

51. Reform Strategy Actions Expected
Revenue
Time frame
OrganizationalDevelopment
1. Establish
SWIFT Tax
Facilitation
Centers
2. Performance
Audit
3. Formalize IT
Management
a. Design and build
STFCs
b. System of
reconciliation / audit
will be linked with
NBP, AG Sindh &
treasury etc.
c. Operationalize the
department, develop
IT policy and SOPs
5% each
in Motor
Vehicle
Tax &
Property
Tax
(PKR
250 M)
Model
level
SFTs at
Divisional
Level in
next 6
months to
one year
51

55. Conclusion
55

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