WHOLESALE & RETAIL TAX FIGHT WHO HAS THE RIGHT TO TAX WHAT?

A major debate is building around whether wholesale and retail trade can be treated as a “service” for sales tax purposes under provincial laws. Pakistan runs a dual system: the federal government collects sales tax on goods, while provinces collect sales tax on services. The problem starts when wholesale and retail, where goods are bought and sold and ownership changes hands, are labelled as “services” without properly matching how business actually works. If wholesalers and retailers are treated purely as service providers, it creates confusion about who owns the inventory, when revenue should be recorded, and how the supply chain should be taxed. It can also clash with the constitutional position that sales tax on goods is a federal subject. The suggested practical way forward is a hybrid approach: federal sales tax should apply on goods up to the final consumer price, provinces should tax the actual services element (where it clearly exists), and the system should be integrated so input credits and reporting are properly reconciled, until any long-term constitutional reform brings a unified GST model.