Fiscal Federalism

After the 18th Amendment[1] to the Constitution[2], goods are taxed by the federal legislature, and the services by the provinces[3]. There is no concurrency in tax. For a particular transaction, the tax is either levied by the federal legislature, or by the provinces. Under the current framework, the supply of goods is taxed by the center under the Sales Tax Act, 1990. The provinces, after the 18th Amendment, have promulgated provincial legislations to bring the taxation on services within their provincial domain.