Sales tax exempted on services provided by beauty parlors

KARACHI: Sales tax has been exempted on services provided by beauty parlors or beauty clinics within the province of Sindh if their annual turnover is below Rs2.5 million.

According to Working Tariff for Sindh Sales Tax on Services (updated on November 01, 2020) issued by the Sindh Revenue Board (SRB) the normal sales tax is 13 percent on service provided or rendered for personal care by beauty parlors, beauty clinics, slimming clinics or centers and others.

However, sales tax on services has been exempted or allowed at reduced rate with different conditions.

The Sindh government granted exemption from sales tax to persons providing the services of hair cutting, hair dressing and hair dyeing and shaving with the condition they are not providing any other beauty treatment, beauty care, beauty parlor or beauty clinic service.

Further, sales tax has been exempted on services provided or rendered by beauty parlors/clinics and slimming clinics whose turn over does not exceed Rs2.5 million in a financial year:

Provided that the exemption shall not apply in case of beauty parlor/clinics and slimming centers:

(i) which are located within the building premises or precincts of a hotel, motel, guest house or club whose services are liable to tax;

(ii) which are franchisers or franchisees;

(iii) which have any branch or have more than one outlet in Sindh; and

(iv) whose total utility (electricity, gas & telephone bill exceeds Rs. 25,000/- in any month during a financial year.

A reduced rate of sales tax on services at 10 percent is available against the normal rate of 13 percent with the condition that input tax credit shall not be admissible.

Further a rate of sales tax on services at 5 percent is also available with condition that services provided or rendered by such beauty parlors, beauty clinics, slimming clinics who have submitted their option or election on Form “B” as prescribed under rule 42C of the Sindh Sales Tax on Services Rules, 2011, and fulfill the limitations, conditions and restriction prescribed in the Proviso to sub-rules (3A), (3B) and (4) thereof. Further, input tax credit/adjustment shall not be admissible.

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