Sales tax imposed on banking services of cheque books, lockers

Sales tax imposed on banking services of cheque books, lockers

KARACHI: SIndh government has imposed sales tax on services on cheque book issuance and maintaining locker vaults by a banking company to its customer.

According to amendment made to Sindh Sales Tax on Services Act, 2011 through provincial Finance Act, 2019, the tax has been imposed on non-fund based banking services.

The banking services have been included for tax purposes, included: bank guarantee; issuance of cheque book, payorder and demand draft; safe deposit lockers and safe vault. Besides, tax is also imposed on those services provided by banks that are not specified in the Act.

According to tax experts with the amendments to the Finance Act, 2019 following services are become taxable: Issuance of cheque book; and commission of all sorts including ‘Banca assurance’.

Tax experts at PwC A F Ferguson Chartered Accountants said that the taxability of banca assurance was contested by the Sindh Revenue Board as falling under tariff 9813.4990, which was rejected in a decision of the SRB Tribunal by majority.

Through the amendment more services have been added for tax purposes, included:

Services provided or rendered by cab aggregator and the services provided or rendered by the owners or drivers of the motor vehicles using the cab aggregator services.

Warehouses or depots for storage or cold storage.

Services of mining of minerals and allied and ancillary services in relation thereto.

Site preparation and clearance, excavation and earth moving and demolition services.

Waste collection, transportation, processing and management services.

Vehicle parking and valet services.

Electric power transmission services.