Sales tax rates for construction services updated

KARACHI: Sindh Revenue Board (SRB) has issued updated rates of sales tax on construction services. The SRB explained the rate of sales tax at normal, concessionary and exempted on construction services.

The SRB issued working tariff updated up to November 01, 2020.

Following are the rate of sales tax on construction services:

The SRB said that a general rate of 13 percent is applicable on the construction services.

However, a reduced rate at 8 percent is also available on following conditions:

(i) The benefit of this reduced rate is not available to persons, engaged in providing or rendering the construction services, who elect or opt to pay the statutory rate of tax at 13 per cent under the Special Procedure prescribed by the Board and avail of the input tax credit/adjustment facility as prescribed in the Act and rules

(ii) Input tax credit/adjustment shall not be admissible.

Another reduced rate at 5 percent is also available on following conditions:

(i) Construction service in relation to Government Civil Works for which expenditure is paid out of the expenditure budget of the Federal Government or the Local Government or the Cantonment Board.

(ii) Input tax credit/adjustment shall not be admissible.

The SRB said that sales tax on service is exempted on construction services related to:

(i) Construction work undertaken by a person whose annual turnover does not exceed 4 million rupees in a financial year;

(ii) Construction and development of EPZ, SEZ and diplomatic and counselor buildings; and

(iii) Construction of an independent private residential house, other than residential unit covered by tariff headings 9807.0000 or 9814.3000, having total covered area not exceeding 10,000 square feet.

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