The Sindh Revenue Board (SRB) has recently announced the sales tax rates applicable to services related to the sale and purchase of immovable properties within the province for the tax year 2020.
The working tariff released by the SRB outlines the rates, providing clarity to stakeholders in the real estate sector.
According to the working tariff, the standard sales tax rate for services provided on the sale and purchase of immovable properties is set at 13 percent. This rate is applicable to a broad range of real estate transactions and services.
However, the SRB has introduced a reduced rate of 10 percent for specific services related to the sale and purchase of immovable properties. It’s important to note that at this reduced rate, input tax adjustment will not be permitted. This provision aims to balance the reduction in tax liability with the restriction on input tax credit.
Property dealers, a key player in real estate transactions, are subject to a sales tax rate of 13 percent on services rendered. Those availing the reduced rate of 10 percent, however, will not be allowed to adjust input tax credit.
In the realm of services related to the renting of immovable property, the standard sales tax rate is set at 10 percent. A further reduced rate of three percent is also available for specific services within this category. However, service providers opting for the reduced rate will not be allowed to adjust input tax credit, emphasizing the trade-off between reduced tax liability and limitations on credit adjustments.
Interestingly, the SRB has introduced an exemption for sales tax on services related to the renting of immovable properties when provided or rendered to an individual person whose income does not exceed the maximum amount exempt from taxation under the Income Tax Ordinance, 2001. This exemption aims to provide relief to individuals with limited financial means, aligning with broader efforts to promote equitable taxation.
The release of these sales tax rates by the SRB is expected to bring transparency and clarity to the real estate sector in Sindh. Stakeholders, including property dealers, service providers, and individuals engaged in real estate transactions, can now navigate the tax landscape with a clearer understanding of the applicable rates. As the tax year concludes, these announcements play a crucial role in shaping the financial dynamics of the real estate industry in the province.
