Karachi, July 24, 2024 – The Sindh Revenue Board (SRB) has unveiled a tax card detailing the sales tax rates on banking services for the tax year 2024-25. This release follows amendments made through the provincial Finance Act, 2024.
Effective from July 1, 2024, the SRB has confirmed that a standard sales tax rate of 15 percent will be applied to all banking services. The tax card outlines the specific services subject to this tax, providing clarity for banking institutions and customers alike.
The following banking services will attract the 15 percent sales tax:
1. Letter of Credit: Charges for issuing letters of credit will be taxed, impacting businesses involved in international trade.
2. Issuance of Cheque Books, Pay Orders, and Demand Drafts: The cost associated with these essential banking documents will now include sales tax.
3. Bill of Exchange: Services related to the processing of bills of exchange will be taxed, affecting financial transactions and credit operations.
4. Money Transfer Services: This includes telegraphic transfers, mail transfers, and electronic transfers, all of which will now incur sales tax.
5. Commission Services: This encompasses bill discounting commissions and other commission-based banking activities.
6. Safe Deposit Lockers and Vaults: Fees for these secure storage services will be subject to the sales tax.
7. Credit and Debit Card Services: The issuance, processing, and operation of credit and debit cards will attract the sales tax, affecting both cardholders and banks.
8. Foreign Exchange Dealings: Commissions and brokerage fees on foreign exchange transactions will be taxed, impacting forex trading and currency exchange services.
9. ATM Services: Operations, maintenance, and management of Automated Teller Machines (ATMs) will incur the sales tax.
10. Banker to an Issue: Services provided by banks in their role as bankers to an issue will be taxed.
11. Other Financial Services: This includes services provided by non-banking finance companies, modarabas, musharakas, and other financial institutions not specifically listed elsewhere.
The SRB’s decision to levy these taxes aims to streamline the tax framework and enhance Sindh provincial revenue collection. This move is expected to have significant implications for banking operations and customer costs within the Sindh province.
Banks and financial institutions located in the Sindh province will need to update their systems and inform their customers about the additional tax charges. Customers should anticipate potential increases in service fees as banks incorporate the new tax rates into their pricing structures.
The introduction of this tax card underscores the SRB’s commitment to maintaining a transparent and effective tax system in the Sindh Province. Stakeholders in the banking and financial sectors are advised to review the tax card carefully and adjust their financial planning accordingly to ensure compliance and mitigate the impact of these new tax measures.