Tag: Sales Tax Act 1990

FBR notifies revision in exemption regime under sales tax laws

ISLAMABAD: Federal Board of Revenue (FBR) has issued changes brought through Finance Act, 2019 in exemption regime under Sixth Schedule of the Sales Tax Act, 1990.

Following changes have been made in Table-1 of the Schedule:

i. Exemptions at the existing serial numbers 2,3, and 72, relating to meat, fish, poultry meat etc. have been amended to clearly provide that these exemptions also apply to products specified thereunder even if these products are packed.

ii. Under serial number 19, the products of milling industry, as sold in retail packing bearing brand names, have been excluded from purview of exemption, however, wheat and meslin flour shall remain exempt even if so packed or sold under a brand name. Redundant PCT Heading 1102.1000 has also been omitted.

iii. Serial numbers 36 and 37 pertaining to Gold and Silver, in unworked condition, have been omitted. Gold and Silver have been placed in the 8th schedule and chargeable to sales tax at the reduced rate of 1%. Gold and Silver have also been excluded from the purview of minimum value-addition tax of@ 3% at import stage under Twelfth Schedule.

iv. The expression “excluding electricity and natural gas” has been added in serial number 52A relating to exemption on goods supplied to specified hospitals. Now, such hospitals are no more eligible for exemption on supplies of electricity and gas.

v. The exemption at serial number 85, as available to fat filled milk, has been restricted to such milk as is not sold in retail packing under a brand name or a trademark. Such packed and branded fat filled milk now shall be subject to 10% sales tax under Eighth Schedule.

vi. In view of doing away with the special procedure for steel industry, the exemption available to vessels / ships for breaking at serial number 95 has been omitted. Vessels imported for breaking up are now taxable at 17%. Field formations of Customs should ensure chargeability of sales tax on import of vessels since 1st July, 2019.

vii. New serial number 151 has been added. This is a transposition of exemption under SRO 1212(I)/2018 which now has been rescinded and which provided exemption on supplies made within the tribal areas. In the transposed form, it allows further exemption on imports of industrial input including plant and machinery imported by industrial units located within tribal areas. These exemptions on imported inputs / plant and machinery shall be available subject to security mechanism specified under this serial.

viii. Newly added serial 152 provides exemption on supplies of electricity as made to all consumers in tribal areas. However, this exemption shall neither be available to industries established after 31st May, 2018, nor to any steel and ghee /oil industries.

ix. Through new serial number 153, imports and supplies by manufacturers of steel billets, ingots, ship plates, bars and other long re-rolled profiles, have been exempted. In lieu of this exemption, federal excise duty has been imposed on these items in sales tax mode.

In Table-2, relating to local supplies, two changes have been made:

(i) Exemption under serial number 16 shall not be available to ginned cotton, as the same has been subjected reduced rate of 10% in Eighth Schedule, at newly inserted serial number 65 in Table 1.

(ii) The exemption to cottonseed oil has been provided at serial number 25.

Related Posts

FBR issues new withholding sales tax rates on supplies

July 29, 2019

FBR issues new withholding sales tax rates on supplies

ISLAMABAD: Federal Board of Revenue (FBR) has announced new rates of withholding sales tax after abolishing Sales Tax Special Procedure (Withholding) Rules, 2007.

The FBR said that as Sales Tax Special Procedure (Withholding) Rules, 2007, have been rescinded, the rates of withholding and exclusions for the same have been provided in newly inserted Eleventh Schedule, as provided in amended section 3(7) of Sales Tax Act, 1990, effective from July 01, 2019, as under:

Table

S.No.	Withholding agent	Supplier category	Rate or extent of deduction
(1)	(2)	(3)	(4)
1	(a) Federal and provincial government departments; autonomous bodies; and public sector organizations (b) Companies as defined in the Income Tax Ordinance, 2001 (XLIX of 2001)	Registered persons	l/5th of Sales Tax as shown on invoice
2	(a) Federal and provincial government departments; autonomous bodies; and public sector organizations (b) Companies as defined in the Income Tax Ordinance, 2001 (XLIX of 2001)	Person registered as a wholesaler, dealer or distributor	1/10th of Sales Tax as shown on invoice
3	Federal and provincial government departments; autonomous bodies; and public sector organizations	Unregistered persons	Whole of the tax involved or as applicable to supplies on the basis of gross value of supplies
4	Companies as defined in the Income Tax Ordinance, 2001 (XLIX of 2001)	Unregistered persons	5% of gross value of supplies
5	Registered persons as recipient of advertisement services	Person providing advertisement services	Whole of sales tax applicable
6	Registered persons purchasing cane molasses.	Unregistered persons	Whole of sales tax applicable

The rates for withholding or deduction by the withholding agent shall not be applicable on following goods and supplies:

(i) Electrical energy;

(ii) Natural gas;

(iii) Petroleum products as supplied by petroleum production and exploration companies, oil refineries, oil marketing companies and dealers of motor spirit and high speed diesel;

(iv) Vegetable ghee and cooking oil;

(v) Telecommunication services;

(vi) Goods specified in the Third Schedule to the Sales Tax Act, 1990;

(vii) Supplies made by importers who paid value addition tax on such goods at the time of import; and

(viii) Supplies made by an Active Taxpayer as defined in the Sales Tax Act, 1990 to another registered persons with exception of advertisement services.

July 28, 2019

Female consumers can present CNIC of husband, father for purchase above Rs50,000: FBR

ISLAMABAD, February 20, 2024 – The Federal Board of Revenue (FBR) has issued a clarification stating that female consumers can present the CNIC of their husband or father when making purchases above Rs50,000.
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July 23, 2019
Consumers may not able to get 5pc sales tax rebate till FBR notification

ISLAMABAD: General public may not be able to avail 5 percent rebate on their purchases until a notification is issued by the Federal Board of Revenue (FBR).

Through Finance Act, 2019 a new proviso has been added wherein customers of Tier-1 retailers are entitled for pay-back up to 5 percent of sales tax involved in the sales tax invoice.

This shall encourage the customers to demand sales tax invoice from registered retailers.

“However, these provisions shall be applicable when the Board so notifies,” said the FBR in instructions to Inland Revenue offices regarding enforcing changes to sales tax laws made through Finance Act, 2019.

The FBR informed the IR about changes made to regime of Tier-1 retailers.

These changes are included option to pay 2 percent turnover tax has been withdrawn.

Provisions relating to SRO 1125(I)/2011 under which zero-rate sales tax was available, have been omitted, thus subjecting textile and leather items to normal rate except for the integrated retail outlets for which the rate shall be 14 percent as per amendment in Eighth Schedule.
Another new proviso aims at expanding the scope of real-time integration beyond textile and leather. These provisions shall become effective when the Board so notifies.

After such notification, the input tax shall be reduced by 15 percent for retailers failing to integrate Point of Sales (POSs) in the prescribed manner, as provided in the newly inserted sub-section (6) in section 8B.

July 12, 2019
FBR directs customs to ensure retail price print on imported goods

KARACHI: Federal Board of Revenue (FBR) has directed customs authorities to ensure printing of retail prices on imported goods for collection of sales tax while clearance of consignments.

The Inland Revenue Policy Wing issued directives on Wednesday to Inland Revenue and Customs for the implementation of changes brought in to Sales Tax Act, 1990 through Finance Act, 2019.

It said that the locally manufactured goods specified in Third Schedule are already chargeable to sales tax on the basis of retail price.

Now, through amendment in section 3(2)(a) of Sales Tax Act, 1990, retail price taxation has also been made applicable to imported goods.

The importers are required to print the retail price in the manner prescribed in the aforesaid clause and such goods shall be assessed on the basis of declared retail price and not on the basis of customs value under section 25 of the Customs Act, 1969.

“All Model Customs Collectorates (MCCs) are requested to ensure that the declared retail prices are duly printed in the prescribed manner and that the sales tax is charged on the basis of such declared retail price,” the FBR said.

Twelve new serial numbers have been added to Third Schedule through Finance Act, 2019 such as electric and gas appliances, motorcycles, auto-rickshaws biscuits, tiles etc.

The FBR directed Large Taxpayers Units (LTUs) / Regional Tax Offices (RTOs) / MCCs should ensure application accordingly.

The FBR defined the value of supply, which has been amended to provide for application of retail price taxation to imported goods, and also to incorporate provisions from rescinded rules and STGOs.

These modifications are enumerated below:

Amendment in clause (d) to exclude imported Third Schedule items from purview of application of ‘customs value’ determined under section 25 of the Customs Act, 1969. These items are to be assessed on the basis of declared retail price. Further such price is also required to be printed on imported goods as stipulated in clause (a) of section 3(2) of the Sales Tax Act, 1990.

(ii) Substitution of clause (f) in section 2(46) pertains to value of supply in case of toll manufacturing, which has defined to be the charges received in lieu of value addition carried out on goods;

(iii) Newly added clause (h) defines value to be energy purchase price in case of supply by IPPs; and

(iv) Another new clause (i) transposes the provisions relating to exclusion of late payment surcharge from value, in case of supply of electricity and gas by the distribution companies, from the rescinded Sales Tax Special Procedures Rules, 2007.

July 10, 2019
Reduced sales tax rates on supply of gold, jewelry imposed

The Federal Board of Revenue (FBR) has introduced significant amendments through the Finance Act, 2019, bringing gold, jewelry, and other precious articles into the sales tax ambit by implementing reduced rates on supplies.
(more…)

July 8, 2019
Finance Act 2019: CNIC condition for sales tax invoices applicable from August 01

KARACHI: The condition of obtaining CNIC number for unregistered persons at the time of supplies by registered person will be applicable from August 01, 2019.

The condition has been proposed to be applicable from July 01, 2019 through Finance Bill 2019.

However, through Finance Act, 2019 this condition now will be applicable from August 2019.

An amendment has been introduced through Finance Bill 2019 to Section 23 of Sales Tax Act, 1990 under which it was now required specifically to mention particulars on invoices in Urdu or English language. Tax Invoice is also required to reflect CNIC Number of recipient in case supplies are made to unregistered person.

The Finance Bill 2019 also proposed to require a supplier of textile yarn and fabric to mention count, denier and construction, in addition to description, on tax invoice at the time of making taxable supply.

According to commentary on Finance Act, 2019 issued by PwC A F Ferguson Chartered Accountants NTN or CNIC are now required to be mentioned in tax invoice in respect of supply to unregistered persons.

In the Finance Bill 2019, only CNIC was proposed to be mentioned on tax invoice.

Further through Finance Act 2019, such requirements have been made effective from 1st August, 2019.

However, an exception from such requirement has been introduced through the Finance Act for supplies made by a retailer where the transaction value inclusive of sales tax does not exceed rupees fifty thousand, if sale is being made to an ordinary consumer.

The term ‘Ordinary Consumer’ has also been explained in the Finance Act as a person who is buying goods for his own consumption and not for the purpose of re-sale or processing. It has been further provided in the Finance Act that in case it is subsequently proved that CNIC provided by the purchaser was not correct, liability of tax or penalty shall not arise against the seller, in case of sale made in good faith.

July 5, 2019
New values of steel products fixed for sales tax payment

ISLAMABAD: Federal Board of Revenue (FBR) has notified new valuations for steel products for the purpose of collecting sales tax from July 01, 2019.

The FBR on Saturday issued SRO 697(l)/2019 to fix the following values of locally produced goods specified in the Table below, for the purpose of payment of sales tax on ad valorem basis, at the rate as applicable to specified in sub-section (1) of section 3 of the Sales Tax Act, 1990.

1. Steel bars: Rs83,000 per metric ton

2. Steel Billets: Rs74,000 per metric ton

3. Steel Ingots/bala: Rs72,000 per metric ton

4. Ship plates: Rs72,000 per metric ton

5. Other re-rollable iron & steel scrap: Rs47,000 per metric tons

In case the value of supply of the goods specified in this notification is higher than the values fixed herein, the value of goods shall be the value at which the supply is made.

The FBR said that the SRO would take effect on and from the 1st day of July, 2019.

June 30, 2019
Finance Bill 2019: 12th Schedule introduced to levy 3pc value addition sales tax on all imported goods

ISLAMABAD: The government has proposed Twelfth Schedule to Sales Tax Act, 1990 to streamline imposition of 3 percent value addition tax on imported goods.

The schedule has been proposed to make part of the Act through Finance Bill, 2019.

According to the schedule,

(1) The sales tax on account of minimum value addition as payable under this Schedule (hereinafter referred to as value addition tax), shall be levied and collected at import stage on all taxable goods as are chargeable to tax under section 3 of the Act or any notification issued thereunder at the rate specified in the Table in addition to the tax chargeable under section 3 of the Act or a notification issued thereunder:

(2) The value addition tax under this Schedule shall not be charged on,—

(i) Raw materials and intermediary goods meant for use in an industrial process which are subject to customs duty at 16% or 20% ad valorem under First Schedule to the Customs Act, 1969;

(ii) The petroleum products falling in Chapter 27 of Pakistan Customs Tariff as imported by a licensed Oil Marketing Company for sale in the country;

(iii) Registered service providers importing goods for their in-house business use for furtherance of their taxable activity and not intended for further supply; and

(iv) Cellular mobile phones or satellite phones.

(3) The value addition tax paid at import stage shall form part of input tax, and the importer shall deduct the same from the output tax due for the tax period, subject to limitations and restrictions under the Act, for determining his net liability. The excess of input tax over output tax shall be carried forwarded to the next tax period as provided in section 10 of the Act.

(4) In no case, the refund of excess input tax over output tax, which is attributable to tax paid at import stage, shall be refunded to a registered person.

(5) The registered person, if also dealing in goods other than imported goods, shall be entitled to file refund claim of excess carried forward input tax for a period as provided in section 10 or in a notification issued there under by the Board after deducting the amount attributable to the tax paid at import stage i.e. sum of amounts paid during the claim period and brought forward to claim period. Such deducted amount may be carried forward to subsequent tax period.”

June 13, 2019
PTBA advises revisiting arrest, prosecution law under sales tax

KARACHI: Pakistan Tax Bar Association (PTBA) has advised the Federal Board of Revenue (FBR) to revisit law related to arrest and prosecution under Sales Tax Act, 1990.

In its tax proposals for budget 2019/2020, the apex tax bar said that under the existing law, every director and officer of the Company is liable to be arrested if the officer has reasons to believe that such director or officer is personally responsible for actions of the Company contributing tax fraud.

Accordingly, a person who is a nominee director or employee director can be held responsible for the liability of the company.

The PTBA said that as per interpretation of the law nominee or employee directors be who are not involved in the administrative matters of a taxpayer are being held responsible for the liability of the taxpayer.

“It is a trite law that before any coercive action is taken against any person; it is the duty of the Revenue Officer to provide proper opportunity of being heard and pass a judicious order to establish that the act of the registered person is willful and there was an element of mens rea.”

In the Income Tax Ordinance, 2001 such matters are covered under Section 139 thereof which comprehensively deals with the liability both in case of company and association of Persons. “Section 139 needs to be replicated in the Sales Tax Act, 1990 on the similar lines.”

The PTBA said that the proposed amendment would protect interest of the nominee/employee directors.

Pointing out the issue of recovery of arrears under sales tax law, the PTBA said under Section 48 which deals with recovery of arrears does not provide any time limit to initiate the recovery proceedings.

“By virtue of section 45B of the Act, a registered person aggrieved by any decision, may file an appeal within thirty days of the date of receipt of the order. On the contrary, under Rule 71 of the Sales Tax Rules, proceeding of recovery of impugned tax may be initiated after thirty days from the date of order.”

In addition, recovery proceedings may be initiated as soon as Commissioner Inland Revenue (Appeals) confirmed the Order under Section 45B of the Sales Tax Act or Section 33 of the Federal Excise Act.

The PTBA said that the section 45B, 48 and the rule are not harmonized. Sometimes order is served to the registered person after many days of the date of order and the recovery proceedings may be initiated under the Rule even if the time limit provided for filing of the appeal has not lapsed.

Therefore, it is recommended that Rule 71 should be amended to provide commencement of recovery proceedings after thirty days from the date of receipt of the order.

Similarly, time limit of 30 days from the date of receipt of the order should be provided in section 48 to bring harmony between the Act and Rules.

The PTBA suggested that thirty days shall also be allowed for initiation of recovery proceedings in case demand is confirmed by the Commissioner Inland Revenue (Appeals) while disposing appeals filed under section 45B of STA and 33 of FEA.

Giving rationale to the proposal, the PTBA said that it would keep harmony between the Act and the Rules in the spirit of natural justice.

June 7, 2019