Pkrevenue.com

Tag: sales tax on services

  • Insurance agents liable to pay 13% sales tax on services

    Insurance agents liable to pay 13% sales tax on services

    KARACHI: Sindh Revenue Board (SRB) has said that insurance agents are liable to pay 13 percent sales tax on services provided or rendered to their clients.

    The SRB issued updated working tariff for tax year 2020 and notified sales tax rate for various services. According to the working tariff the insurance agents are liable to pay 13 percent sales tax on services provided or rendered.

    However, a reduced rate of five percent is available to insurance agents with condition that input tax credit shall not be admissible.

    The SBR also notified sales tax rate for other services such as electric power transmission services liable to 13 percent sales tax on services.

    The provincial revenue body said that vehicle parking and valet services liable to 13 percent sales tax on services. However, a reduced rate of five percent also available with condition that input tax credit shall not be admissible.

    The rate of 13 percent sales tax applicable on: actuarial services; services of mining of mineral and allied and ancillary services in relation thereto; site preparation and clearance, excavation and earth moving and demolition services; waste collection and management services; warehouse or depots for storage or cold storages; supply chain management or distribution, including delivery) services.

    The services provided or rendered by cab aggregator and the services provided or rendered by the owners of drivers of the vehicles using the can aggregator services are liable to 13 percent sales tax. A reduced rate of 5 percent of such services is also available with condition that the input tax credit shall not be admissible.

  • Sales tax rates on services provided by goods transportation

    Sales tax rates on services provided by goods transportation

    KARACHI: Sindh Revenue Board (SRB) has issued updated working tariff for tax year 2020 and notified sales tax rates on services provided or rendered by persons engaged in inter-city transportation.

    According to the SRB, the sales tax shall be 13 percent on services provided or rendered by persons engaged in inter-city transportation or carriage of goods by road or through pipeline or conduit.

    However, this rate shall be reduced at 8 percent with the condition that input tax credit/adjustment shall not be admissible.

    The sales tax rate shall be 13 percent on services provided or rendered by persons engaged in inter-city transportation or carriage of goods by road through truck addas or through bus/wagon stands excluding road transportation or carriage of goods through addas or through bus/wagon stands excluding road transportation of

    (i) petroleum oils through oil tankers;

    (ii) automotive vehicles, classified under tariff headings of Chapter 87 of the First Schedule to the Customs Act, 1969, as are transported or carried through specialized vehicle carriers; and

    (iii) Goods and cargo through vehicles operated by Fleet Logistic Companies having not less than 25 vehicles in its fleet

    The reduced rate of three percent is allowed with condition that input tax credit shall not be admissible.

    These services are also exempt from sales tax on following:

    Services provided or rendered by persons engaged in inter-city transportation of goods by road during the period from July 01, 2014 to the June 30 ,2015, provided that :

    (a) Such person has neither billed /involved/ charged the service recipient any amount of tax nor collected or received any amount of tax from the service recipient on account of such transportation or carriage services as were provided during the said Period;

    Provided further that the amounts of tax billed or invoiced or charged or received or collected, if any, by the such person for the services provided or rendered during the period from the 1st July,2014 to the 30th June, 2015, are e-deposited in Sindh, Government’s head of account “B-02384” in the prescribed manner on or before the 15th day of July, 2015.

    (b) Such person gets e-registered with the SRB on or before 25th day of July, 2015, in accordance with the provisions of section 24 of the Act, read with the rules prescribed thereunder; and

    (c) this exemption shall not entitle any exemption benefit or any claim for refund of the amount of tax already deducted or withheld or paid or deposited by any person in relation to the services provided or rendered or received or procured during the period from 01st day of July, 2014 to the 30th day of June, 2015. Such amount shall be deemed to be the tax under section 16 of the Act and shall be e-deposited in Sindh Government head of account “B-02384” in the prescribed manner on before the 15th day of July, 2015, failing which it shall be recovered alongwith penalty and surcharge as prescribed in the Act.

  • Sales tax rate on services provided by fashion designers

    Sales tax rate on services provided by fashion designers

    KARACHI: Sindh Revenue Board (SRB) issued updated working tariff for tax year 2020 and notified sales tax rate on fashion designers.

    The services provided or rendered by fashion designers shall be 13 percent. The SRB does not provide any reduced rate for this service category.

    The FBR said the services provided by race club shall be subject to 13 percent sales tax. However, the services of entry/admission the sales tax shall be charged at Rs200 per entry ticker or entry pass of the person visiting the race event.

    The SRB said that services provided or rendered by program producers and production houses shall be 13 percent. However, reduced rate of eight percent with condition that the input tax adjustment shall not be admissible.

    Similarly, service provided or rendered by corporate law consultants the tax rate shall be 13 percent. However, the reduced tax rate of eight percent is available with condition that the input tax credit shall not be admissible.

    The tax rate is 13 percent for services provided or rendered by call centers.

    The reduced rate at 3 percent is available on:

    1. Services provided or rendered by a call center from a place of business in Sindh for which the registered person receives the value of the services from a place outside Pakistan in foreign exchange through banking channels in the business bank account of the registered person in the manner prescribed by the State Bank of Pakistan.

    2. Input tax credit shall not be admissible.

  • Sales tax rate on services provided by property developers

    Sales tax rate on services provided by property developers

    KARACHI: Sindh Revenue Board (SRB) has issued updated working tariff for tax year 2020 under which 13 percent sales tax is applicable on services rendered by property developers.

    (more…)
  • Rate of sales tax on banking services

    Rate of sales tax on banking services

    KARACHI: Sindh Revenue Board (SRB) has issued updated working tariff for tax year 2020 which showed banks to pay 13 percent on sales tax regarding various services provided to customers.

    According to working tariff the sales tax shall be charged at 13 percent on services provided or rendered by banking companies in relations:

    Guarantee including bank guarantee

    Brokerage

    Letter of credit

    Issuance of cheque books, pay order and demand draft

    Bill of exchange

    Transfer of money including telegraphic transfer, mail transfer and electronic transfer

    Commission including bill discounting commission

    Safe deposit lockers and safe vaults

    Other services not elsewhere specified

    Issuance, processing and operation of credit and debit cards

    Commission and brokerage of foreign exchange dealings

    Automated Teller Machine operations, maintenance and management

    Service provided as banker to an issue

    Others, including the services provided or rendered by non banking, finance companies, modaraba and musharika companies and other financial institutions.

  • Sales tax rates on professional services issued

    Sales tax rates on professional services issued

    KARACHI: Sindh Revenue Board (SRB) has issued amended working tariff for tax year 2020 under which the tax rate for rendering professional services shall be at 13 percent.

    The SRB also notified reduced rate for professional services with condition of not allowing input tax adjustment.

    According to SRB working tariff chart updated till December 31, 2019, legal practitioners and consultants are required to pay sales tax on services t 13 percent.

    However, legal practitioners have option to pay reduced rate of 8 percent sales tax on services but input tax credit/adjustment shall not be adjustable.

    Similarly the sales tax rate is 13 percent for services rendered by accountants and auditors.

    The services rendered by accountant and auditors’ are exempted from sales tax if it services are exported, by registered persons, outside Pakistan, to such of the service recipients as are not located and not resident in Pakistan, subject to the condition that the value of export of the services is received in foreign exchange through banking channels in the business bank accounts of the registered person exporting the services and is also reported to the State Bank of Pakistan in the manner prescribed by the State Bank of Pakistan.

    However, the accountants and auditors have been given option to pay reduced tax rate of 8 percent on which input tax adjustment shall not be allowed.

    The SRB said that the sales tax rate of 13 percent is applicable on management consultants, technical, scientific and engineering consultants.

    The sales tax on services is also at 13 percent for software or IT based system development consultants. However, the services are exempt in case software or IT-based system development consultants’ services exported, by registered persons, outside Pakistan subject to the condition that the value of export of the services is received in foreign exchange through banking channels in the business bank accounts of the registered person exporting the services and is also reported to the State Bank of Pakistan in the manner prescribed by the State Bank of Pakistan.

    Other consultants including tax consultants, human resources and personnel development consultants are subject to 13 percent sales tax on services rendered by them.

    The SRB allowed reduced rate of tax at 8 percent on these consultants with condition that input tax adjustment will not be allowed.

  • Sales tax rates for services rendered on immovable properties

    Sales tax rates for services rendered on immovable properties

    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.

    (more…)
  • FBR proposed to collect sales tax on services

    FBR proposed to collect sales tax on services

    ISLAMABAD: The federal government is planning to takeover right to collect sales tax on services from the provinces as it was felt the true potential of collection was not realized.

    According to minutes of the meeting chaired by the prime minister to review proposed restructuring of Federal Board of Revenue (FBR) and domestic resource mobilization, held last month, it is discussed that revenue potential of General Sales Tax (Services) is not being fully realized owing to jurisdiction issues between FBR and provincial revenue authorities.

    It is also discussed that cross provincial jurisdictional and conflict of interest issues also stifles collection of GST on services.

    The sales tax on services needs to be collected centrally by FBR as per rates legislated by provincial governments.

    Tax proceeds of GST on services can be transferred directly to provinces as per delineated jurisdiction and share.

    In this regard it is decided that a joint committee comprising representatives of ministry of finance, FBR and provincial revenue authorities would be constituted to finalize proposal for central collection of GST on Services by the FBR.

    It is further decided mechanism of transfer of tax proceeds of GST on services be worked out by the ministry of finance.

    It is worth mentioning that prior the 18th Amendment to the Constitutions, the FBR was collecting sales tax on services. However, after the amendment the Sindh government was the first to establish a separate entity to collect sales tax on services arising within the jurisdiction of the province.

    The other provinces also followed the same and set up their revenue collecting agencies.

    Experts believed that the plan of the federal government would be reversal of such transfer of rights to the provinces.

  • 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.

  • Sindh adds 13 new services to provincial sales tax

    Sindh adds 13 new services to provincial sales tax

    KARACHI: The Sindh government has included 13 new services for the collection of sales tax from July 01, 2019.

    According to PwC A F Ferguson Chartered Accountants following services are proposed to trigger Sindh Sales Tax (SST) effective July 1, 2019:

    1. Renting of machinery, equipment, appliances and other tangible goods.

    2. Indoor sports and games center.

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

    4. Warehouses or depots for storage or cold storages.

    5. Training services.

    6. Actuarial services.

    7. Services of mining of minerals and allied ancillary services

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

    9. Waste collection, transportation, processing and management services

    10. Vehicle parking and valet services

    11. Electric power transmission services

    12. Insurance agents

    13. Tailoring and stitching services by fashion designers.

    For the purpose of taxing new services, certain definitions are proposed in the Finance Bill 2019.

    The chartered accountants said that no definitions have been proposed for ‘services of mining of mineral and allied & ancillary services in relation thereto’ and ‘electric power transmission services’.

    In the definition of training services, exclusion is proposed for ‘coaching or training of sports’ which is apparently for promotion of sports.