ISLAMABAD: The government has announced an incentive on sales tax rate on supplies made by restaurants and eateries on account of takeaway.
The FBR issued SRO 725(I)/2021 dated June 08, 2021 to exempt sales tax in excess of five percent chargeable on supplies made by restaurants and eateries on account of takeaway subject to the condition that no input tax shall be adjusted.
The notification shall remain in force up to June 30, 2021.
ISLAMABAD – In a bid to enhance transparency and compliance, the Federal Board of Revenue (FBR) has stipulated that registered businesses must retain their sales tax records for a period of six years for audit and examination purposes.
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The Federal Board of Revenue (FBR) has amended tax laws to legally authorize the direct recovery of sales tax amounts from the bank accounts of tax defaulters.
(more…)Sales Tax Act, 1990 has explained the meaning of sales tax imposed on supply of goods.
The Sales Tax Act, 1990 [updated up to June 30, 2020 issued by the Federal Board of Revenue (FBR)] has explained the following:
“sales tax” means – –
(a) the tax, additional tax, or default surcharge levied under this Act;
(b) a fine, penalty or fee imposed or charged under this Act; and
(c) any other sum payable under the provisions of this Act or the rules made thereunder;
“sales tax account” means an account representing the double entry recording of sales tax transactions in the books of account.
The Federal Board of Revenue (FBR) announced on Wednesday the exemption of sales tax and additional sales tax on the import of 52 fire-fighting vehicles.
(more…)ISLAMABAD: Federal Board of Revenue (FBR) has said that buyer’s CNIC (Computerized National Identity Card) detail is now mandatory on the invoice issued by seller for providing service in order avail credit.
The FBR in its explanation of Sales Tax and Federal Excise through Circular No. 01 of 2020, stated the word “services” has been added along with goods to enlarge the scope of disallowance of input tax on account of non-mentioning of CNIC of the buyer by the seller on the invoice as required under section 23 of the 1990 Act.
Resultantly, input tax claimed against goods as well as services shall be disallowed on pro rata basis if supplies have been made to persons without obtaining their CNIC/ NTN subject to the conditions mentioned in the law.
The measure is expected to optimally broaden the sales tax base.
The FBR explained that Following two changes have been made in subsection (7) of Section 3: The expression “by the buyers” has been omitted and after the word “persons” the expression “being purchaser of goods or services” has been added”.
The first change is only clarificatory/consequential, however, the second change enlarges the scope of sales tax withholding by including purchase of services in the ambit of sales tax withholding regime.
ISLAMABAD: Federal Board of Revenue (FBR) issued budget salient feature related to sales tax and federal excise duty (FED) presented through Finance Bill, 2020.
RELIEF MEASURES
MEASURES FOR REMOVAL OF ANOMALIES
3(a) In order to encourage documentation, it has been decided to provide relief to organized retail sector which is integrated online with FBR through Point of Sale system. Their existing sales tax rate is proposed to be reduced from 14 percent to 12 percent
STREAMLINING MEASURES
SALIENT FEATURES
FEDERAL EXCISE DUTY
The proposed budgetary measures pertaining to Federal Excise Duty (FED) for FY 2020-21 are:
HEALTH RELATED MEASURES
MEASURES FOR REMOVAL OF ANOMALIES
4(a) In the wake of worsening affect of COVID-19 and reduction in production of cement, it has been proposed to reduce FED on cement from Rs. 2 per kg to Rs. 1.75 per kg.
STREAMLINING MEASURES
KARACHI: Nausheen Javaid Amjad, Chairperson of Federal Board of Revenue (FBR) has ruled out reducing sales tax rate to single digit and said such move would bankrupt the economy of the country.
However, she hinted at reducing the further sales tax rate in the upcoming budget 2020/2021.
A press release issued by Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Friday quoted FBR chairperson as saying. She made these comments while a meeting with the office bearers of the apex trade body.
The chairperson said that refunds are fully automated under FASTER; amendment in Annexures-F and H should be identified by the exporters for FBR consideration; tax on machinery would be abolished.
The FBR chairperson further highlighted proposals to be incorporated in the Finance Bill 2020 which included that tax on distributors would be uniformed; tax rates including minimum tax rates would be reviewed for reduction; withholding tax paid would be appeared on IRIS w.e.f June, 2020; Exemption Certificate Law would be amended and rationalized; option would be given to remain in presumptive tax regime or opt for normal tax regime ; greenfield industry issue would be resolved in consultation with Engineering Development Board (EDB).Regarding CNIC condition the Chairperson, FBR said that agreement has been made with the traders and cannot be reversed.
In response to the customs issues raised by the FPCCI, she replied regulatory duty on tyre would be considered to abolish in the next budget.
She proposed to hold second round of the meeting to discuss the FPCCI Proposals in detail for consideration and incorporation in the forthcoming Federal Budget 2020-21.
KARACHI: Overseas Investors Chamber of Commerce and Industry (OICCI) has recommended harmonization of sales tax on goods and services and should be set at 13 percent as applicable in Sindh province.
The OICCI in proposals for budget 2020/2021, said that the sales tax rate in Pakistan, at 17 percent, is the highest in Asia. Our analysis shows an average of less than 12 percent in Asia, with a range of 6 percent to 17 percent.
Moreover different rates of sales tax on goods and services i.e. standard, reduced, specified etc. prevailing in the country lead to a number of issues for business organizations operating all over the country.
Sales tax rates (federal and provincial), both on goods and services, should be harmonized throughout the country and be aligned to 13 percent charged in Sindh.
Moreover only one Tax return should be filed with FBR.
The OICCI highlighted the issue of admissibility of Input sales tax on civil work and other equipment and materials.
Adjustability of input sales tax restricted under section 8(1)(h) & (i) of Sales Tax Act, 1990 and SRO 490(I)/2004 on building material, office equipment, furniture & fixtures, vehicles & their parts used for taxable activity purposes has increased the cost of doing business for all documented sectors, and encourages procurement from un-registered sector whereby 17 percent sales tax cost is mitigated with only 5 percent sales tax withholding.
The OICCI recommended that Sub-Section (1)(h) and (i) of section 8 of STA 1990 should be deleted.
SRO 490(I)/2004 which is in contradiction with section 8 should also be rescinded.
The overseas chamber pointed out the issue of sales tax be applied at the time of delivery, instead of Earlier of Receipt of Payment or Delivery of Goods.
It said that prior to amendment made in section 2(44) of Sales Tax Act, 1990, vide Finance Act, 2013, sales tax was levied at the time of actual delivery of goods regardless of time of payment.
Application of sales tax on advances causes serious operational issues and also leads to unnecessary reconciliations resulting in hardships to taxpayers.
The OICCI recommended that sales tax be applied at the time of actual delivery for ease of doing business, rather than earlier of receipt or delivery.
The OICCI said that as per serial no. 1 and 2 of Eleventh Schedule of Sales Tax Act, 1990, Government departments/ bodies/ authorities and Companies as defined in ITO 2001 are required to withhold sales tax against supplies made by registered and active sales taxpayers. This is only creating hardship for registered sales tax persons as Government departments are not making withholding sales tax payments through FBR web-portal system and deductions made by Companies like leasing companies, Modarabas, etc who are not registered in STA 1990 and FBR does not allow any manual entry of such withholding sales tax.
After implementation ‘STRIVe’ from July 2016 onwards, no mismatch arises between input and output tax for transactions with registered sales tax persons.
Therefore, withholding sales tax on purchases made by Government departments/ bodies/ authorities or unregistered taxpayers, etc. from registered sales tax persons being active taxpayer is only creating hassles and unnecessary documentation for tax payers.
It is recommended to abolish serial no. 1 and 2 of Eleventh schedule of STA 1990.
Sales tax SRO’s are issued so frequently that it is very difficult to keep oneself updated with respect of different SRO’s and it’s also difficult to identify the current applicable SRO.s
All active SRO’s should be made part of the Act. Subsequently in every budget, SRO’s issued during the previous year, should also be made part of the Act.
Joint and several liability of registered persons in supply chain where tax remains unpaid.
As per section 8A of Sales Tax Act, 1990 a registered person purchasing goods is jointly and severally liable if the sales tax is not paid by the seller of the goods. It is quite unjustified to punish a genuine buyer for an offense committed by corresponding supplier. This section is also inequitable as payments are made after verifying the seller status on the FBR portal at the time of purchase.
It is recommended that Section 8A of the Sales Tax Act, 1990 should be abolished.
As per section 8B a registered person is not allowed to adjust input tax in excess of 90 percent of the output tax for that period in STA 1990.
It is recommended that section 8B of the STA 1990 should be abolished for registered taxpayers. Most industries have long term import contracts with international suppliers. Due to current COVID pandemic situation, sales of companies have reduced significantly and resultantly, input tax is getting accumulated as full adjustment of input taxes against output tax is not possible.
KARACHI: Business community has urged Federal Board of Revenue (FBR) to defer CNIC condition on purchases above Rs50,000 for at least six months.
In a statement Saquib Fayyaz Magoon, Convener of Federation of Pakistan Chambers of Commerce and Industry (FPCCI) standing committee on Sales Tax and Chairman Indenters Association of Pakistan (IAOP), urged Government to pay attention on economic crises due to lockdown for prevention of coronavirus pandemic and has demanded Prime Minister to defer CNIC Condition for 6 months on sale of goods to unregistered persons in view of the current economic crisis.
Magoon Said due to situation caused by the coronavirus, all payments to exporters have been stopped and export orders canceled while the economic activities have also stopped. While there has been a severe crisis of cash flow in the market, therefore, by defer the condition of the CNIC will improve the cash flow situation, otherwise there will be another major financial crisis.
He also requested the government to accept sales tax returns without CNIC and said that in the current economic crisis, now we will depend largely on the local consumer industry, who are already in crisis due to the CNIC condition.
Prime Ministers adviser on commerce Abdul Razzaq Dawood in which he assured that cash flow would not be affected by the Coronavirus.
So if he wants the cash flow not affected then CNIC Condition must defer for minimum six months so that business activities can be restored as usual.
Magoon pointed to the difficulties facing the businessman community over the ban on courier companies due to the lockdown, said the original document of import shipment could not be reached in the banks.
So as long as the lockdown is in place, the State Bank should issue clear instructions to the banks that the EIF be approved on the copy of the document to ensure uninterrupted clearance of imported goods. Because the original documents are required for EIF approval.
Due to not being provided original documents is causing constraints and importers are not able to file a GD which is causing consignment storage and shed charges.
Saquib Fayyaz Magoon appealed the Prime Minister Imran Khan that in view of the serious situation caused by the coronavirus, a directive should be issued to the State Bank that the EIF be approved on the copy of the document at the time of payment by the importers to the banks.