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  • FBR extends date of sales tax, FED payment

    FBR extends date of sales tax, FED payment

    ISLAMABAD: Federal Board of Revenue (FBR) on Thursday extended the last date for sales tax and federal excise duty (FED) payment for the month of July 2019 up to August 23, 2019.

    The FBR in an office order informed all Chief Commissioners Inland Revenue of Large Taxpayers Units (LTUs) and Regional Tax Offices (RTOs) regarding extension in the date for submission of sales tax and FED return for the tax period of July 2019.

    The FBR said that the date of payment of sales tax and FED for the tax period July 2019, which was due on August 10, 2019 and extended up to August 21, 2019, has been further extended up to August 23, 2019.

  • FBR urges consumers to provide sales tax deduction by unregistered persons

    FBR urges consumers to provide sales tax deduction by unregistered persons

    ISLAMABAD: Federal Board of Revenue (FBR) has urged consumers to provide invoices showing deduction of sales tax by unregistered persons.

    The FBR on Friday appealed the people to file complaints against charge of sales tax by unregistered businessmen.

    “The consumers’ are encouraged to send the images of such invoices or report the matter to FBR for action,” said a statement.

    It said that the FBR had issued a circular which has stated that general public has reported complaints against the businessmen who are charging sales tax from consumers without being registered with FBR under the Sales Tax Act, 1990.

    It is, therefore, clarified that sales tax registration number (STRN) (thirteen digits) is issued to every person who is registered for sales tax purpose and only that person is authorized to change sales tax on his taxable sales except where goods fall under third schedule to the Sales Tax Act, 1990.

    A business which is not registered for sales tax and does not have an STRN is not authorized to charge sales tax on the invoice.

    It is advised in the public interest that an invoice which does not bear a valid STRN should not include any sales tax amount and if any sales tax amount is indicated, the customer is entitled to demand a sales tax invoice with STRN printed on it.

    FBR has further clarified that mentioning of NTN is not a substitute for STRN. In order to facilitate the general public and providing a check on abuse of system, FBR has installed a special help line for this matter.

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  • Customers advised to pay sales tax only to registered suppliers

    Customers advised to pay sales tax only to registered suppliers

    ISLAMABAD: Federal Board of Revenue (FBR) on Thursday said that sales tax can only be recovered from customer if the supplier is registered for sales tax purpose.

    The FBR issued Sales Tax Circular No. 02 of 2019 and said that it was observed in many cases, suppliers of goods and services were charging sales tax on invoices/ receipts without identifying their sales tax registration number (STRN) on the ‘Invoices/Receipts’ issued to the customers. At times, National Tax Number (NTN) is indicated on invoices, to exhibit that the supplier is registered.

    The FBR suggested customers to ask for invoices/receipts having STRN on the invoices/receipts on purchase of goods and services. “Sales tax can only be recovered from the customer if the supplier is registered for sales tax purposes, and reflects the STRN on the invoice/receipt issued to the customer.”

    In other cases, the supplier is not entitled to recover sales tax from the customers. “Customers should beware of the same.”

    The FBR said many suppliers were charging sales tax from customers without getting them registered under the sales tax regime. This practice is against the law and is liable to penal action. “This practice leads to increase in prices and undue enrichment of sellers without any deposit of tax with the government,” the FBR said.

    Customers are suggested to seek invoice/receipts from suppliers with STRN on the invoices/receipts issued, if sales tax is charged on their purchases.

    The FBR further explained that buyer is not required to provide his NIC in case of purchases from a person not registered for sales tax.

    The FBR also clarified that in case of purchase of third schedule items, which are subject to sales tax on the basis of retail price and on which retail price along with sales tax is legibly and indelibly printed or embossed, the sales tax on the same is deposited by the manufacturer or importer. “In case of such items, STRN may not be required if the same are purchased from a retailer,” the FBR said.

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  • FBR notifies new chapter for sales tax withholding rules

    FBR notifies new chapter for sales tax withholding rules

    ISLAMABAD: Federal Board of Revenue (FBR) has notified a new chapter for deduction and deposit of sales tax withholding on taxable goods and services.

    The rules shall apply from today or July 01, 2019.

    The FBR issued SRO 698(I)/2019 to amend Sales Tax Rules, 2006 to include Chapter XIV-D regarding withholding of sales tax by recipient of supply.

    Following is the text of rules notified by the FBR through the SRO.

    “150ZZH. Application.— (1) This chapter shall apply to taxable goods and services as are supplied to the withholding agents as specified in the Eleventh Schedule to the Act, for the purpose of deduction and deposit of sales tax persons registered as exporters.

    (2) This chapter shall also apply to services on which federal excise duty is payable in sales tax mode, and the ones specified in the Schedule to the Islamabad Capital Territory (Tax on Services) Ordinance, 2001 (XLII of 2001).

    (3) Withholding agent, in case of supplies to Federal or Provincial Government departments, includes the accounting office which is responsible for making payment against the purchases made by a government department.

    150ZZI. Responsibility of a withholding agent.--(1) The withholding agent, intending to make purchases of taxable goods, shall indicate in an advertisement or notice for this purpose that the sales tax to the extent as provided in this Chapter shall be deducted from the payment to be made to the supplier.

    (2) A withholding agent, other than a recipient of advertisement services, shall deduct an amount as specified in the Eleventh Schedule to the Act and make payment of the balance amount to him as per illustration given below,–

    ILLUSTRATION (in case 1/5th of sales tax amount is to be deducted)

    Value of taxable supplies excluding sales tax: Rs. 1000

    Sales tax chargeable @ 17%: Rs. 170

    Sales tax to be deducted by the withholding Agent: Rs. 34 (i.e. Rs. 170 / 5)

    Sales tax payable by the withholding agent to the supplier: Rs. 136 (i.e. Rs. 170-Rs.34)

    Balance amount payable to the supplier by the withholding agent: Rs. 1136 (i.e. Rs. 1000 + Rs.136)

    Provided that the withholding agent shall not be entitled to reclaim or deduct the amount of tax withheld from such persons as input tax.

    (3) A person who receives advertisement services, in case the sales tax amount is not indicated on the invoice received, he shall deduct sales tax at the applicable rate of the value of taxable services from the payment due to the service provider.

    (4) Where the purchases are made by a government department, the following procedure shall be observed, namely:–

    (a) the Drawing and Disbursing Officer (DDO) preparing the bill for the accounting office shall indicate the amount of sales tax withheld as illustrated above. The accounting office shall adopt the procedure as indicated below:

    (i) in case of purchases made by a department under the Federal Government, the office of the Accountant General of Pakistan Revenue shall account for the amount deducted at source during a month under the Head of Account “B02341-Sales Tax” and send an intimation to the Chief Commissioner, Regional Tax Office, Islamabad, by the 15th of the following month;

    (ii) in case of purchases by departments under provincial or district governments, the Accountant General of the province or the District Accounts Officer, as the case may be, shall credit the amount deducted at source during a month to the head of account “GI2777-Sales Tax Deductions at Source under rule 40 & 40A of Chapter Miscellaneous of Sales Tax (Withholding) Rules, 2007”. Cheque for the amount will be prepared by the Accountant General or the District Accounts Officer, as the case may be, in the name of Commissioner having jurisdiction by debit to the aforesaid head of account and sent to the Commissioner by the 15th of the following month; and

    (iii) where the purchases are made by the departments falling in purview of Military Accountant General, the MAG shall account for the amount deducted at source during a month under the Head of Account “B0234l-Sales Tax” and send intimation to the Chief Commissioner, Regional Tax Office, Rawalpindi, by the 15th of the following month. The amount so deducted at source shall be reported by MAG office to AGPR through civil exchange accounts; and

    (b) the concerned Drawing and Disbursement Officer shall prepare the return in the form as set out in STR-28 for each month and forward the same to the Commissioner having jurisdiction by the 15th of the following month.

    (5) In case of purchases, not covered by sub-rule (4) or sub-rule (6), the sales tax deducted at source shall be deposited by the withholding agent in the designated branch of National Bank of Pakistan under relevant head of account on sales tax return-cum-payment challan by 15th of the month following the month during which the purchase has been made. The return-cum-payment challan shall be prepared and deposited with the bank in triplicate and the bank shall send the original to the Commissioner of Sales Tax having jurisdiction, return the duplicate to the depositor and retain the triplicate for its own record:

    Provided that a single return-cum-challan can be filed in respect of all purchases for which the payment has been made in a month.

    (6) In case the withholding agent is also registered under the Sales Tax Act, 1990, or the Federal Excise Act, 2005, he shall deposit the withheld amount of sales tax along with return filed for the month in which the purchase was made in the manner as provided in Chapter II, along with other tax liability:

    Provided that in case the withholding agent is not registered for sales tax or federal excise duty but holds a national tax number assigned under the Income Tax Ordinance, 2001 (XLIX of 2001), he shall file the return, as set out in STR-28, electronically and deposit the amount deducted at source in the manner as provided for persons filing returns electronically under rule 18:

    Provided further that any other withholding agent may also opt to file the prescribed return electronically and deposit the deducted amount in the manner as provided in this sub-rule.

    (7) The withholding agent shall furnish to the Commissioner of Sales Tax having jurisdiction all such information or data as may be requested by him for carrying out the purposes of these rules.

    (8) A certificate showing deduction of sales tax shall be issued to the supplier by the withholding agent duly specifying the name and registration number of supplier, description of goods and the amount of sales tax deducted.

    150ZZJ. Responsibility of the registered supplier.— (I) The registered supplier shall issue sales tax invoice as stipulated in section 23 of the Sales Tax Act, 1990, in respect of every taxable supply made to a withholding agent.

    (2) The registered supplier shall file monthly return as prescribed in Chapter II, taking due credit of the sales tax deducted by the withholding agent, in the manner as prescribed in the return.

    150ZZK. Responsibility of the Commissioner.—(1) The Commissioner shall keep a list of all withholding agents falling in his jurisdiction and monitor payment of tax deducted by withholding agents falling in his jurisdiction and shall also ensure that the return prescribed under these rules is filed.

    (2) The Commissioner shall ensure that the return received from the bank is duly fed in the computerized system as referred to in clause (5AA) of section 2 of the Sales Tax Act, 1990.

    (3) The Commissioner shall periodically ensure that the suppliers mentioned in the return filed by the withholding agents, as fall under his jurisdiction, are filing returns under Chapter II, and are duly declaring the supplies made to withholding agents.

    150ZZL. Exclusions.-The provisions of this Chapter shall not apply to the supplies
    of the following goods and services if made by a registered person, namely:-

    (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) telecommunication services;

    (v) goods specified in the Third Schedule to the Sales Tax Act, 1990 (VII of 1990), and the goods on which federal excise duty is payable in sales tax mode on the basis of retail price;

    (vi) supplies made by commercial importers who paid value addition tax on such goods at the time of import as prescribed under Twelfth Schedule to the Act, and

    (vii) Supplies made by an active taxpayer as defined in the Sales Tax Act, 1990 to another registered person with the exception of advertisement services.”

    This Notification shall take effect on and from the 1st day of July, 2019.

  • FBR issues uniform 17pc sales tax rates for petroleum products

    FBR issues uniform 17pc sales tax rates for petroleum products

    ISLAMABAD: Federal Board of Revenue (FBR) on Sunday issued uniformed sales tax rates for petroleum products effective from July 01, 2019.

    To implement the sales tax rates for petroleum products from July 01, 2019 the FBR issued SRO 700(I)/2019 on Sunday.

    In the earlier SRO 602(I)/2019 dated May 31, 2019, the FBR fixed the sales tax rate included: petrol 13 percent; high speed diesel oil, 13 percent; kerosene oil 17 percent; and light diesel oil at 17 percent.

    The FBR sources said that the sales tax rates have been increased on the two major products including petrol and high speed diesel oil, which are main revenue spinner.

    The FBR has been given Rs5,550 billion target for fiscal year 2019/2020, which is apparently an impossible target on the back of weak economic conditions and lower manufacturing output.

  • New values of steel products fixed for sales tax payment

    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.

  • FBR increases up to 28.34 percent retail value of CNG for sales tax collection

    FBR increases up to 28.34 percent retail value of CNG for sales tax collection

    ISLAMABAD: Federal Board of Revenue (FBR) has enhanced the consumer value of CNG by 28.34 percent for collection of sales tax from July 01, 2019.

    The FBR issued SRO 690(I)/2019 to notify the consumer value of CNG for the purpose of charging of sales tax from CNG stations by gas transmission and distribution companies.

    The FBR increased the consumer value of CNG to Rs69.57 per kilogram for Region-I, which included Khyber Pakhtunkhwa, Baluchsitan and Potohar Region (Rawalpindi, Islamabad, and Gujar Khan. The increase in consumer value is around 7.36 percent for this region as compared with the previous rate of Rs64.80 per kilogram.

    However, the FBR increased the consumer value of CNG by 28.34 percent for Region – II to Rs74.04 per kilogram from Rs57.69 per kilogram.

    The Region – II is included: Sindh and Punjab excluding Potohar Region.

    Large Taxpayers Unit (LTU) Karachi two years back presented a draft amendment, which stated:

    “Notification in exercise of powers under subsection (8) of section 3 for value of supply of CNG to CNG consumers as per prevailing market price in the same way as it is being issued in case of sale of petroleum product every month.

    “Board [FBR] may kindly issue the notification in exercise of powers under subsection (8) of section 3 for value of supply of CNG to CNG consumers as per prevailing market price in the same way as it is being issued in case of sale of petroleum products to avoid huge loss of monthly sales tax revenue.”

    The LTU Karachi said that the Gas Transmission and Distribution Company charges sales tax from CNG stations @ 17 percent of the value of supply to the CNG consumers as notified by the Board from time to time in terms of section 3(8) of the Sales Tax Act, 1990.

    Board accordingly vide its SRO No. 236(I)/2014 dated 31-03-2014, had notified the value of supply to the CNG consumers as the total value added cost of CNG as notified by the OGRA.

    The latest notification issued by OGRA is dated 31.08.2015 which fixed the maximum CNG price as follows:

    RegionValue Added CostGST

     

    @ 17%

    		Maximum

     

    CNG Sale Price

    I64.8011.02Rs. 75.82
    II57.699.81Rs. 67.50

    On 21-12-2016, OGRA deregulated the CNG sector in Pakistan, and directed the CNG station operators/associations to fix the rates themselves, as per market demand.

    This caused in an instant increase in the rates of CNG which jumped from Rs. 67.50 per kg in the Southern Region to Rs.79 overnight.

    However, the Gas distribution companies are charging sales tax on the previously issued notification of OGRA dated 31-08-2015.

    As a result, the CNG stations are collecting sales tax on maximum CNG sales price at Rs79 per kg from the end consumers where as the Government is getting sales tax from the Gas distribution companies on maximum retail price at Rs67.50, incurring a loss of sales tax revenue of Rs1.67 per kg.

    This loss of sales tax revenue of Rs.1.67 per kg is being collected from end consumers and pocketed by CNG stations.

    CNG retail price per kg on which SSGC is collecting GST (Rs.)GST @ 17%(Rs)CNG prevailing market retail price (Rs)GST @ 17% (Rs)Loss in sales tax revenue per kg(Rs)
    67.509.8179.0011.481.67

    The per month loss to the government revenue comes to be Rs75 million only in the case of SSGCL as the average monthly sale of Gas to the CNG stations by SSGCL is 50 million kgs of gas.

    Similarly the loss in case of SNGPL which caters more than three times of CNG stations is fairly high.

  • Finance Bill 2019: Special regime for steel sector abolished; normal tax at 17pc imposed

    Finance Bill 2019: Special regime for steel sector abolished; normal tax at 17pc imposed

    ISLAMABAD: The government has abolished special sales tax procedure for steel sector through Finance Bill 2019 and imposed 17 percent federal excise duty in sales tax mode.

    According to amendment proposed to Federal Excise Act, 2005 through Finance Bill 2019, normal tax of 17 percent ad valorem has been proposed on supply of steel billets, ingots, ship plates, bars and other long re-rolled products.

    A fourth schedule to FED Act has been proposed for minimum production of steel products.

    The minimum production for steel products shall be determined as per criterion specified below:

    01. Steel billets and ingots: one metric ton per 700 kwh of electricity consumed.

    02. Steel bars and other re-rolled long profiles of steel: one metric ton per 110 kwh of electricity consumed.

    03. Ship plates: 75 percent of the weight of the vessel imported for breaking.

    Procedure and conditions:–

    (i) Both actual and minimum production, and the local supplies shall be declared in the monthly return. In case, the minimum production exceeds actual supplies for the month, the liability to pay duty shall be discharged on the basis of minimum production:

    Provided that in case, in a subsequent month, the actual supplies exceed the minimum production, the registered person shall be entitled to get adjustment of excess duty on account of excess of minimum production over actual supplies:

    Provided further that in a full year, as per financial year of the company or registered person, or period starting from July to June next year, in other cases, the duty actually paid shall not be less than the liability determined on the basis of minimum production for that year:

    Provided also that in case of ship-breaking, the liability against minimum production, or actual supplies, whichever is higher, shall be deposited on monthly basis on proportionate basis depending upon the time required to break the vessel.

    (ii) The Board, may notify minimum values for steel products as mentioned in the Table above in exercise of powers under sub-section (5) of section 12.

    (iii) The payment of FED on ship plates in aforesaid manner does not absolve ship breakers of any tax liability in respect of items other than ship plates obtained by ship-breaking.

    (iv) The melters and re-rollers employing self-generated power shall install a tamperproof meter for measuring their consumption. Such meter shall be duly locked in room with keys in the custody of a nominee of the Commissioner Inland Revenue having jurisdiction. The officers Inland Revenue having jurisdiction shall have full access to such meter.

    (v) The minimum production of industrial units employing both distributed power and self-generated power shall be determined on the basis of total electricity consumption.

  • Budget 2019/2020: Measures related to sales tax, federal excise

    Budget 2019/2020: Measures related to sales tax, federal excise

    The Federal Government of Pakistan has unveiled an extensive array of budgetary measures targeting the Sales Tax and Federal Excise frameworks for the fiscal year 2019/2020.

    (more…)
  • FBR extends dates for payment, return filing of sales tax, federal excise

    FBR extends dates for payment, return filing of sales tax, federal excise

    ISLAMABAD: Federal Board of Revenue (FBR) has extended the last date for payment of duty and tax and filing of sales tax and federal excise returns for the month of May 2019.

    The FBR issued notification on Monday addressing all chief commissioners of Inland Revenue regarding extension in the date for submission of sales tax and federal excise return for the tax period of May 2019.

    The dates have been extended considering the Eid holidays which are falling on June 04 to June 07, 2019.

    The FBR extended the date of submission of Annexure-C and Annexure-I of the sales tax and federal excise return up to June 15, 2019, the date of payment of sales tax and federal excise duty up tot June 18, 2019 and the date of submission of sales tax and federal excise return up to June 21, 2019 for the tax period May 2019 due to Eid-ul-Fitr holidays.

    Earlier, tax practitioners requested the FBR to extend the dates.

    A letter has been sent on Friday to FBR Chairman Syed Muhammad Shabbar Zaidi for urgent consideration and for extension of time for e-filing of sales tax annexure ‘C’ and sales tax returns for the tax period May 2019.

    The Pakistan Tax Bar Association (PTBA) in its letter to FBR chairman informed that the last date for e-filing of sales tax annexure ‘C’ of sales tax returns and filing of sales tax return for the month May 2019 is June 10, 2019 and June 15, 2019, respectively. However, due to Eid Holidays due from June 04 to June 08, 2019, all the business houses will remain closed.

    The PTBA further said that the first word day after Eid and weekly holidays shall be June 10, 2019 which will be the last day of filing of Annexure “C”. Therefore it would not be practically possible to submit annexure “C” and Sales Tax Return in time.

    In view of above, the PTBA requested to extend the last date of e-filling of Sales Tax annexure “C” and e-filling of sales tax return up to June 18, 2019 for the tax period May 2019 to facilitate the taxpayers to fulfill their legal obligations properly.