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Tag: Sindh Revenue Board

  • 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.

  • Withholding agents to be liable to pay tax on failure to deduct Sindh sales tax

    Withholding agents to be liable to pay tax on failure to deduct Sindh sales tax

    KARACHI: The Sindh government has proposed legislation to make withholding agents responsible to pay tax on which he fails to deduct or fails to deposit deducted amount to provincial kitty.

    The Sindh Finance Bill 2019 proposed that the withholding agent is personally liable if he either fails to deduct tax or having deducted tax fails to deposit the tax in the government treasury which is revocable along with default surcharge, according to a commentary on Sindh Budget 2019/2020 released by PwC A F Ferguson Chartered Accountants.

    They said that it may be noted that Section 47(1B) already provides for collection of any tax short withheld or collected from the withholding agent which has been challenged in courts on various grounds.

    “Hence, the apparent purpose of bringing the said provision within Section 13 in this Finance Bill may also be examined in that context,” they said.

    The government while imposing liability on withholding agents needs to cover a situation where the person from whom tax was not deducted has already paid the tax before initiation of recovery from the withholding agent.

    In such situation, there should be no recovery of principal amount of tax from the withholding agent who failed to deduct the tax from the payment.

    A clarification to this effect is required to be inserted by way of an explanation so that such amendment would avoid unnecessary litigation as to the double recovery of tax from the withholding agent as well from the registered service provider, they said.

  • Sindh tax on online taxi service creates anomaly

    Sindh tax on online taxi service creates anomaly

    KARACHI: The levy on online taxi services introduced by Sindh government has created an anomaly as those taxi services not connected to ‘cab aggregator’ will remain outside the ambit of this tax, tax experts said.

    The Sindh Finance Bill 2019 has proposed to tax services of the “Cab Aggregator” including the services provided or rendered by the owners or drivers of the motor vehicle using the cab aggregator services.

    The rate of tax is 13 per cent on total consideration for providing or rendering such services from July 1, 2019 onwards.

    The bill also defines “cab aggregator” to mean a person who is an aggregator or operator or intermediary or online marketplace who canvasses or solicits or facilitates passengers for travel by motor vehicles like tax, cab, car, van, motor cycle and rickshaw, and who connects the passenger or the intending passenger to a driver of any of the aforesaid motor vehicles through telephone cellular phone, internet, web-based services or GPS or GPRS-based services, electronic or digital means, whether or not he charges or collect any fee, fare, commission, brokerage or other charges or consideration for providing or rendering such services.

    “The aforesaid insertion in taxable services has created an anomaly whereby motor vehicles, like taxi, cab, car, van, motor cycle and rickshaw not connected to a cab aggregator will remain outside the ambit of such tax,” said PwC A F Ferguson Chartered Accountants in a commentary on Sindh Budget 2019/2020.

    They said that it appears that the aforesaid services will become uncompetitive compared to services of cabs, taxi, rickshaw etc. which are not connected to a cab aggregator.

    “Due to complex nature of operations, special procedure rules for chargeability and collection of tax on such services is required to be introduced separately,” they added.

  • PTBA proposes withdrawal of restriction on input claim under Sindh sales tax

    PTBA proposes withdrawal of restriction on input claim under Sindh sales tax

    KARACHI: Pakistan Tax Bar Association (PTBA) has urged the Sindh government to withdraw the restriction on claiming input tax by services rendered by a taxpayer.

    The apex tax bar in its proposals for Sindh budget 2019/2020, said that no input tax is allowed to be claimed on goods or services acquired prior to six months preceding the date of commencement of the provision of taxable services by a taxpayer.

    It is recommended that such restriction should be eliminated.

    That any bar on admissibility of input tax borne by the taxpayer prior to six months preceding the commencement of provision of taxable services is against the basic principal of Value Added Tax (VAT). It is also not justifiable in case of a long term projects.

    Any assessment order can be amended by a tax officer on the basis of any subsequent information, etc. Such powers are arbitrary and unjust and may open the doors for harassment and corruption, the tax bar said.

    Therefore it is recommended that the taxpayer should first be confronted with a show-cause notice with substantial reasons and definite information/evidence(s) that warrant reopening or amending the assessment order.

    Further, the powers to amend any assessment order should only be vest with the Commissioner or Board only.

    This recommendation would introduce transparency in the tax system for revision of shut and close transactions and provide justice to the taxpayer.

    Highlighting another issue, the PTBA said that the taxpayer is required to retain records for a period of 10 years and show-cause notices may be issued within a period of 8 years from the date of relevant tax period.

    “This is in excess of the statute of limitation provided under the STA and ITO. It will not only put excess burden on the taxpayer, but also dis-incentivizes the tax authorities from taking timely action.”

    The time period for retention of records and assessment of tax should be reduced to 5 years.

    This would save taxpayers from practical difficulties and unnecessary burden while pushing the tax authorities to take more timely action.

    In another proposal, the PTBA said that the tax officer is empowered to ask for any information from a taxpayer without specifying the reason or nature of the case being investigated by him.

    Scope of Section 52(1) should be restricted to specific parties and transactions which are within the jurisdiction of Sindh and are specifically identified by the tax officer instead of fishing and roving enquiries.

    This promotes equity and natural justice and avoids harassment and unnecessary proceedings.

    At present the Sindh Revenue Board (SRB) may arbitrarily empower a Deputy Commissioner to exercise the powers of Commissioner (Appeals).

    This provision should be deleted. Such an amendment undermines the quasi-judicial function and weakens the judicial process by empowering a junior ranked officer to assume the powers of a quasi-judicial authority.

    At present recovery of demand can be initiated at any time after the assessment order is issued.

    Since an appeal may be filed within 30 days from the date of receipt of an assessment order, the recovery proceedings should not be initiated within such time.

    This recommendation would harmonize the Federal and Provincial tax laws.

    The PTBA said that a lot of services mentioned in the First Schedule are without H.S. Code/Tariff Headings which may create difficulties.

    It is suggested that all services should be marked with the respective Tariff Headings in order to avoid confusions on the part of assessing authorities as well as the registered persons.

    This recommendation would bring clarity, equity and harmony in the tax laws.

  • SRB extends dates for tax deposit and return filing

    SRB extends dates for tax deposit and return filing

    KARACHI: Sindh Revenue Board (SRB) has extended the last date for payment of sales tax on services and filing of sales tax return for month of May up to June 18 and June 21, 2019, respectively, a notification said on Monday.

    The decision to extend the dates was taken considering the Eid holidays that are falling on June 04 to June 07, 2019.

    The SRB said that it had permit the registered persons, including the withholding agents covered by the provisions of the Sindh Sales Tax Special Procedure (Withholding) Rules, 2011, to:

    i. e-depost the amount of Sindh sales tax for the tax period May 2019, on or before Tuesday, June 18, 2019; and

    ii. e-file their tax returns for the tax period May 2019, on or before Friday June 21, 2019.

  • SRB suspends sales tax registration of Multinet Pakistan

    SRB suspends sales tax registration of Multinet Pakistan

    KARACHI: Sindh Revenue Board (SRB) has suspended sales tax registration of M/s. Multinet Pakistan (Pvt.) Limited for defaulting tax payment and non-compliance in filing monthly sales tax return.

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  • PTBA suggests reducing record retention time to five years under Sindh tax laws

    PTBA suggests reducing record retention time to five years under Sindh tax laws

    KARACHI: Pakistan Tax Bar Association (PTBA) has submitted budget proposals 2019/2020 to Sindh Revenue Board (SRB) suggesting to reduce time limit for retaining records to 5 years from 10 years.

    The apex tax bar said that under present legislation a taxpayer is required to retain records for a period of 10 years and show-cause notices may be issued within a period of 8 years from the date of relevant tax period.

    This is in excess of the statute of limitation provided under the Sales Tax Act and Income Tax Ordinance. It will not only put excess burden on the taxpayer, but also disincentivizes the tax authorities from taking timely action.

    It is therefore recommended that the time period for retention of records and assessment of tax should be reduced to five years.

    This would save taxpayers from practical difficulties and unnecessary burden while pushing the tax authorities to take more timely action.

    The PTBA also highlighted the issue that no input tax is allowed to be claimed on goods or services acquired prior to six months preceding the date of commencement of the provision of taxable services by a taxpayer.

    Therefore it is recommended that such restriction should be eliminated.

    Giving rationale to the suggestions, the PTBA said that any bar on admissibility of input tax borne by the taxpayer prior to six months preceding the commencement of provision of taxable services is against the basic principal of VAT. It is also not justifiable in case of a long term projects.

    Regarding assessment order, the apex tad bar said that it can be amended by a tax officer on the basis of any subsequent information, etc.

    “Such powers are arbitrary and unjust and may open the doors for harassment and corruption.”

    The PTBA suggested that the taxpayer should first be confronted with a show-cause notice with substantial reasons and definite information/evidence(s) that warrant reopening or amending the assessment order.

    “Further, the powers to amend any assessment order should only be vest with the Commissioner or Board only.”

    This recommendation would introduce transparency in the tax system for revision of shut and close transactions and provide justice to the taxpayer.

    The PTBA further pointed out that the tax officer is empowered to ask for any information from a taxpayer without specifying the reason or nature of the case being investigated by him.

    Scope of Section 52(1) should be restricted to specific parties and transactions which are within the jurisdiction of Sindh and are specifically identified by the tax officer instead of fishing and roving enquiries.

    This promotes equity and natural justice and avoids harassment and unnecessary proceedings.

  • SRB launches amnesty scheme for exemption from penalty

    SRB launches amnesty scheme for exemption from penalty

    KARACHI: Sindh Revenue Board (SRB) on Monday launched an amnesty scheme to exempt penalty amount on payable as sales tax on services.

    However, concession has been granted on the payment of default surcharge.

    The SRB issued notification stating that the provincial revenue board had exempted the whole of the amount of penalty and such of the amount of default surcharge as is in excess of the amount of default surcharge, provided that the principal amount of the tax and the following amount of the default surcharge thereon are deposited during the periods as specified below:

    (a) the principal amount of tax (as outstanding on May 21, 2019) along with 5 percent of the amount of default surcharge thereon if deposited during the period from May 21, 2019 to May 27, 2019.

    (b) the principal amount of tax (as outstanding on May 21, 2019) along with 10 percent of the amount of default surcharge thereon if deposited during the period from May 28, 2019 to June 03, 2019.

    (c) the principal amount of tax (as outstanding on May 21, 2019) along with 15 percent of the amount of default surcharge thereon if deposited during the period from June 04, 2019 to June 10, 2019.

    (d) the principal amount of tax (as outstanding on May 21, 2019) along with 20 percent of the amount of default surcharge thereon if deposited during the period from June 11, 2019 to June 20, 2019.

    (e) the principal amount of tax (as outstanding on May 21, 2019) along with 25 percent of the amount of default surcharge thereon if deposited during the period from June 21, 2019 to June 30, 2019.

    The SRB said that the word ‘deposited’, used in the notification, means deposited by means of the Computerized Payment Receipt (CPR) so generated.

    The SRB further said that benefits of exemption of penalty and default surcharge, as specified in the notification, shall also be available in relation to the arrears of the tax (so outstanding on the May 21, 2019) payable under Sindh Sales Tax Ordinance, 2000 and under the Sindh Sales Tax on Services Act, 2011 by:

    (i) persons who are liable to be registered under Section 24 of the Act but were not registered, provided that:

    (a) they get themselves registered with SRB in the prescribed manner during the aforementioned periods from May 20, 2019 to June 30, 2019;

    (b) they deposited their tax liabilities for the principal amount of tax along with the aforementioned percentage of the amount of default surcharge thereon in relation to the tax periods from the date of the commencement of their economic activity to the tax period of May 2019;

    (c) they also e-file their tax returns, for the tax periods from date of commencement of their economic activity of taxable services to the tax period May 2019 during the period from the date of this notification to June 30, 2019.

    Explanation: For the purpose of word ‘registered’ in the case of withholding agents shall mean ‘e-signed up’ in terms of Sindh Sales Tax Special Procedure (Withholding) Rules, 2014;

    (ii) persons who were registered but were non-filers or null-filers or nil-filers of their tax returns;

    (iii) persons who were late-registered with SRB and they did not file all of their tax returns for the tax periods from the date of commencement of their economic activity of taxable services;

    (iv) persons who withheld any amount of Sindh sales tax but have either not deposited that withheld amount in provincial government account or have deposited the withheld amount in a head of account other that the Sindh government’s head of account.

    (v) persons who determine the arrears through self-detection and self-assessment;

    (vi) persons who short-paid any amount of tax in their tax returns and persons against whom any arrears of tax was detected in SRB’s scrutiny of tax returns or in SRB’s audit of taxpayers’ record;

    (vii) persons against whom any tax amount has been determined or assessed or adjudged, by an officer of the SRB, through an order or decision passed under the Sindh Sales Tax on Services Act, 2011, or the rules/notification issued thereunder;

    (viii) persons against whom any tax liability has been adjudged or confirmed by the Commissioner (Appeals) or the Appellate Tribunal;

    (ix) persons whose cases are under assessment or under adjudication with any officer of the SRB or are pending, at the appellate stage with the Commissioner (Appeals) or with the Appellate Tribunal; and

    (x) persons whose cases are under litigation in any court of law including the High Court or the Supreme Court.

    The SRB said that the benefits of this notification, to the extent as specified below, shall also be available in case where a person has late paid the principal amount of tax prior to the date of this notification and/ or has not yet discharged the liability of penalty (whether the prescribed amount or the adjudged amount of the penalty) and the default surcharge on such late payment provided that he pays an amount equal to:

    (a) 5 percent of such amount of penalty and 15 percent of such amount of default surcharge (as outstanding on May 21, 2019) in provincial government account during the period from May 21, 2019 to June 3, 2019;

    (b) 10 percent of such amount of penalty and 20 percent of such amount of default surcharge (as outstanding on May 21, 2019) in provincial government account during the period from June 04, 2019 to June 20, 2019; and

    (c) 15 percent of such amount of penalty and 25 percent of such amount of default surcharge (as outstanding on May 21, 2019) in provincial government account during the period from June 20 21, 2019 to June 30, 2019.

    The SRB said that if the whole of the dues of the principal amount of tax and the aforementioned prescribed percentage of the amount of default surcharge thereon are paid by a person in terms of this notification, he shall not be prosecuted under Section 49 of the Act and the offence, to the extend of the arrears of the tax paid under this notification, shall also be compounded under Section 46 of the Act.

    The SRB further said that if the principal amount of the tax and the aforementioned percentage of the amount of the default surcharge thereon, as are paid in terms of this notification by the persons in clauses (vi) (vii) (viii) (ix) and (x) of paragraph 2 of the notification, are held to be not payable in view of the order issued by the respective competent authority (i.e. the adjudicating officer or the commissioner appeals or the appellate tribunal or the court of law), the officer of the SRB, not below the rank of an assistant commissioner, shall allow tax adjustment/credit of the amount or alternately, shall refund the amount, so paid, within 90 days from the date of receipt of the taxpayer’s application, for refund or for tax adjustment/credit, together with a copy of the order/judgment and also of the evidence that the incidence of the tax was not passed on to the service recipient.

    The SRB further said that the notification would not apply for refund or adjustment of any amount of tax or default surcharge or penalty as has already been paid or recovered on any date prior to May 21, 2019.

  • SRB suspends sales tax registration of four freight forwarders

    SRB suspends sales tax registration of four freight forwarders

    KARACHI: Sindh Revenue Board (SRB) has suspended sales tax registration of four freight forwarders for defaulting payment and non-compliance of filing sales tax returns.

    The SRB issued suspension notices to the following freight forwarders:

    Muhammad Rafique (M/s. Rafique Brothers)

    M/s. Prime Ocean Cargo Management Company (Pvt) Limited

    M/s. Shahnoor Weavers

    Muhammad Tahir Imam (M/s. ST Logistics International)

    The SRB said that Muhammad Rafique (M/s. Rafique Brothers) had failed to make payment of Sindh Sales Tax on Services for the period from July 2011 till to date. Further the company also failed to file return electronically for the tax periods February 2017 to December 2018 and July 2011 to April 2013.

    The SRB asked the company that the notice would be revoked in case it takes remedial action by May 24 by making payment and filing true and correct returns for the said periods. Otherwise the case shall be proceeded for cancellation in case remedial action was not taken by May 25, 2019.

    In case of M/s. Prime Ocean Cargo Management Company (Pvt) Limited, the SRB said that the company had failed to file returns for the period July 2016, December 2015, March 2015, June 2013, March 2013, September 2012, August 2012, June 2012, May 2012, April 2012, March 2012, February 2012, January 2012, December 2011, October 2011, September 2011, August 2011, July 2011.

    The SRB directed the company to take remedial action by May 24, 2019. “In case of non-satisfactory response or failure to take remedial measures as suggested above on or before May 25, 2019 the case shall be further preceded for cancellation of registration wit the SRB.”

    In the case of M/s. Shahnoor Weaver, the SRB said that the company had failed to make payment since July 2011 till date. Further, the company had failed to e-filer sales tax returns for tax periods from July 2011 to June 2015 and from August 15 to December 2018.

    The SRB directed the company to take remedial action by May 26, 2019. “In case of non-satisfactory response or failure to take remedial measures as suggested on or before May 27, 2019, the case shall be further preceded for cancellation of registration with the SRB.”

    In the fourth case of Muahmmad Thair Imam (M/s. ST Logistics International), the SRB said that the company had failed to make payment of sales tax on services from July 2011 till date. Further, the company also failed to e-filer sales tax returns for the said period.

    The SRB has directed the company to take remedial action by May 23, 2019. “In case o non-satisfactory response or failure to take remedial measures as suggested on or before May 24, 2019 the case shall be further preceded for cancellation of registration wit SRB,” it added.

  • SRB suspends sales tax registration of M/s. Hellenic Shipping Agencies

    SRB suspends sales tax registration of M/s. Hellenic Shipping Agencies

    KARACHI: Sindh Revenue Board (SRB) has suspended sales tax registration of M/s. Hellenic Shipping Agencies (Pvt) Limited for non-payment and non-compliance of return filing for the last eight years.

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