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Tag: SRB

  • SRB extends date for sales tax payment, return filing

    SRB extends date for sales tax payment, return filing

    KARACHI: Sindh Revenue Board (SRB) has extended date for payment and filing sales tax return for the month of May 2020.

    The SRB issued a notification extending the last date for e-deposit of Sindh sales tax for the tax period May 2020 and for e-filing of tax return for the tax period May 2020.

    The notification said that the SRB allowed the registered persons, including the withholding agents covered by provisions of the Sindh Sales Tax Special Procedure (Withholding) Rules, 2014:

    e-deposit the amounts of Sindh sales tax for the tax period May 2020 on or before Monday June 29, 2020; and

    e-file their returns for the tax period May 2020 on or before Thursday July 02, 2020.

  • Sindh exempts sales tax on life insurance service

    Sindh exempts sales tax on life insurance service

    KARACHI: Sindh government has exempted sales tax on services provided by life insurance companies for full fiscal year i.e. July 01, 2019 to June 30, 2020.

    Sindh Revenue Board (SRB) issued notification No. SRB-3-4/13/2020 dated June 22, 2020 stated that the Sindh government had granted exemption to the life insurance services (other than its related re-insurance services), classified under tariff heading 9813.1500 of the Second Schedule to the Sindh Sales Tax on Services Act, 2010, from whole of the sales tax payable thereon, as were provided or rendered during the period from July 01, 2019 to June 30, 2020.

    However, the relaxation is subject to following conditions:

    (a) the person providing or rendering life insurance services commences e-depositing, in the Sindh government’s head of account in the prescribed manner, the amount s of Sindh sales tax due, on such services for the tax periods from July 2020 onward; and

    (b) the amounts of Sindh sales tax charged or collected, if any, on such services during the period from the 1st day of July, 2019 to the 30th June, 2020, are e-deposited, by the person providing or rendering such services, in Sindh Government’s head of account “B-02384” in the prescribed manner by the 15th day of July, 2020.

    This notification shall not entitle any person, whether a service provider or a service recipient, to any refund or adjustment of tax, the SRB added.

  • SRB suspends sales tax registration of Turnotech for defaulting tax payment

    SRB suspends sales tax registration of Turnotech for defaulting tax payment

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

    In a notice the SRB said that M/s. Turnotech (Pvt) Limited had failed to comply with the following obligations:

    — To discharge the Sindh sales tax liability against the services provided or rendered during the tax periods from March 2015 to July 2015, September 2015 to December 2015 and April 2016 to July 2018.

    — e-file their Sindh sales tax return for the tax periods from March 2015 to July 2015, September 2015 to December 2015 and April 2016 to July 2017.

    The SRB said that the suspension of the company would be revoked on taking following measures:

    — to discharge the due Sindh Sales Tax liability along with default surcharge for the tax periods from March 2015 to July 2015, September 2015 to December 2015 and April 2016 to July 2017.

    — to e-file the true and correct monthly Sindh sales tax returns for the tax periods from March 2015 to July 2015, September 2015 to December 2015 and April 2016 to July 2017, accordingly.

    The SRB said that the compliance date for remedial actions had been fixed on June 23, 2020. In case of non-satisfactory response or failure to take remedial measures the case would be proceeded for cancellation from the provincial tax authority.

  • Sindh Revenue Board announces tax incentive package

    Sindh Revenue Board announces tax incentive package

    KARACHI: Sindh Revenue Board (SRB) has announced tax incentive scheme and waived up to 100 percent penalty amount on payment of outstanding amount, said a statement on Monday.

    The SRB said that acceding to the request of the taxpayers, associations and tax bars, the provincial revenue authority, had issued tax incentive package, which provides substantial benefits and relief to the taxpayers, service providers and withholding agents, in return of their tax compliance, under the Sindh Sales Tax on Services Act, 2011.

    The package includes exemption of up to 100 percent of the amount of default surcharge, total remission of penalties and immunity from arrest and prosecution if the taxpayer deposits:

    1. the liability of the arrears of tax (as outstanding on May 31, 2020) plus zero percent of the amount of default surcharge thereon between June 01, 2020 and June 15, 2020;
    2. the liability of arrears tax (as outstanding on May 31, 2020) plus five percent of the amount of default surcharge thereon between June 16, 2020 and June 22, 2020; and
    3. the liability of arrears of tax (as outstanding on May 31, 2020) plus 10 percent of amount of default surcharge between June 23, 2020 and June 30, 2020.

    The SRB said that in case where no tax liability is outstanding but only the arrears of amounts of penalty and/or default surcharge are outstanding, tax incentive package allows the remission of 95 percent of the amount of such penalty and 90 percent of the amount of such default surcharge, if the balance of the amounts of penalty and default surcharge are deposited during the period from June 01, 2020 to June 30, 2020.

    The provincial revenue authority advised all taxpayers, service providers and withholding agents to avail the benefits of the tax incentive package which shall expire at the close of June 30, 2020.

    The incentives announced through the notification provide and opportunity to the taxpayers to get substantial waiver of their liability to pay penalties and default surcharge by depositing the outstanding amounts of tax liabilities during the period the said notification is valid.

    The SRB further said that the package may also help in resolution of disputes pending in litigation, appeals, adjudication or audit.

  • SRB urged to allow normal tax for car dealers

    SRB urged to allow normal tax for car dealers

    KARACHI: Sindh Revenue Board (SRB) has been urged to bring authorized dealers of car manufacturers into normal tax regime.

    Overseas Investors Chamber of Commerce and Industry (OICCI) in its proposals for budget 2020/2021 submitted to SRB, recommended that normal sales tax rate should be applied for services provided by authorized car dealers under tariff heading 9806.4000.

    It said that sales tax on services by authorized car dealers under tariff heading 9806.4000, is at reduced rates and input sales tax is barred, while no such position is available under any of the other provincial sales tax laws.

    Further, no option is available to the service provider to pay sales tax at the normal rate at the rate of 13 percent, instead of reduced rate, as provided for other services under notification No.SRB 3-4/5/2015 dated Jul 01, 2015, e.g. Construction services, Transportation services, Concrete services etc.

    The OICCI recommended that normal sales tax rate should be applied for services provided by authorized car dealers under tariff heading 9806.4000.

    Alternatively, option should be provided to “authorized car dealers of vehicle manufacturers” to pay sales tax at normal rate under tariff heading 9806.4000, as provided to other services.

    Application of standard rate will eliminate the discrimination arising on services provided by dealers in Sindh against other provinces and cost of doing business will reduce for service providers and recipients, it added.

  • Insurance should be excluded from taxable services

    Insurance should be excluded from taxable services

    KARACHI: The provincial tax authorities have been urged to exclude insurance from taxable services in order to provide incentives to insurance industry.

    Overseas Investors Chamber of Commerce and Industry (OICCI) in its proposals for budget 2020/2021 submitted to Sindh Revenue Board (SRB), said that each year, the life/health insurance companies have been approaching the SRB for an exemption, which is granted annually.

    The last exemption for life insurance was valid only till June 30, 2019, whereas exemption for Corporate Health Insurance is valid till June 30, 2020 and has not yet been renewed.

    The life and health insurance industry is based largely in the province of Sindh, where, the medical sector itself is exempt from SST.

    Accordingly, subjecting the corporate health insurance to SST is making it uncompetitive, in Sindh, by adding on to the cost of health insurance.

    Discussions are still ongoing with the Chairman SRB, and the Chairperson, Sindh Board of Investment, for exemption on the same.

    The OICCI recommended that both, life insurance and health insurance, which do not fall within the scope of definition of service, should be permanently included in the list of exempted services by incorporating the same under table of exempted services specified in SRB’s notification no. SRB 3-4/7/2013 dated June 18, 2013, as per the following:

    01. 9813.15: Life Insurance

    02. 9813.16: Health insurance, rendered to both, individuals and corporates.

    It may be mentioned that in Sindh these are taxable services.

    A life insurance/ health policy is not a service. It is an underwriter’s promise to pay to the policy holder ‘in the future’, a specified sum of money, ‘either on occurrence of an identified event or on maturity of the policy’.

    Such tax is highly discriminatory as entire health sector itself remains exempt and is not taxed.

    This creates a deterrence for insurance business, as a person obtaining insurance would be paying additional 13 percent as well as cost of insurance, compared to directly obtaining health services, where he does not have to pay this tax.

    This is clearly discriminatory and in violation of Article 25 of the Constitution of Pakistan.

    The assertion that insurance is not a service, has also been legally upheld in USA and the Court there has ruled that life insurance policies are not “services”.

    The KP Revenue Authority has exempted life insurance from the purview of taxable services. Uniformity across the country is essential for ease of doing business.

  • Sindh proposed to exempt sales tax on export of services

    Sindh proposed to exempt sales tax on export of services

    KARACHI: Sindh Revenue Board (SRB) has been proposed to exempt sales tax on export of services.

    Overseas Investors Chamber of Commerce and Industry (OICCI) in its proposals for budget 2020/2021 presented to SRB, said that as per the Fifth Schedule to the Sales Tax Act 1990, exports made by a registered person are zero-rated.

    “Presently, there is no concept of zero-rating in Provincial Sales Tax Acts,” it said.

    Resultantly, the companies providing services to foreign companies and bringing foreign exchange in Pakistan need to pay sales tax from their own account.

    The OICCI recommended that a separate schedule should be inserted in Provincial Sales Taxes Act for zero rating. “All services provided to foreign companies outside Pakistan which result in inflow of foreign exchange and export of all taxable services should be exempt from Sind Sales Tax.”

    Giving rationale to the proposals, the OICCI said that this will result in harmonization of tax laws in Pakistan and would ensure convenient compliance with tax laws through uniform systems across the country and would also contribute towards the economic development of the Country.

    The OICCI highlighted another issue that all pharmaceutical products are exempt from Sales Tax.

    Consequently any sales tax paid by pharmaceutical industry on goods or services purchased, can neither be passed on to the consumer nor can be claimed as input, and has to be absorbed by the manufacturers in their costs.

    It is resulting in increasing the cost of doing business and is also against the philosophy of sales tax which is supposed to be borne by the consumer.
    Therefore, it is recommended that services received by pharmaceutical industry should be zero rated.

    Since pharmaceuticals prices are controlled, sales tax paid on inputs can neither be added to the selling price nor separately charged.

  • Withholding sales tax should be exempted on services rendered to registered persons

    Withholding sales tax should be exempted on services rendered to registered persons

    KARACHI: Sindh Revenue Board (SRB) has been proposed to exempt sales tax withholding in case a registered person renders services to another registered person.

    Withholding of sales tax from registered sales tax persons with Sindh Revenue Board (SRB), does not provide any benefit and only creates hardships for genuine taxpayers of reconciliations and delay in adjustments, said Overseas Investors Chamber of Commerce and Industry (OICCI) in its budget proposals for 2020/2021 submitted to the SRB.

    It further said that similar to federal sales tax law, exemption should be given if payment being made to sales tax registered person against withholding sales tax.

    Withholding tax rules are applicable on active taxpayers also.

    The OICCI recommended:

    i. Withholding should be exempted from deduction of Sales Tax at applicable rate against the payments to the Sales tax registered persons with SRB, in line with Federal Laws.

    ii. The rate of withholding sales tax against the invoices of unregistered persons should be reduced to 5% in line with the FBR’s Withholding Sales Tax regime as applicable under SRO.660 (I)/2007.

    iii. Withholding tax rules should not applicable on active taxpayers.

    Giving rationale to the proposals, the OICCI said that the withholding agents are unnecessarily burdened with deduction of sales tax which is not claimable as input tax and is thus resulting in increasing their cost of doing business.

    Similar matters have already been decided by the courts in case of sales tax withholding rules of FBR and PRA. The ultimate objective of the taxpayer is that indirect tax should not increase its cost of doing business. Moreover these enforcement measures have negative bearing on the regulated sector only.

    The purpose of withholding tax deduction is to ensure that non-active & nonregistered taxpayers can be detected. Compliance burden of businesses can be reduced for businesses by exemption deduction at source for active taxpayers.

    PRA allows similar provision [Sindh Sale Tax Special Procedures (Withholding Tax) Rules, 2014 read with notification SRB-3-4/14/2014].

  • Reverse charge should only be levied on service providers located outside Pakistan

    Reverse charge should only be levied on service providers located outside Pakistan

    KARACHI: Sindh Revenue Board (SRB) has been advised that reverse charge should be restricted to such cases where service providers are located outside Pakistan.

    (more…)
  • Sindh urged to bring down sales tax rate at 10 percent

    Sindh urged to bring down sales tax rate at 10 percent

    KARACHI: Sindh Revenue Board (SRB) has been suggested to bring down sales tax on services rate to 10 percent from existing 13 percent to encourage registration of more taxpayers.

    Overseas Investors Chambers of Commerce and Industry (OICCI) in its budget proposals 2020/2021 submitted to the SRB, said that the expectations of the investors that the SRB will continue the reduction of Sales Tax rate on services to 13 percent, as done in fiscal year 2016-17, remained unrealized.

    “Although, investors appreciate that the Sales Tax rate in Sindh province at 13 percent is the lowest in the country, it remains higher than comparative regional tax rates.”

    The OICCI suggested that to keep in-line with the regional developing countries, reduction in sales tax on services should be made by 1 percent in the Sindh Finance Act 2020-2021 and gradually reduced to 10 percent over the next three years for registered entities, whilst the current rate should be maintained for unregistered entities.

    This will encourage registration to avail the benefits of input adjustment.

    The OICCI also suggested that the option to opt for the basic rate or normal regime should be given to all the service providers who fall under the reduced/fixed rate regime.

    This option will reduce the cost of doing business for recipient of services as lower tax is not available for input tax adjustment, the OICCI added.