Applicable withholding sales tax rates on various supplies

KARACHI: Federal Board of Revenue (FBR) has notified withholding sales tax rates to be deducted / collected on various supplies by withholding agents.

The FBR recently updated Sales Tax Act, 1990 and updated sales tax rates to be collected on various supplies under sub-section 7 of section 3 of the Act.

The tax shall be withheld by the buyer at the rate as specified in the Eleventh Schedule, by any person or class of persons as withholding agent for the purpose of depositing the same, in such manner and subject to such conditions or restrictions as the Board may prescribe in this behalf through a notification in the official Gazette.

Following rate of withholding sales tax shall be applicable:

01. 1/5th of Sales Tax as shown on invoice to be collected from registered persons by (a) Federal and provincial government departments; autonomous bodies; and public sector organizations; (b) Companies as defined in the Income Tax Ordinance, 2001 (XLIX of 2001)

02. 1/10th of Sales Tax as shown on invoice to be collected from person registered as a wholesaler, dealer or distributor by (a) Federal and provincial government departments; autonomous bodies; and public sector organizations; (b) Companies as defined in the Income Tax Ordinance, 2001 (XLIX of 2001)

03. Whole of the tax involved or as applicable to supplies on the basis of gross value of supplies from unregistered persons by Federal and provincial government departments; autonomous bodies; and public sector organizations

04. 5 percent of gross value of supplies from unregistered persons by companies as defined in the Income Tax Ordinance, 2001 (XLIX of 2001)

05. Whole of sales tax applicable from person providing advertisement services by registered persons as recipient of advertisement services

06. Whole of sales tax applicable from unregistered persons by registered persons purchasing cane molasses.

The rates for withholding or deduction by the withholding agents not applicable to following goods and supplies:

(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) Vegetable ghee and cooking oil;

(v) Telecommunication services;

(vi) Goods specified in the Third Schedule to the Sales Tax Act, 1990;

(vii) Supplies made by importers who paid value addition tax on such goods at the time of import; and

(viii) Supplies made by an Active Taxpayer as defined in the Sales Tax Act, 1990 to another registered persons with exception of advertisement services.

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