The Sindh Revenue Board (SRB) on 30th June 2021 issued various notifications regarding amendments in sales tax on various taxable services. We are providing hereunder the significant amendment in Sindh Sales Tax on Services vide said notifications.
CHARGEABILITY OF SALES TAX ON SERVICES
Recruiting Agents (9805.6000)
SRB vide notification no. SRB-3-4/19/2021 dated 30th June 2021 has provided reduced rate of sales tax at the rate of 5% for recruiting agents who recruit person or group of persons for employment outside Pakistan. The reduced rate shall be applicable for financial year 2021-22 subject to following conditions:
- Registered with SRB under tariff heading 9805.6000 as principal activity
- Is a stand-alone service provider as recruiting agent
- Recruitment services for employment within Pakistan shall remain chargeable at the rate of 13%
- Regularly deposits sales tax liability
- Any unpaid sales tax liability upto June 2021 is required to be deposited by 15th July 2021
- Regularly files sales tax returns
- Any outstanding sales tax return upto June 2021 is required to be filed by 20th July 2021
- Complies with all applicable provisions of the Act
- No input tax adjustment or refund shall be available against reduced tax rate of 5%
Call Center Services (9835.0000)
SRB vide notification no. SRB-3-4/13/2021 dated 30th June 2021 has exempted the service of call center provided by SRB registered person to person outside Pakistan against which proceeds are received from outside Pakistan in foreign exchange through normal banking channel. This exemption is applicable from 1st July 2021 and onwards. Previously, such services were subject to reduced rate of 3% without input tax adjustment.
Telecommunication Services (98.12)
SRB vide notification no. SRB-3-4/13/2021 dated 30th June 2021 has withdrawn exemption available to telecommunication services involving charges payable on the international leased lines or bandwidth services used by software exporting firms registered with the Pakistan Software Export Board.
Cable TV Operators (9819.9000)
SRB issued notification no. SRB-3-4/18/2021 dated 30th June 2021 vide which exemption from chargeability of sales tax available to Cable TV Operators is extended till 30th June 2022 subject to condition that the outstanding sales tax return for the period July 2016 to June 2021 are filed by 31st July 2021 and any sales tax payable on other taxable services including sales tax withheld during the period July 2016 to June 2021 is deposited with SRB by 31st August 2021.
Health insurance (9813.1600)
SRB vide notification SRB-3-4/17/2021 dated 30th June 2021 extended the exemption on Health Insurance Services till 30th June 2022.
Inter-Province Oil tanker transport service (9836.0000)
Inter province transportation or carriage of petroleum oils through oil tankers is chargeable to sales tax at the rate of 15% subject to condition that the service provider opts for such tax rate of 15% through furnishing election or option to SRB in the prescribed format which was valid till 30th June 2021. The SRB vide notification no. SRB-3-4/16/2021 dated 30th June 2021 has extended the period for election / option till 30th June 2022.
SINDH SALES TAX ON SERVICES RULES, 2011
Requirement to file scanned attachment (Rule 16)
The SRB vide notification no. SRB-3-4/5/2021 dated 30th June 2021 has made amendment in Rule 16 and prescribed for attachment of invoices with sales tax returns in respect of input tax claimed against service acquired where input tax claimed exceeds 20% of output tax. This requirement was previously applicable in case of input tax related to goods only.
Services provided by restaurants (Rule 42)
SRB vide notification no. SRB-3-4/5/2021 dated 30th June 2021 has made amendment in sub-rule (4) of Rule 42 wherein it is prescribed that restaurants shall issue invoices showing amount inclusive of sales tax without specifying value exclusive of sales tax and sales tax amount. Subject to condition that such restaurant clearly specify in its menu card, price list and invoice that the prices are inclusive of sales tax. Further, amount of tax shall be calculated and deposited by the service provider under the tax fraction formula.