KTBAS PROFESSIONAL DEVELOPMENT PROGRAM UNDERSTANDING SINDH SALES TAX

KTBA’S PROFESSIONAL DEVELOPMENT PROGRAM UNDERSTANDING SINDH SALES TAX ON SERVICES ACT, 2011 By: Zeeshan-ur-Rehman ACA, ACCA Senior Manager, Shekha & Mufti Chartered Accounts 1

Highlights q Definition/Interpretation; q Scope & chargeability of sales tax; q Exemptions; q Registration & allied matters q Filing of return q Record & Bookkeeping 2

Definition & Interpretation 3

Definition/Interpretation What is “service” or “services” under the SSTSA 2011? Section 2(79) of SSTSA 2011 ü anything which is not goods; ü shall includes but not limited to services listed in the First Schedule; Point to note: It is not necessary for a services to be specifically included in the First Schedule. 4

Definition/Interpretation What is a “service” or “services”? ü a service remains to be treated as services regardless providing of such service involves use, supply, disposition or consumption of any goods; ü whether or not essential or incidental aspect of providing such service; Example: - technicians using machines, tools, wires & cable; telecommunication service uses infrastructure and equipment; building material used or consumed in construction; goods acquired or taken for further processing (such as toll manufacturing); etc. 5

Definition/Interpretation What is First & Second Schedule? ü The First Schedule is the comprehensive list of services; ü Service listed in the Second Schedule are those which are taxable services Point to note: Inclusion of a service in the First Schedule is not mandatory to be categorized as “taxable” service. The fundamental requirement is inclusion in Second Schedule. 6

Definition/Interpretation Advertisement – Section 2(2) Any notice, circular, label, wrapper, document, banner, hoarding, billboard etc. displayed or presented through any means and medium. Point to note: Public service messages for awareness of public information is not advertisement – Commissioner Appeal Sindh Revenue Board. Advertising agent – Section 2(3) Person engaged in providence of any service connected with making, preparation, display, demonstration or exhibition of any advertisement in any manner including media buying house. 7

Definition/Interpretation Associates – Section 2(12) Two person when: ü ü ü one may reasonably be expected to act in accordance with intention of other; an individual and his relative; members of association of person; association and its members when member/associated members controls fifty percent or more of the rights to income or capital of the association; company and its shareholder when shareholder/associated shareholders controls: - fifty percent or more of voting power; - fifty percent or more of the dividends; - fifty per or more of the capital ü two companies when a person alone or with associates controls fifty percent or more of the rights as explained above. 8

Definition/Interpretation Auctioneer – Section 2(13 A) Person providing service of auction of: ü moveable or immovable property; ü tangible or intangible property Any connected service such as providing of facility for auction, advertising services, price estimates, storage etc. are also included. ü Auction of right to tolls, fees and other levies are covered in the ambit of service; ü Rule 41 C (3) says that in case of auction of property or goods by the owner of the property or the goods, the tax shall be payable by such person (owner). SRB may not tax goods and capital receipts ! 9

Definition/Interpretation Business Support Service – Section 2(19) Services provided in relation to business or commerce and includes; ü evaluation of prospective buyers, ü customer relationship management services, ü telemarketing, call centre facilities, ü accounting and transactions, processing of ü operational assistance for marketing, ü formulation of customer service and pricing policies, ü processing of purchase orders and fulfillment services, ü infrastructural support services and other transaction processing. ü information and tracking of delivery schedules, ü managing distribution and logistics, 10

Definition/Interpretation Business Support Service – Section 2(19) ü Very broad definition and implications ü Virtually includes every facet of economic activity which is supporting the operational existence of any business ü No clear guidelines available either from Sindh Revenue Board or Punjab Revenue Authority for its clear and better understanding ü Reimbursable expenses appear to be non deductible. Hence, service may be taxable on “gross value” charged to the customers ü No exemption threshold has been defined ü Specific rules for ascertainment and calculation of liability have not been framed 11

Definition/Interpretation Commission Agents – Section 2(22 A) Person acting for sale & purchase of goods or provision or receipt of services and including the following: ü deals with goods or services or documents of title to such goods or services; ü collects payments of sale price of goods and services; ü guarantees for collection or payment for goods and services; ü undertakes any activity thereof; 12

Definition/Interpretation Commission Agents – Section 2(22 A) Sales tax is payable on “gross consideration” received by Commissioner agents; q q What is meant by ‘gross consideration’? Front end load charged by asset management companies; ü All distributors who are not engaged in outright sale or purchase of goods for example distributor of automobiles; ü Exclusive suppliers or dealers of imported machinery, equipment, vehicles etc. ü 13

Definition/Interpretation Stock broker – Section 2(90) ü person affecting transactions in securities on account of others including; ü security broker; ü securities advisors; and ü securities managers defined in Securities Act, 2015 Securities – Section 2(77 A) ü Previously, securities were only confined to definition in Security Exchange Ordinance. Now the term include all forms of shares, stock, options, warrants, bonds, sukuk, COI, PTC, debentures, future contracts, custodian receipt etc. as security. ü Similarly, amendments are also made in definition of exchange to include all form of over the counter markets etc. ü The rules still do not cover commodity brokerage. [Refer to SSTSA Rules] 14

Definition/Interpretation Economic Activity– Section 4 Any activity carried on: üIn form of business; üsupply of moveable property by way of lease, license or similar arrangement; üone off adventure or concern in form of trade üanything done or undertaken in the commencement or termination of economic activity. The Supreme Court of Pakistan has held that disposal of asset is part of the economic activity. 15

Definition/Interpretation Franchise & Intellectual Property Right – Section 2(46) “Franchise” means as an authority given by a franchise under which the franchisee is contractually or otherwise granted any right to produce, manufacture, sell or trade in or do any other business activity in respect of goods or to provide services or to undertake any process identified with franchiser against a fee or consideration including royalty or technical fee, whether or not a trade mark, services mark, trade name, logo, brand name or any such representation or symbol, as the case may be, is involved. ” Following elements are essential to establish a franchise arrangement under the law: üFranchisee is granted any right to produce or manufacture; üFranchisee is granted any right to sell or trade; üFranchisee is granted any right to do other business activity is respect of goods identified with franchiser; üFranchisee is granted any right to provide services possessed by a franchiser; and üFranchisee is granted right to undertake any process identified with franchiser. 16

Definition/Interpretation Intellectual Property Right – Section 2(46) ü Recently inserted through Sindh Finance Act 2015. ü intellectual property right means any right of intangible property; ü anything produced by the mind, trade mark, patent, designs, copyrights and; ü anything defined in Section of Intellectual Property Organization of Pakistan Act, 2012. 17

Definition/Interpretation Input tax – Section 2(52) ü tax levied under the SSTSA; ü tax levied on goods under Sales Tax Act, 1990; ü Provincial sales tax or Islamabad Capital Territory sales tax on services. 18

Definition/Interpretation Open Market Price – Section 2(61) A service is considered to be at open market price when; P the price the transaction would fetch in an open market freely entered between the person are not associated; P when the service is specific in nature and no open market exists, the price that similar service would fetch in open market between person not associated after taking account of the differences between similar services and actual service. determined by the Board. The concept of open market price is similar to the provisions of Income Tax Ordinance 2001 and Sales Tax Act, 1990. 19

Definition/Interpretation Production house – Section 2(67 A) Any person providing: ü facilities; ü utilities; ü advantages; In relation to production of programme. Program – Section 2 (67 B) ü audio or visual matter live or recorded; ü disseminated by electromagnetic waves, space or cables; ü received by general public directly or indirectly 20

Definition/Interpretation Ready Mix Concrete Service – Section 2(69 B) th ü Withdrawal of exemption under the 6 Schedule on building blocks of cement and ready mix concrete by FG in the Year 2011. ü Later on, cases were made to tax read mix concrete as supply of goods. ü Taxpayer have challenged that providence of read mix concrete is not ‘supply’ rather a service and obtained restraining orders for SHC. ü Prior, to July 2015, not specifically taxed as “service” ü Now taxable under the SSTSA 2011 w. e. f. 01 July 2015. 21

Definition/Interpretation Registered Person –Section 2(71) ü A person registered under the Act ü Liable to be registered under the Act Resident company [Section 2(33)] ü If registered office is in Sindh; or ü It has place of business in Sindh; or ü the control and management of the affairs of the company is situated wholly or almost in Sindh. 22

Definition/Interpretation Services in relation to renting of immovable property services Two new definition i. e. Renting of immovable property [72 B] & Renting of q Immovable Property Services [72 C] are included in Section 2 of the SSTSA 2011; Rent of immovable property includes; ü renting, letting, sub-letting, leasing, sub-leasing, licensing or similar arrangement of immovable property in course & furtherance of business [Exclusion apply]; ü rent of immoveable property under single or composite contracts; ü rent of immoveable property is not affected by transfer of position; ü any plant, machinery, equipment, furniture of fitting installed and provided with immovable property is also covered. 23

Definition/Interpretation Services in relation to renting of immovable property services Section 2(72 C) Previous Definition Rent of immovable property services means any service provided or rendered to any person, by another person IN RELATION TO renting of immovable property. New Definition Rent of immovable property services means any service provided or rendered, to any person, by renting of immoveable property as defined in clause (72 B)… 24

Definition/Interpretation Intercity Transport & Carriage of Goods –Section 2(98) ü Reduced rate increased from 5% to 6% without option to the service provider to opt for 14% regime ü The levy & collection of sales tax on transport services was kept in abeyance by SRB till 31 December 2015. However, other modes still taxable. ü Punjab has also taxed @ 16%. No demarcation on sales taxability on transport among Provinces. ü Practical issue regarding calculation of tax on fixed rental paid to transport service provider. ü Sub-contracting of transport services 25

Definition/Interpretation Important definition not provided in SSTSA Software of IT Based system development; ü ü Toll manufacturing services; ü Construction services; ü Contractual execution of work or furnishing of supplies; 26

Scope, Chargeability & Liability 27

Scope, chargeability & liability Taxable Service –Section 3 By Registered Person P service listed in the Second Schedule; P provided by a registered person (includes person liable to be registered) P from registered office or place of business in Sindh; P provided in the course of an economic activity, By Non Resident Person P service provided by non-resident unregistered person; P if provided to resident person; P in the course of economic activity 28

Scope, chargeability & liability Chargeability - Section 8 ü Charging sections are mandatory in nature and required to comply completely. ü Benefit of doubt, ambiguity, two or several interpretation of charging section is to be given to the taxpayer. Sales tax is to be charged, levied & collected: P at rate of sales tax - specified in the Second Schedule; - notified by the Board 29

Scope, chargeability & liability Chargeability - Section 8 P on value of taxable service which is; - consideration received; - open market price - discounted price - determined by the board [as in case of franchise] 30

Scope, chargeability & liability Liability to pay tax – Section 9 P registered person providing taxable service; P recipient of taxable services receiving service from non-resident person P specified by the Board Who is liable to pay tax when taxable services are provided by resident unregistered person? 31

Sales Tax on Services – Bird Eye View Taxable Services [Broad Descriptions] Sindh Punjab KPK Balochistan 19. 5 10 (N 3) 19. 5 14 (N 2) 16 15 15 Advertisement 14 (N 2) 16 (N 2) 15 (N 2 & N 3) 15 Shipping Agent 14 16 15 15 Stevedoring Services 14 16 15 15 Ship Management Services 14 Non Taxable 15 15 19. 5 / 18 (N 1 & N 2) 19. 5 / 18 (N 1) Telecommunication Tracking services and security alarm services Service provided by Hotels, motels, guest houses, clubs, restaurants, marriage halls, lawn and caterers. Freight Forwarder Agents Custom Clearing Agent Rs. 500/BL or 14 on other Rs. 1000/BL services (N 3) 14 16 N 1: Conditions applies on service provider N 2: Services are subject to some exclusion or exemption N 3: Input tax adjustment is not allowed Capital Territory Non Taxable 16 16 (N 2) Non Taxable 16 Non Taxable 15 15 16% / Rs. 400 per B/L 15 15 16 32

Sales Tax on Services – Bird Eye View Sindh Punjab KPK Balochistan Capital Territory 10 [New] (N 3) 16 Non Taxable 16 10 (N 2 & N 3) 16 15 15 16 Recruiting agents 14 16 15 15 16 Advertising Agent 14 16 15 15 16 Ship Chandlers 14 16 15 15 16 Share transfer agent 14 16 15 Non Taxable 16 Share depository agents 15 Non Taxable Sponsorship services 14 16 15 15 Non Taxable Business support services 14 16 10 15 16 Taxable Services [Broad Descriptions] Travel Agent Tour Operator N 1: Conditions applies on service provider N 2: Services are subject to some exclusion or exemption N 3: Input tax adjustment is not allowed 16 33

Sales Tax on Services – Bird Eye View Taxable Services [Broad Descriptions] Sindh Services provided in matter of sale, purchase or hire of immovable property 10 (N 3) Property dealer 10 (N 3) Renting of immovable property services Car or automobile dealers 6 [New] (N 2 & N 3) 10 (N 3) Punjab KPK Non Taxable 16 15 BTN Capital Territory 15 Non Taxable 15 16 (a) Rs. 100 / sq. yard for land sq. yard for yard of land development land (N 3) development Property developers and promoters N 1: Conditions applies on service provider N 2: Services are subject to some exclusion or exemption N 3: Input tax adjustment is not allowed (b) Rs. 50 / sq. foot of constructed covered area (N 3) (b) Rs. 50 / sq. feet for building construction (N 3) 15 (b) Rs. 50 / sq. feet for building construction (a) Rs. 100 / sq. yard for land developmen t, and (b) Rs. 50 / sq. feet for building construction 34

Sales Tax on Services – Bird Eye View Taxable Services [Broad Descriptions] Courier Contractual execution of work or furnishing supplies Beauty parlours, clinics and slimming clinics, body massage centers, pedicure centers and Others Laundries and dry cleaners Banks, insurance, NBFC, etc. Services by foreign exchange dealer or exchange company or money changer Architects, town planners and interior decorators Contractor of building & Turnkey projects etc. N 1: Conditions applies on service provider N 2: Services are subject to some exclusion or exemption N 3: Input tax adjustment is not allowed Sindh Punjab KPK Balochistan Capital Territory 14 16 15 15 16 14 (N 2) 16 (N 2) 15 15 16 (N 2) 10 (N 2 & N 3) 16 (N 2) 15 15 16 (N 2) 14 (N 2) 16 15 15 16 16 (N 2) 15 15 Non Taxable 14 Non Taxable 15 Non Taxable 14 16 15 15 16 14 Non Taxable 15 Non Taxable 35

Sales Tax on Services – Bird Eye View Taxable Services [Broad Descriptions] Legal practitioner & consultants Accountants & auditors Management consultants Technical, scientific & engineering consultants Software or IT based system development consultants Tax Consultants Services provided or rendered by laboratories other than the services relating to pathological, radiological or diagnostic tests of patients. Security agency N 1: Conditions applies on service provider N 2: Services are subject to some exclusion or exemption N 3: Input tax adjustment is not allowed Sindh Capital Territory Non Taxable Punjab KPK Balochistan Non Taxable 15 15 16 15 15 14 16 15 15 16 6 (N 3) 16 15 15 Non Taxable 14 [New] 16 Non Taxable 16 10 (N 3) 15 16 6 (N 3) 36

Sales Tax on Services – Bird Eye View Sindh Punjab KPK Balochistan Capital Territory 14 [New] 16 10 (N 3) Non Taxable 16 Market research agency 14 16 10 (N 3) 15 16 Futures brokers 14 Non Taxable commodity brokers 14 Non Taxable 15 Stockbrokers 14 16 15 15 Underwriter 14 [New] 16 Indenters 14 [New] 16 Non Taxable Money exchanger 14 [New] Non Taxable 15 Taxable Services [Broad Descriptions] Credit rating agency N 1: Conditions applies on service provider N 2: Services are subject to some exclusion or exemption N 3: Input tax adjustment is not allowed Non Taxable 16 16 Non Taxable 37

Sales Tax on Services – Bird Eye View Sindh Punjab KPK Balochistan Capital Territory Commission agents 14 [New] 16 Non Taxable 16 Packers and movers 14 [New] Non Taxable 16% / Rs. 400 per B/L Rent a car and automobile rental service 10 (N 3) 16 15 15 16 Surveyors 10 (N 3) Non Taxable 15 Non Taxable 16 14 16 (N 2) 15 15 Non Taxable Cable TV operators 10 (N 2 & N 3) 16 Non Taxable 15 16 Auctioneers 10 [New] (N 3) 16 Non Taxable 16 Taxable Services [Broad Descriptions] Services provided in respect of mining of minerals, exploration of oil and gas including related surveys and allied activities Photographers and videographers N 1: Conditions applies on service provider N 2: Services are subject to some exclusion or exemption N 3: Input tax adjustment is not allowed 38

Sales Tax on Services – Bird Eye View Balochistan Capital Territory 15 16 15 Non Taxable 15 15 16 16 10 15 16 14 16 15 15 16 14 (N 2) 16 10 (N 3) 15 16 Taxable Services [Broad Descriptions] Sindh Punjab Technical testing and analysis service 14 16 (N 2) 14 (N 2) Services provided or rendered by a registrar to an issue Services provided or rendered by port operators, airport ground service providers and terminal operators Service provided by Auto-workshops, including authorized service stations Service provided by Workshops for industrial machinery, constructions and earth-moving machinery or other special purpose machinery, etc. Service provided by Workshop for electric or electronic equipment or appliances, etc. , including computer hardware N 1: Conditions applies on service provider N 2: Services are subject to some exclusion or exemption N 3: Input tax adjustment is not allowed KPK Non Taxable 39

Sales Tax on Services – Bird Eye View Taxable Services [Broad Descriptions] Sindh Punjab KPK Balochistan Capital Territory Service provided by Car or automobile washing or similar service station Service provided in Health care centre, gyms or physical fitness center, etc. 14 (N 2) 16 15 15 16 14 16 Non Taxable 15 16 Body message center 14 Non Taxable 15 16 Pedicure Center 14 Non Taxable 15 16 Non Taxable 16 Fumigation services Maintenance or cleaning services Janitorial services Dredging or deslting services N 1: Conditions applies on service provider N 2: Services are subject to some exclusion or exemption N 3: Input tax adjustment is not allowed 10 (N 2 & N 3) 10 (N 3) 16 16 10 (N 3) 16 10 [New] (N 3) 16 Non Taxable Non Taxable 40

Sales Tax on Services – Bird Eye View Taxable Services [Broad Descriptions] Sindh Punjab KPK Balochistan Capital Territory Non Taxable 16 (N 2) 10 / 14* (N 3) 6 / 14* (N 2 & N 3) 16 10 (N 3) 15 16 (N 2) 15 15 Management Services including fund assets management services 14 16 15 15 16 Airport services 14 Non Taxable 15 15 Non Taxable 14 16 15 15 16 14 14 16 Non Taxable 15 15 16 16 14 16 15 15 Non Taxable 15 16 Franchise services Construction services Event management services including the services by event photographers, event videographer and the persons providing services related to such event management Exhibition services. Public bonded warehouses Labour and manpower supply services N 1: Conditions applies on service provider N 2: Services are subject to some exclusion or exemption N 3: Input tax adjustment is not allowed 41

Sales Tax on Services – Bird Eye View Taxable Services [Broad Descriptions] Sindh Punjab KPK Balochistan Capital Territory Service provided in the matter of manufacturing or processing for others on toll basis 14 16 10 (N 3) 15 Non Taxable Race Clubs: (a) services of entry/admission (b) other services a) Rs. 200 per entry ticket or entry pass of the person visiting the race event. (N 3) 16 a) Rs. 200 per entry ticket or entry Non pass of the Non Taxable person Taxable visiting the race event. (b) 14%] (b) 15%] Services provided or rendered by programme producers and production houses Services provided or rendered by corporate law consultants N 1: Conditions applies on service provider N 2: Services are subject to some exclusion or exemption N 3: Input tax adjustment is not allowed 6 (N 3) 16 15 15 16 6 (N 3) 16 15 15 Non Taxable 42

Sales Tax on Services – Bird Eye View Taxable Services [Broad Descriptions] Services provided or rendered by fashion designers Services provided or rendered by call centres Services provided or rendered by persons engaged in inter-city transportation or carriage of goods by road or through pipeline or conduit Ready mix concrete services Intellectual property services Erection, commissioning and installation services Technical inspection and certification services, including quality control certification services and ISO certifications N 1: Conditions applies on service provider N 2: Services are subject to some exclusion or exemption N 3: Input tax adjustment is not allowed Balochistan Capital Territory 15 16 15 18. 5 15 16 Non Taxable Non Taxable Sindh Punjab 10 (N 3) 16 14 16 6 / 14* (N 3) 16 (N 2) Non Taxable 16 15 16 16 6 / 14* [New] (N 3) 10 / 14* [New] (N 3) 14 [New] KPK Non Taxable 16 16 14 [New] 43

Sales Tax on Services – Bird Eye View Taxable Services [Broad Descriptions] Sindh Valuation services, including competency and eligibility testing services Visa processing services 14 [New] Non Taxable Services in relation to supply of tangible goods including machinery, Non equipment and appliances for use, Taxable without transferring right of possession and effective control of such machinery, equipment and appliances. Public relation services Domestic transportation of goods by air Facilities for travel Non Taxable N 1: Conditions applies on service provider N 2: Services are subject to some exclusion or exemption N 3: Input tax adjustment is not allowed Punjab KPK Balochistan Capital Territory 16 Non Taxable 16 16 [New] Non Taxable Non Taxable Non Taxable Non Taxable 16 [New] Rs. 2, 500/per ticket Rs. 1, 500/per ticket Rs. 5, 000/per ticket Rs. 10, 000/per ticket (N 2) 44

Sales Tax on Services – Bird Eye View Taxable Services [Broad Descriptions] Chartered flight services within or originating from the Punjab. Debt collection and similar other recovery services. Supply chain management or distribution (including delivery) services. Broadcasting Services N 1: Conditions applies on service provider N 2: Services are subject to some exclusion or exemption N 3: Input tax adjustment is not allowed Sindh Punjab Non Taxable 16 [New] Non Taxable KPK Balochistan Non Taxable Capital Territory Non Taxable Non Taxable 15 Non Taxable 45

Exemptions 46

Exemptions Exemption provision are opponent of charging provision. ü ü Exemption provision are liberally construed in favour of the State and against the subject because the burden of tax is to be borne by other member of the State. ü Burden is on the person claiming exemption to prove that he falls within the exemption provision and fulfils the exemption requirements and conditions. ü Benefit of doubt, ambiguity, or alternative interpretation of exemption provision is to be given to the State except claimant of exemption is State or state divisions, charitable institutions, or meant for economic development. 47

Exemptions Section 10 The Sindh Revenue Board (SRB) has the powers to exempt: Pany taxable service; Pany taxable service provided by a specific person or a class of persons; Pany recipient of services or class of such recipients, including international organizations and institutions; Pany person or class of persons from the whole or any part of the tax chargeable under the law either prospectively or retrospectively. 48

Exemptions Tariff Heading 9801. 2000 & 9801. 5000 Nature of Service Exemption Restaurants & Turnover does not exceed Rs 3. 6 million in a financial year Caterers Exclusion Øair-conditioned; Øconnected with hotel, motel, guest house or clubs; Øfranchisors or franchisees; Ømore than one outlet in Sindh; ØUtility bills in excess of Rs 40, 000/ (any month) 9801. 3000 Marriage halls Plots measuring 800 square yards or less with exclusion as above. 9801. 4000 Clubs Ø Initiation fee not exceeding Rs 30, 000/-; Ø Monthly fee not exceeding Rs 100, 000/- 98. 02 Advertisement Financed out of funds provided by Govt. under Grant-In-Aid. 9802. 4000 Advertisement in newspaper & periodicals 49

Exemptions Tariff Heading Nature of Service Exemption 9805. 5100 Tour Operators Hajj and Umrah tour packages (Note: Ziyart not included) 9806. 3000 Rent of immovable By individual having income not exceeding income chargeable property to Income Tax (i. e. Rs 150, 000) 9809. 0000 Contractual execution Total value for contracts does not exceed Rs 50 million in a of work or furnishing financial year provided that the value component of service supplies does not exceed Rs 10 million 9810. 0000 Personal Care Ø Exclusive service of hair cutting, hair dressing, hair dyeing and shaving; Ø Turnover not exceeding Rs 3. 6 million Exclusion ü air-conditioned; ü connected with hotel, motel, guest house or clubs; ü franchisors or franchisees; ü more than one outlet in Sindh; ü Utility bills in excess of Rs 40, 000/ (any month) 50

Exemptions Tariff Heading 98. 12 Nature of Service Exemption Telecommunication Ø Charges payable on International leased lines used by software exporting firms registered with PSEB; Ø Internet services upto 2 Mbps or Rs 1, 500/- per month 98. 13 Banking, NBFC & Others Service for Hajj and Umrah, Cheque book issuance, Modaraba & Musharika financing 9813. 1500 Life Insurance No condition 9813. 1600 Corp Insurance & Health Insurance No condition 9813. 9000 Foreign exchange & dealer or money 9819. 2000 changer Spread charges as permitted by SBP 51

Exemptions Tariff Heading 9815. 3000 Nature of Service Exemption 9815. 6000 Software of IT Based system development consultant Same as above 9819. 9000 Cable TV operators In rural areas under PEMRA’s license of “R” category 9820. 1000 Auto workshops Turnover not exceeding Rs 3. 6 million Exclusion Øauthorized workshop Øprovided under agreement Øwarranty given by manufacturer Accountant & auditors Services exported by registered persons Conditions Ønot located and non resident of Pakistan; Øvalue of export service received in foreign exchange; Øvia banking channel and business bank account; Øreported to State Bank of Pakistan 52

Exemptions Tariff Heading 9820. 4000 Nature of Service Exemption Car or automobile washing Turnover not exceeding Rs 3. 6 million in financial year 9824. 0000 Construction Ø projects of commercial & industrial nature where value of services construction does not exceed Rs 50 million and value component of service does not exceed Rs 10 million; Ø construction and repair of roads, ports, airports, railways, transport terminals, bridges, Govt. buildings not meant for commercial purpose and commercial letting; Ø construction & development of EPZ, SEZ, diplomatic and counselor buildings and other building exempt under ITO. Ø construction of independent projects of private residential houses and apartments having covered area not more than 10, 000 sq feet for houses. 53

Registration & allied matters 54

Registration & allied matters TYPES OF REGISTRATION ü Registration under Section 24 ü Voluntary Registration- Section 24 A ü Compulsory Registration- Section 24 B 55

Registration & allied matters Registration- Section 24 Registration is required for person who: ü are residents; ü provide services listed in Second Schedule from registered office or place of business in Sindh; and ü fulfill any other criteria or requirements defined by the Board ‘Place of Business in Sindh’ means where a person owns, rents, shares or in any other manner occupies a space in Sindh from where the economic activity is carried out by the person. A person required to be registered shall apply electronically and the applicant shall be given registration number. However, existing taxpayers shall not be required to file application for registration and they will be automatically registered under the Act. Different offices within Sindh will require single registration; 56

Registration & allied matters Voluntary Registration- Section 24 A ü person carrying out economic activity; ü not otherwise required to be registered The Board may registered such person on fulfilment of conditions. Compulsory Registration- Section 24 B ü person providing taxable services not obtained registration under Section 24; ü the officer of SRB after making inquiry may register the person compulsorily; ü order under Section 24 B is required to be passed with providing opportunity of being heard. 57

Registration & allied matters Registration process- Chapter II of Rules Ø An application to be submitted online on SRB web portal on Form SST-01 Ø Ø Ø NTN certificate; Certificate of incorporation; Attested copy of CNICs of all directors; Utility bills (electricity, gas and telephone); Bank account certificate; License or certificate of issued by concerned regulatory authority; 58

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Registration & allied matters Change in particulars Application for change in particular may be filed on-line for: Ø Ø Ø change of name and address; business activity or principal services; agent particulars; particulars of directors or partners; particulars of business branches and bank accounts; or Any other information mentioned in the registration particulars. 60

Filing of return 61

Filing of return TYPES OF RETURN ü Return under Section 30 ü Special Return- Section 31 ü Final Return- Section 32 62

Filing of return Return under Section 30 & Chapter III of Rules Every registered person is required to file return as specified in Form SST-03 within due date. The return is required to be filed electronically through e-portal of Sindh Revenue Board. The due date of filing of return is 18 th of the month and the due date of payment is 15 th of the month. A unique user ID and password is required to be obtained by enrolling with SRB before filing the return. Revised Return The return may be revised with the permission of the SRB or any officer authorised by the SRB subject to certain condition and restrictions. 63

Record & Bookkeeping 64

Record & Bookkeeping ü The record are required to be kept at the business premises or registered office. ü The records and documents should be maintained in such form and manner which would determine ready ascertainment of tax liability of registered person. The following shall be kept at registered office or place of business: ü Records of taxable services provided indicating the description and type of service, the value of services or fee, the name and address of the person to whom the services was provided; ü Records of exempt supplies; and ü such other records specified by the board Registered person is required to retain the record and documents for a period of 5 years after the end of the tax period to which such record or documents relate or in case of any proceeding including appeals, assessment etc. until the final decision is made. 65

THANK YOU 66