Documents required for new Sales Tax Registration W.E.F 01.07.2019

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Good news for Sales Tax Registration

 

Federal Board of Revenue has announced that the automated system for sales tax registration will be effective from 1st July, 2019.The following procedure is proposed and the same shall replace the one as prescribed in sub-rules (2) to (8) of rule 5 of the Sales Tax Act, 1990:
The applicant having NTN/income tax registration shall, using his login credentials, upload following information / documents:
(a) Bank account certificate issued by the bank in the name of the business
(b) Registration / consumer number with the gas and electricity supplier
(c) Particulars of all branches in case of multiple branches at various locations
(d) GPS-tagged photographs of the business premises
(e) In case of manufacturer, also the GPS-tagged photographs of machinery and industrial electricity or gas meter installed
On furnishing above documents, the system shall register the applicant for sales tax. After registration, the applicant or his authorized person shall visit e-Sahulat Centre of NADRA within a month for bio-metric verification. In case of failure to visit or failure of verification, the registered person’s name shall be taken off the sales tax Active Taxpayer List. In case of manufacturer, the Board may require post verification through field offices or a third party authorized by the Board. In case, the field office, during scrutiny after the registration, finds that any document provided is non-genuine / fake / wrong, it may request through the system, to provide the missing document, in fifteen days, failing which the registered person shall be taken off from the sales Active Taxpayer List.

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Sales tax withholding comparison and exceptions under federal and provincial sales tax laws

Sales tax withholding comparison and exceptions under federal and provincial sales tax laws.

Rules relating to sales tax withholding and exception therefrom under federal and provincial sales tax laws are summarized hereunder:

1. Supply of goods (in any territory) and rendering of services in Islamabad:

For supply of goods (in any territory) and rendering of services in Islamabad, sales tax is withheld;

• @ 20% of the sales tax charged in the invoice by a registered vendor; and
• @ 1% of the gross invoice amount from a vendor that is unregistered but liable to be registered.

However sales tax withholding will not apply to the supplies of the following goods and services if made by a registered person, namely:–

(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) Registered persons paying sales tax under Chapter XI of the Sales Tax Special Procedure Rules, 2007, except those paying sales tax on ad valorem basis at standard rate;

(viii) Vegetable ghee and cooking oil;

(ix) Telecommunication services ;

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

(xi) Supplies made by commercial importers who paid value addition tax on such goods at the time of import as prescribed under Chapter X of the Sales Tax Special Procedure Rules, 2007; and

(xii) Supplies made by active taxpayer as defined in STA 1990 to registered person except for advertisement services.

2. Services obtained in Punjab:

For services obtained in Punjab, sales tax is withheld

• @ 100% of sales tax charged in the invoice by a registered vendor; and
• @ 100% of applicable rate of sales tax, if services are obtained from unregistered vendor that is liable to be registered.

Sales tax withholding shall not apply to

• Telecommunication,
• Banking,
• Courier,
• Insurance, and
• Services, other that the advertisement services, provided by corporate sector persons registered with the authority.

3. Services obtained in KPK:

For services obtained in KPK, sales tax is withheld:

• @20% of sales tax charged in the invoice, if services are received from registered vendor who is also active for sales tax.
• @100% of sales tax charged in the invoice, if services are received from registered vendor who is inactive for sales tax.
• @ 100% of applicable rate of sales tax, if services are obtained from unregistered vendor that is liable to be registered.

4. Services obtained in Sindh:

For services obtained in Sindh, sales tax is withheld:

• @20% of sales tax charged in the invoice, if services are received from a registered vendor.
• @ 100% of applicable rate of sales tax, if services are obtained from registered vendor and the amount of sales tax is not indicated on the invoice.
• @ 100% of applicable rate of sales tax, if services are obtained from unregistered vendor that is liable to be registered.

Sales tax withholding shall not apply to:

• Telecommunication,
• Banking companies,
• Financial institutions, insurance companies (other than re-insurance).
• Port operator,
• Airport operator,
• Terminal operator,
• Airport ground services.

5. Services obtained in Balochistan:

• @20% of sales tax charged in the invoice, if services are received from a registered vendor.
• @ 100% of applicable rate of sales tax, if services are obtained from unregistered vendor that is liable to be registered.

Sales tax withholding shall not apply to:

• Telecommunication,
• Banking companies,
• Financial institutions, insurance companies (other than re-insurance).
• Port operator,
• Airport operator,
• Terminal operator,
• Airport ground services.

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Sales Tax Record Format

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RTO Faisalabad Team Arrested 07 Persons Accused of Sales Tax Fraud, on 18-03-2019

M/S SHAHEER TEXTILES was involved in fake/paper transactions to the tune of Rs.1.502 Billion and consequent tax fraud amounting Rs. 212.103 Million emanating from fake/flying invoices. Following the Order-in-Original that established the non-existent nature of the enterprise and fraudulent activities on the part of the Registered Person, her husband, the Sales Tax Consultant and banking industry accomplices, an FIR vide FIR No. 01/2019  was lodged on 14.03.2019 by the I & P Cell of the RTO. Given below is list  of accused people arrested today on 18.03.2019
1. Mehboob Anjum
2. Ehsan Sarfraz
3. Shoaib Elahi
4. Muhammad Waseem
5. Akram Zia
6. Yasir Maqbool
7. Nasir Abbas
Arrested accused have been  sent to the Police Station Lock-up for night stay ( شب باشی )and would be produced before the Special Judge (Customs & Taxation), Lahore tomorrow for physical remand .
Efforts to apprehend the other accomplices are underway.

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FBR Issues Advice for Payment of Rs 7.23 Billion Sales Tax Refunds

Federal Board of Revenue (FBR) has issued an advice to the State Bank of Pakistan for making payment of sales tax refunds amounting to Rs. 7,236 million to facilitate the exports.

The payment will benefit 898 claimants involved in exports of textile, carpets, leather, sports goods, surgical instruments, rice, food items, machinery and other items. The refund has been paid against 2,637 refund payment orders issued up 30 th January, 2019.

The refund payments shall be transmitted electronically to the respective bank accounts of claimants by the State Bank of Pakistan by the close of banking hours on Monday, 4th March, 2019.

 The payments have been made to all those claimants of the aforesaid categories who had provided their bank account details in IBAN format. Those refund claimants who have not provided account number in IBAN format are requested to provide the same through their user ID on FBR’s web portal.

Further, Federal Board of Revenue is conscious of the problems being faced by the businesses on account of outstanding refunds and is working on a plan to pay remaining outstanding refund claims by issuing bonds after the passage of Finance Supplementary (Second Amendment) Bill, 2019, which is presently under approval of National Assembly.

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Difference between Sales Tax and VAT (Value Added Tax)

So, many people have questions regarding the difference between Sales Tax and VAT.

This is due to the fact that in countries where Sales Tax is applicable people are generally unaware of V A T whereas in the countries where VAT is applicable people are unaware of Sales Tax.

In simple words, Sales Tax is basically applicable on the goods and services on the retail price that is the end price whereas VAT on the other hand is applicable on all the stages of production of those goods that is manufacturing stage, distribution stage, wholesale stage, retail stage etc.

Unlike VAT, Sales Tax is imposed on the total value of goods and services purchased.

The Sales Tax is collected one time by the retailer whereas the Value Added Tax is collected by all the sellers at various stages of production.

Although, the burden of tax in both Sales Tax and VAT falls upon the end consumer, however, the payment of these taxes is made by all the purchasers in VAT as compared to single end consumer in the case of Sales Tax.

The rate of Sales Tax is generally high as compared to the rate of VAT due to the fact that the Sales Tax is applicable one time generally where as the VAT is applicable on various stages of value addition.

Both the taxes are indirect of nature. Also, the treatment of adjusting Input and Output taxes is also similar in both Sales Tax and VAT.

It is generally believed that the model of VAT as compared to Sales Tax is more effective as it brings all the stages of value addition under tax net where as in Sales Tax certain stages remain unaccounted for.

In general the rate of Sales Tax in various countries remains between 17% to 25% where as the rate of VAT fluctuates between 5% to 12%.

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