Issuance of Tax Deduction Certificate by Agents

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In view of your question, who will issue tax deduction certificate, you need to understand SPECIAL PROCEDURE FOR PERSONS PROVIDING OR RENDERING SERVICES SUBJECT TO SALES TAX UNDER THE PROVINCIAL LAWS, ADVERTISEMENTS ON TELEVISION AND RADIO, PART.- 1 CHAPTER VI, of The Sales Tax Special Procedures Rules 2007.

Because you are following wrong procedure, According to procedure.

<b>29. Application</b>.—The provisions of this Chapter shall apply for collection and payment of sales tax by the persons providing or rendering services chargeable to sales tax under the respective Provincial laws. ( This procedure will apply on who is providing Advertising Service, Other then advertising agencies)

<b>34. Invoicing.—(</b>1) A service provider, providing or rendering taxable services shall issue serially numbered sales tax invoices to its customers or clients or members, for the services provided or rendered, containing all the particulars as prescribed under section 23 of the Act
(According to Section 34 Service provider shell issue Invoice, all invoices issued by the service provider are in accordance with the specimen invoice set out at Annex-B. Advertising agent cannot issue invoice behalf of the service provider)

<b>36. Scope and value.— </b> (1) In relation to advertisements, the expression “taxable services” means the services in respect of advertisements—
(a) broadcast or telecast by TV or radio stations based in Pakistan;
(b) booked in Pakistan for broadcasting or telecasting on TV or radio stations based abroad, whether or not possessing landing rights in Pakistan; and
(c) transmitted on closed circuit T.V. or cable T.V. network.]
(2) “Value of taxable service” for the purposes of levy of sales tax shall be the total consideration in money received or the gross amount charged by a service provider from his clients for broadcasting or telecasting of any advertisement on radio or television, including all Federal and Provincial levies but excluding the amount of sales tax.

Now you can understand about procedure.

<b>First step</b>
Service provider will issue an invoice 100,000. Like this format,

<b><center>NAME OF THE COMPANY</center></b>
Address______________________________________________________
Phone No. ____________________ Fax No._______________________
Sales Tax Registration No.________________________________________
Invoice No._____________
Date of Issue___________
M/s.__________________________________________________________ ______________________________________________________________
(Name & address of client) Through
M/s.__________________________________________________________ _____________________________________________________________
(Name & address of advertising agency)
Agency Code___________ [TV Channel]

Advertiser
M/s._________________________________________________________
(Name of client)
Client’s Sales Tax Reg. No._______________________________________
Consumer Product ______________________________________________

GROSS AMOUNT Rs. 100,000/=
ADD 16% Sales Tax Rs.16,000/=
Total Rs. 116,000/=
LESS 15% Agency Commission (Rs.15,000)
Net Payable Rs.101,000/=
1. Kindly make payment of this invoice by crossed cheque [Payee’s Account only] in favour of M/s._______________________________


M/s ———————————————.
(Name of telecasting company)

<b>Second Step-</b>Advertising Agency collect invoice above mention from service provider and along with his own invoice for commission 15,000/=, will send to the client / customer.

<b>Third Step-</b>While Client / customer received 2 invoices 1 for Service, 2nd for Commission, He shell pay separate cheque for service amounting 94940/= namely Service provider & deduct 6% WHT 6060/=, and pay separate cheque for commission amounting 14250/= namely Advertising agent & deduct 5% WHT 750/=,

<b>Fourth step-</b>After deposit WHT deducted by Clint / customer to the FBR, Cline shell issue separate certificate for Service provider & Advertising Agency.
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Note- </b> If service is exempt from sales tax then sales tax shell not apply