Is Sales Tax Applicable on Services?

[danishayub_76]

I need help on the sales tax matters. Is sales tax applicable on the services or not ?

[oalevel]

A person providing taxable services in Pakistan is liable to pay sales tax. Input tax adjustment can also be claimed on taxable services. Example Couriers, Custom Agents, Hotels.

[danishayub_76]

Thanks for your reply. I need further details. What is the criteria under which a service is regarded as taxable service. For example if a company outsource the services of security guards, is it taxable service.

[massoodakhter]

HI,

Sales Tax was levied in the budget 2000 through provincial governement on services, not on all services but on some specific which includes-

services provided by courier services, advertisement on television and radio, services provided by hotels, services provided by clearing agnents etc

[awaisaftab]

Danish
The sales tax is not levied on the services of security firms


awais

[Hasaan]

for services, sales tax is levied through provincial sales tax ordinances,

for example, in case of punjab http//punjablaws.gov.pk/laws/421.html ( link to Pubjab sales tax ordinance 2000)

Here are the first two subsections of this ordianance
Subject to the provisions of this Ordinance, there shall be charged, levied and paid a tax on services known as sales tax on services at the rate of [sixteen percent] of the value of the taxable services rendered or provided in the Province of the Punjab.

(2) The tax shall be charged and levied on the services specified in the Schedule to this Ordinance, in the same manner and at the same time, as if it were a sales tax leviable under sections 3, 3A or 3AA, as the case may be, of the Sales Tax Act, 1990.

Under the schedule u have the following services on which u have to pay sales tax @ 16%
1. Services provided or rendered by hotels, [3] clubs, and caterers.–

(a) Services provided or rendered by hotels;

[5][(b)] Services provided or rendered by clubs; and

[6][(c)] Services provided or rendered by caterers.

2. Advertisements on T.V. and radio excluding advertisements.–

(i) if sponsored by a Government Agency for health education;

(ii) if sponsored by Population Welfare Division relating to Sathi educational promotion campaign [7][financed out of funds provided under a grant-in-aid agreement]; and

(iii) public service messages if telecast on television by World Wildlife Funds for Nature and UNICEF.

3. Services provided or rendered by persons authorized to transact business on behalf of others.–

(a) customs agents;

(b) ship chandlers; and

(c) stevedores.

4. Courier services.


Any service rendered other than this in the province of punjab is not chargeable to sales tax. only these services are chargeable to tax.

Services may change from province to province on which sales tax is levied by the respective province

[awaisaftab]

<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by danishayub_76</i>
<br />I need help on the sales tax matters. Is sales tax applicable on the services or not ?
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
Danish,

I think you live in Peshawar. Sales tax is levied on services by provincial governments. so please consult Provincial Sales Tax Act of NWFP. The sales tax acts of all provinces are included in Synopsis of taxes in Pakistan written by Mirza Munawar Hassan,FCMA. Pl purchase the book this book will also be very helpfull for you for the preparation of exam of Bunsiness Taxation of ICMA S-III.

Regards,

Awais