Presented by: Muhammad Asim Khan - ACA

Planned by: Syed Noman Shamim - ACA

Syed & Co.

Chartered Accountants
Web: www.syedandcompany.com
Email: contact@syedandcompany.com
 Syed & Co.
Chartered Accountants
PROFILE
We are a team of true professionals who are passionate about what we do
for our clients.

Services we provide:
• Accounting
• Taxation
• Audit
• Corporate
• Training & workshops

Our work is the key to your success and makes you proud of your
reputation.
 AGENDA
Understand the implications of the Tax laws on Payments of Expenditures

 Income Tax
 Sales Tax
 Provincial Sales Tax
 INTRODUCTION
Taxation
• Income Tax
• Sales Tax on Goods
• Provincial Sales Tax on Services

Provincial Sales tax on Services

• For Sindh
• For Punjab
• For Baluchistan
• For KPK
• For Capital territory
 INCOME TAX
Difference between Registration status vs Filing status (ATL)
• Those who have NTN are registered

• Those who file return on time are filers

(ATL status active)

Who will Withhold Income Tax??? (u/s 153)

1. Every prescribed person
2. Making payment in full/part/advance
3. To a resident person for: Definition of Prescribed
• Supply of goods person = Sub sec 7 of section
• Rendering of services 153
• Execution of Contracts
Shall deduct tax on gross amount including sales tax
 Withholding Tax Rates = Div III Part III First Schedule
Non-
Sec Category Filer
Filer
Sale of Goods
Companies 4% 8%
153 (1)(a)
Individual/ AOP 4.5% 9%
Services
Companies 8% 16%
Individual/ AOP 10.0% 20%
Certain Special Services
Hotel Services
Transportation services
Courier services
153 (1)(b)
Security Guard Services
IT Services and IT enable services
3% 6%
Software Development Services
Car Rental services
Building Maintenance services
Advertising Services (Other than Print/ Electronic Media)
Advertising Services on Print/ Electronic Media
Contracts
153 (1) (c) Companies 7% 14%
Individual/ AOP 7.50% 15%
No need to Withhold Income Tax
Exemptions (Sec 153 and SRO 586)

Payment to:
1. Provincial Government
2. Local Government
3. Person having Exemption Certificate
4. Electricity/gas/PTCL Companies
5. Payments for the supply of crude oil
6. Payments to Attock/National/Pakistan Refinery
7. PSO/Shall/Caltex for petroleum products
8. Hotels and restaurants receiving payments in cash
9. Payment for Goods up to 75K in a FY to a resident person
10.Payment for Services not exceeding 30K in a FY to a resident
person
 If Income Tax not Deducted (Ref: Sec. 161)

•Personal liability to pay the tax

•Default surcharge @ 12%

•The related expenditure shall not

be allowable deductions. (Ref: Sub
sec “C” of Sec 21)
Payment to be Made through
Banking Channel (NOT IN CASH)
(Ref: Sub Sec. “l” & “m” of Sec. 21)
Single account head expenditure exceeding
Rs. 50,000 in a year to be paid via banking
channel.
Exceptions:
a) Single payment up to 10K
b) Payment on account of:
• Utility Bills
• Freight Charges
• Travel Fare
• Postage
• Payment of Taxes/duties/charges
c) Salary up to 15K pm

•An amount is to be paid within three years otherwise chargeable to tax

under the “Head income from Business”.
LEARNING OUTCOMES
 Sales Tax Act, 1990
Difference between Registration status vs Filing status (ATL)
• Those who have SNTN are registered

• Those who file monthly sales tax return on time are filers
(Sales Tax ATL status active)
 Sales Tax Act, 1990

To qualify for the Tax amount

Supply
Taxable Goods
Taxable Supply
Value of Supply
Tax rate
Sales tax amount
 Some Useful Definitions

Supply
Supply means sale or other transfer of the right to dispose of
goods as owner

Taxable Goods
All Goods which are not exempt (sixth schedule item).

Taxable Supply
Supply of taxable goods made by an importer, manufacturer,
wholesaler, dealer, distributor or retailer.
Concept of value of supply

Value of Supply (Ref: clause 46 of sec 2)

In respect of taxable supply means consideration in money
including all duties and taxes excluding the amount of sales tax

Supply in kind – Open Market Price

In case of trade discounts – Discounted price provided the tax

invoice shows the discounted price, related tax, and discount is
in conformity of the normal business practice
 Scope of Sales Tax (Ref: sec 3):
Tax @ 17% is applicable on the value of:
•Taxable supplies made by a registered person in the course of taxable activity
•Goods imported into Pakistan

Taxable supplies/imports of items specified in the 3rd schedule shall be charged

@ 17% on retail price. If similar goods are specified in eight schedule, at the rate
specified in the eight schedule.

Goods specified in the eight schedule shall be charged at the rates specified in
the eight schedule (reduced rate goods)

On the goods specified in the tenth schedule (fixed rate tax) on the basis
specified in the tenth schedule
 Sales Tax Amount
Value of Supply X Tax Rate

Different Sales Tax Rates for different products

General Value *17% =Sales Tax

Supply of Retail Item (3rd Schedule) Retail Price *17% =Sales Tax

Supply of item at fixed rate (10th Schedule) Rs. 7,500 per month

Supply of Reduced rate item (8th Schedule) Value *5% =Sales Tax
Determining Tax liability

Output tax 150,000 X 17%= 25,500

Less: Input Tax 100,000 X 17%= 17,000
Tax payable 8,500

Conditions to Claim the input tax (Ref: sub Sec 2 of Sec 7)

• Input tax on invoice for any of the six succeeding tax periods

• Tax invoice to be in the name of the Company

• Supplier must have paid the tax or have declared the supply in his
return
 Tax Credit not allowed (Ref: Sec 8)
• the goods or services used or to be used for any purpose other
for taxable activity,

• the goods or services in respect of which sales tax has not been
deposited in the Government treasury by the respective
supplier,

• fake invoices,

• goods and services not related to the taxable supplies made by

the registered person,

• goods associated to immoveable property, such as building and

construction materials, paints, electrical and sanitary fittings,
pipes, wires and cables.
Payment to be Made
through Banking Channel
(NOT IN CASH)

Section 73
1. Any amount exceeding Rs. 50K other than utility bills
should be made through a crossed cheque,
2. Payment should be made through the business bank
account,
3. Online transfer is allowed subject to verification,
4. Payment is to be made within 180 days of the invoice
date.
LIABILITY TO PAY THE SALES TAX
• On the person making the supply
• On the person importing the goods

Some Relevant Supplies for Beaconhouse

Stationery Items
Who will Withhold Sales Tax???
Withholding Agent
• Federal Government
• Provincial Government
• Autonomous Bodies
• Public Sector Organizations
• Companies
• Registered Person as recipient of advertisement services
• Registered person purchasing Cane Molasses
 SALES TAX WITHHOLDING RULES (Ref: Eleventh
Schedule)
Withholding Agent Supplier Rate of Deduction
Company Registered Person 1/5 or 20% of ST
(Not in ATL)
Registered as 1/10 or 10% of ST
wholesaler, dealer or
Distributor
Unregistered 5% of Gross value of
supplies
 No need to Withhold Sales Tax (Ref: Eleventh
Schedule)
Exceptions
1. Electrical energy;
2. Natural Gas;
3. Petroleum Products;
4. Telecommunication services;
5. Goods specified in the Third Schedule to the Sales Tax Act,
6. Supplies made by importers who paid value addition tax on such
goods at the time of import; and
7. Supplies made by an Active Taxpayer as defined in the Sales Tax
Act, 1990.
 Particulars of Sales Tax Invoice (Ref:
Sec 23)

1. Serial Number
2. Name, address, NTN, SNTN of the Supplier
3. Name, address, NTN, SNTN of the Customer
4. Date of Invoice
5. Description of the Goods
6. Value excluding sales tax
7. Amount of Sales Tax
8. Value inclusive of Sales Tax
LEARNING OUTCOMES
 Sindh Sales Tax on Services Act, 2011
Taxable Service
1. Service listed in Second Schedule
2. Registered Person (SRB Registered Person)
3. Registered Office/Place of Business in Sindh
4. Economic Activity – Including commencement or
termination of the Activity

Note:
Goods are General – All goods are taxable unless exempt
Services are Specific – Services that are specified are taxable
SRB REGISTRATION:
Required for all persons who:
•Are residents
•Provide any service listed in Second Schedule
•Have place of Business / RO in Sindh
•Fulfill any other criteria which the board may prescribe
Sindh Sales Tax Amount Calculation
• Value of a service
• Tax rate

Value * Tax Rate = Sales Tax Amount

Value of Taxable Service

•Consideration in money including all taxes excluding Sindh Sales Tax
•Consideration in Kind – Open Market Price (OMP)
•Service b/w related parties – value shall be the arms length price
•Service below the market price – the value shall be the OMP
 SOME RELEVANT SERVICES FOR BEACONHOUSE

• Telephone @ 19.5
• Catering @ 13%
• Transportation @ 13%
• Hotel @ 13%
• Repair and Maint. Services @ 13%

Repair and
Maintenance Telephone

Hotel Catering

Transportation

Telephone Catering Transportation Hotel Repair and Maintenance

CHANGE IN TAX RATE
Tax rate that is applicable at the time when service is provided

Input Tax Credit Not Allowed

•Input tax on Goods or Services not related to Taxable Activity
•Tax not deposited in the Government Treasury
•Further Tax/extra Tax/Value Addition Tax
•Tax on Fake invoices
•Input Tax on Capital Goods / Fixed Assets
•Tax below standard rate/specified rate/fixed rate
•Utility Bills not in the name of Registered Person unless satisfaction
of the SRB is Obtained
Sindh Sales Tax Withholding Rules

Withholding Rate Service Category

20% of sales tax amount all services
Withholding agent
100% of sales tax amount Transportation

Exceptions:
Telecom
Banking companies
LEARNING OUTCOMES
 Baluchistan Sales Tax on Services

• Telephone @ 19.5
• Catering @ 15%
• Transportation @ 15%
• Hotel @ 15%
• Repair and Maint. Services @ 15%
 Individual Income Tax return

Benefits of Becoming filer:

•Taxed at reduced rate. E.g.. property/vehicle purchase, Saving
schemes, Dividend income, bank profit, prize bonds
•Restricted purchasing capacity of immovable property

Who is required to file income tax return:

•Owns land
•Owns Flat
•Motor vehicle above 1000Cc engine capacity

Tax Credits / rebates:

•Donations
•Tax Credit on Investment – IPO
•Tax Credit for investments in Health Insurance
Adjustment of Withholding Income Tax:
Mobile Phone
Telephone Bills
Cash withdrawal from bank
Functions on gathering
Educational Fees
 Rent Expense
Rent (Ref: Sec 15):
• Amount received or receivable by the owner of land or building
• Forfeited deposit

Income from Other Sources

• Plant and machinery
• Amnesties/utilities/services

Up to 200,000 Nil
200,001 to 600,000 5% exceeding 200,000
600,001 to 1,000,000 20,000 + 10% exceeding 600,000
1,000,001 to 2,000,000 60,000 + 15% exceeding 1,000,000
2,000,001 to 4,000,000 210,000 + 20% exceeding 2,000,000
4,000,001 to 6,000,000 610,000 + 25% exceeding 4,000,000
6,000,001 to 8,000,000 1,110,000 + 30% exceeding 6,000,000
above 8,000,000 1,710,000 + 35% exceeding 8,000,000

15% of Gross Rent on Company Ref: Div VIA, Part I, First Schedule for rates
Presented by: Muhammad Asim Khan - ACA
Planned by: Syed Noman Shamim - ACA

Syed & Co.

Chartered Accountants
Cell: +92-331-2337428
Web: www.syedandcompany.com
Email: contact@syedandcompany.com