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History of zero rated / reduced rate regime for export
operation on 01-12-2012
It was amended a number of times since its
inception with the major amendments coming
through SRO 154(I)/ 2013 dated 28-02-2013, SRO
504(I)/2013 dated 12-06-2013, SRO 682(I)/ 2013
dated 26-07-2013 and SRO 898(I)/ 2013 dated 0410-2013
The SRO as amended to date has two tables
consisting of various goods belonging to the five
export oriented sectors as well as raw materials,
chemicals, components, subcomponents etc. used
in these export oriented sectors
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Table 1
5% of the value of supply regarding items mentioned in
Table 2
3% of the value of supply regarding fabrics
17% of the value of supply in case supplies are made
outside the reduced rate sectors
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follows:
In the case of local supply of goods, of the person making
as
the
Federal
Government
may
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the federal government vide SRO 660(I)/2007 dated 30-062007 in exercise of powers under Section 3(7) of the Sales Tax
Act, 1990
Major amendments were introduced to these rules vide SRO
98(I)/2013 dated 14-02-2013, SRO 505(I)/2013 dated 12-062013 and SRO 897(I)/2013 dated 4-10-2013
These rules came into force on 01-07-2007
These rules apply to all taxable goods and services barring few
exceptions that are purchased by the withholding agents
The definition of withholding agent includes Federal and
provincial government departments, autonomous bodies,
public sector organizations, registered companies, registered
recipients of services of advertisement and registered
exporters
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equal to one fifth of the total sales tax shown in the sales tax
invoice issued by the registered supplier and make payment of
the balance amount to him. In case of supplies made by a
registered wholesaler, dealer or distributor the amount
deducted would be one tenth.
The withholding agent is required to indicate through notice or
advertisement that withholding sales tax shall be deducted by
him on purchases of taxable goods
The sales tax so deducted shall be deposited by the
withholding agent in the designated branch of National Bank
of Pakistan on sales tax return-cum-payment challan, by 15 th
of the month following the month during which payment has
been made to the supplier
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revenue measure
The scope of sales tax withholding has been increased
manifold, by introduction of companies and exporters as
withholding agents
These measures have been introduced in order to discourage
undocumented sector and to bring more persons carrying out
taxable activity into the tax net through sales tax registration
but this effect has been nullified due to latest amendment
introduced through SRO 897(I)/2013 dated 4-10-2013
Failure on part of the department to bring various
undocumented sectors / segments into the sales tax net is
reflected by expansion of the with holding regime
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THANK YOU
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