SINDH BUDGET HIGHLIGHTS 2015-16 - Junaidy Shoaib Asad · 2017-05-31 · SINDH BUDGET HIGHLIGHTS 2015-16. JUNAIDY SHOAIB ASAD . Chartered Accountants . 6 . 9819.1100 Underwriter 9819.1200

SINDH BUDGET HIGHLIGHTS 2015-16

JUNAIDY SHOAIB ASAD Chartered Accountants 1


JUNAIDY SHOAIB ASAD CHARTERED ACCOUNTANTS



INDEX Page No.

1. PREFACE…………………………………………………… 3 2. DEFINITIONS OF CERTAIN SERVICES……………….. 4 3. AMENDMENT IN FIRST SCHEDULE…………………… 4 4. AMENDMENT IN SECOND SCHEDULE……………….. 5 5. SERVICES TAXABLE AT REDUCED RATE…………… 6 6. EXEMPTIONS……………………………………………… 7 7. PENALTIES………………………………………………… 7 8. CONTACT US……………………………………………… 9



PREFACE The Sindh budget for 2015-16 was announced by Sindh Finance Minister on 13th June 2015. The proposed changes are effective from 1st July unless an earlier date is given for effectiveness of a particular provision. Our comments on the budget provisions provide basic understanding of amendments expected to be brought about however, it is recommended that for giving detailed understanding our advice may be sought.



BUDGET HIGHLIGHTS SINDH SALES TAX ON SERVICES ACT, 2011

DEFINITION OF CERTAIN SERVICES ARE ADDED IN SECTION 2 OF THE ACT

Clause Service 13A Auctioneer 18A Business bank account 22A Commission agent 30A Credit rating agency 35A Dredging or desilting 38A Erection, commissioning and installation services 39A Exchange 47C Future broker 51A Indenter 54A Intellectual property right 54B Intellectual property service 54C Interior decorator 69A Ready mix concrete 69B Ready mix concrete service 69C Real Estate 72B Renting of immovable property 72C Renting of immovable property services 77A Securities 79A Share transfer Agent include share depository agent 90 Stockbroker

93A Tax fraction 96AA Technical inspection and certification services, including

quality control certification services and ISO certification 98C Travel agent 98D Underwriter

SERVICES UNDER FIRST SCHEDULE

Certain new services are included in First Schedule to the Act

Tariff Heading Description of services 9801.1000 Services provided by motels, guest houses and

farmhouses 9801.6000 Ancillary services provided by motels, guest houses and

farmhouses 9806.3000 Renting of immovable property services 9812.9500 Burglar and Security Alarm Services 9812.9490 Vehicle and Other tracking services 9819.1000 Future brokers

After tariff heading 9824.0000 Program producers production houses



After tariff heading 9824.0000 Services provided or rendered by persons engaged in intercity transportation or carriage of goods by road or through pipeline or conduit

After tariff heading 9824.0000 Ready mix concrete services After tariff heading 9824.0000 Erection, commissioning and installation services

After tariff heading 9824.0000 Technical inspection and certification services, including quality control certification services and ISO certification

After tariff heading 9824.0000 Valuation services, including competency and eligibility testing services

Tariff headings are revised / changed for following services

Tariff Heading Description of services 9801.4000 Car or automobile dealers 9806.5000 Dealers of second hand goods other than cars or

automobiles 9806.9000 Others

TAXABLE SERVICES UNDER SECOND SCHEDULE

Rate of sales tax on services has proposed to be reduced from 15% to 14%.

Rate of sales tax on Telecommunication service under main tariff heading 98.12 is proposed to be reduced from 19.5% to 18%. However, notice will be issued under section 8(2) of the Act to this effect.

Reduced rate of 5% is proposed to increase to 6% w.e.f. 01.07.2015, on the services which are liable to the reduced rate of 5% under notifications No. SRB-3-4/8/2013 dated 01.07.2013 read with No. SRB-3-4/10/2014 dated 01.07.2014. A notification, under section 8(2) of the Act will be issued.

Certain services are proposed to be taxable as included in Second Schedule to the Act

Tariff Heading Description of services 9812.9490 Other tracking services 9812.9500 Burglar and Security Alarm Services 9801.1000 Services provided or rendered by motels and guest houses 9801.6000 Ancillary services provided or rendered by motels and guest

houses 9805.5000 Travel Agents 9806.3000 Renting of immovable property services *(there are certain

exclusions) 9806.4000 Car or automobile dealers 9817.9000 Services provided or rendered by laboratories other than

services relating to pathological, radiological or diagnostic test of patients

9818.2000 Credit rating agency 9819.1000 Future brokers



9819.1100 Underwriter 9819.1200 Indenters 9819.1300 Commission agents 9819.1400 Packers and movers 9819.9100 Auctioneers 9822.4000 Dredging or desilting services 9837.0000 Ready mix concrete services 9838.0000 Intellectual property services 9839.0000 Erection, commissioning and installation services 9840.0000 Technical inspection and certification services, including quality

control certification services and ISO certification 9841.0000 Valuation services, including competency and eligibility testing

services

“(72B)“ Renting of immovable property”includes renting, letting, sub-letting, leasing, sub-leasing, licensing or similar other arrangements of immovable property for use in the course or furtherance of business or commerce, but does not include -

(i) renting of immovable property by a religious body to another religious body; (ii) renting of vacant land or premises solely used for agriculture, aquaculture, farming,

forestry, animal husbandry or mining purposes; (iii) renting of land or premises solely used for outdoor games and sports;

(iv) renting of buildings solely used for residential purposes or solely used as hostels and boarding homes of a recognized educational institution; and

(v) renting of immovable property by hotels, motels, guest houses, clubs and marriage halls and lawns which are otherwise liable to tax under tariff heading 98.01 and the sub-headings thereof.

Tariff heading are assigned to certain already taxable services

Tariff Heading Description of services Tax Rate 9825.0000 Management services including fund and asset management

services 14%

9826.0000 Airport Services 14% 9827.1000 Event management services including the services by event

photographers, event photographers, event videographers and person providing services related to such event management

14%

9827.2000 Exhibition services 14%

Certain services are proposed to be taxed at reduced ratehowever; notification under section 8(2) of Act will be issued to this effect. No input tax adjustment will be allowed against sales tax liability:

Tariff Heading Description of services Proposed Rate

98.12 Telecommunication Services 18% After tariff heading

9824.0000

Service provided by program producers and production houses

6%

9827.1000 Travel Agent 10% 9827.2000 Auctioneer 10% 9822.4000 Dredging or desilting services 10%



9838.0000 Intellectual Property Services 10% 9806.3000 Renting of immovable property services 6% After tariff heading

9824.0000

Ready mix concrete services 6%

EXEMPTIONS

The exemption of SST on utility bills collection by banks, financial institutions, NBFCs and NADRA Technologies Ltd (NTL) are proposed to be withdrawn effective from 01.07.2015. A notification under section 10(2) of the Act will be issued to amend the provisions of notification No. SRB-3-4/7/2013 dated 18.06.2013 to give effect to this measure.

The conditions for exemption of SST on laundries and dry cleaners (tariff heading 9811.0000) are proposed to be reviewed to also exclude such laundries and dry cleaners whose turnover exceeds Rs. 3.6 million in financial year or whose total utility bills (electricity, gas and telephone) exceeds Rs. 40,000/= in any month during a financial year. A notification, under section 10(2) of the Act, shall be issued to give effect to this measure.

PENALTIES & DEFAULT SURCHARGE

Minimum penalty shall be Rs. 100,000 in case notice or an order of compulsory registration issued. (Serial 1, Sec 43)

In case of failure to intimate change in particulars of registration, penalty shall be Rs. 10,000 which may extend to Rs. 100,000 (Serial 1A, Sec 43)

Minimum time during which minimum penalty of Rs. 300 per days for non-filing of return is applicable is reduced from 15 days to 10 days.(Serial 2, Sec 43)

In case of failure to maintain required record under the Act, penalty may be extended to Rs. 100,000 subject to minimum penalty of Rs. 10,000 or five percent of total tax payable during the period he fails to maintain record. Further, the defaulter shall be liable to imprisonment upto one year. (Serial 4, Sec 43)

In case of failure to produce records by the registered person, amount of maximum penalty shall be Rs. 100,000 (Serial 5, Sec 43)

In case of tax fraud minimum penalty has proposed to be increased from Rs. 25,000 to Rs. 50,000 (Serial 6, Sec 43)

In case of not allowing access to authorized officer to accounts or records minimum penalty has proposed to be increased from Rs. 25,000 to Rs. 50,000. (Serial 7, Sec 43)

In case of not allowing access to authorized officer to business premises or failure to facilitate such officer, penalty shall be Rs. 100,000 or twice the amount of tax assessed whichever is higher. Further, the defaulter shall be liable to imprisonment upto one year. (Serial 7A, Sec 43)



In case of violation of any embargo placed on economic activity penalty shall be Rs. 100,000 or an amount equal to tax sought to be recovered whichever is higher. Further, the defaulter shall be liable to imprisonment upto one year. (Serial 9(a), Sec 43

In case of failure or delays by bank in attaching bank account of the taxpayer for recovery of tax, penalty shall be Rs. 100,000 or twice the amount of tax assessed whichever is higher. Further, the defaulter shall be liable to imprisonment upto one year. (Serial 9(b) Sec43)

In case of obstructing officer in performance of his duties or refuses to received notice or order, minimum penalty has proposed to be increased from Rs. 25,000 to Rs. 50,000 (Serial 10, Sec 43)

In case of contravention of provisions of the Act or notices, penalty shall be Rs. 50,000 or an amount equal to tax involved, whichever is higher. Further, the defaulter shall be liable to imprisonment up o one year. (Serial 11, Sec 43)



CONTACT US.

JSA KARACHI Partner NaveedAlam – Partner [email protected] Farrukh V. Junaidy Senior Partner [email protected]

Address 1/6-P, Block-6, P.E.C.H.S, MohtarmaLaeeq Begum Road, Off Shahra-e-Fasial, Near Nursery Flyover, Karachi, Pakistan. Tel : +92 21-34371910-13 Fax : +92 21-34371916

JSA LAHORE Partner Shoaib Waseem [email protected] Asad Feroze [email protected]

Address Suite No. 9A, Third Floor, Imtiaz Plaza, Shahra-e-Qauid-e-Azam, Lahore. Phone : +92 42 3636 1176 +92 42 3636 0253 +92 42 3636 9408

JSA ISLAMABAD Partner

Rukhsar Ahmed [email protected]

Address

S77 A, Street # 45, F-10/4, Islamabad Phone : +92 051 8356316-7

mailto:[email protected]�




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SINDH BUDGET HIGHLIGHTS 2015-16 - Junaidy Shoaib Asad · 2017-05-31 · SINDH BUDGET HIGHLIGHTS 2015-16. JUNAIDY SHOAIB ASAD . Chartered Accountants . 6 . 9819.1100 Underwriter 9819.1200