Comments on SSTA 2014 15

7/21/2019 Comments on SSTA 2014 15

http://slidepdf.com/reader/full/comments-on-ssta-2014-15 1/13w.taxpert.com.pk Pag

SINDH SALES TAXON SERVICES

2014-15


http://slidepdf.com/reader/full/comments-on-ssta-2014-15 2/13w.taxpert.com.pk Pag

SINDH SALES TAX ON SERVICES

Salient Features.

Change (Revenue Measure) Impact

Reduction @ 1% in standard rate of sales tax from 16% to 15% Positive

Scope of Sind Sales Tax is expanded on Tour operators, Recruiting agents , Sharetransfer agents, Purchase or sale or hire of immovable property ;Property dealers, Services provided or rendered by laundries and dry cleaners, Interior decorators , Medical and dental practitioners and consultants; Technical, scientific andengineering consultants; Services provided or rendered by pathologicallaboratories; Services provided or rendered by medical diagnostic laboratoriesincluding clinical and radiological laboratories, X-Rays, ultra-sound, CT scan,MR Imaging, etc.; Rent a car and automobile rental service; Services provided orrendered by a registrar to an issue; Workshops for electric or electronicequipments or appliances, etc., including computer hardware; Car or automobilewashing or similar service stations; Fumigation services; Maintenance or cleaningservices; Janitorial services; Services provided or rendered by programme producersand production houses; Services provided or rendered by corporate law consultantsServices provided or rendered by fashion designers; Services provided or renderedby call centres; Services provided or rendered by persons engaged in inter-citytransportation or carriage of goods by road or through pipeline or conduit;Education services; Services provided or rendered by hospitals and clinics

Regulatory broadening of tax net(except for

dental , medical,education

andlabrotaries

test are drastically negative on common men)

Substantial increase of penalties Negative

Increase of rates and fees for filing of appeal Negative

Wider scope of tax fraud regulatory

Powers to make rules and grant concess ion without approval of government discriminatory

Condition for submission of audited accounts regulatory

Transfer of appeals to Apellate Tribunal if not decided within time Negative

Omission of time limitation in case of stay/adjournment for conclusion of proceeding regulatory

Provision for f iling of appeal against orders of revisions regulatory

Reduction in General Sales Tax Rates There is a proposal in the Sindh Finance Bill 2014 to reduce the existing general rate of 16 to 15per cent for all the services other than the telecommunication services which will continue to bechargeable to tax at the rate of 19.5 percent.


http://slidepdf.com/reader/full/comments-on-ssta-2014-15 3/13www.taxpert.com.pk Page 3

New definitions inserted in SECTION 2 of SINDH SALES ACT

The bill seeks to insert following new definition in SSTA 2011. In order to imply the appropriateunderstanding and to avoid any confusion definitions are depicted exactly it’s proposed withouthaving any comments.Call Centre [Section ( !)"#“call centre” means an establishment providing or rendering the services of receiving ortransmitting requests by telephone, facsimile, live support software, social media and e-mail,

whether for the product support or business support of any person or for information inquiriesfrom consumers or for telemarketing, soliciting of donations and subscriptions, debt collection,market research or other similar services;

Car $r "utomo%ile &ealer [Section ( !)'#“car or automobile dealer”, by whatever name called, means a person who is engaged inproviding or rendering the services in relation to sale, purchase, transfer, leasing, marketing or

booking of cars and automobiles, whether imported or locally assembled or locally

manufactured, including new, old and used cars or automobiles;

Car $r "utomo%ile ashing $r Similar Service Station [Section ( !)C#“car or automobile washing or similar service station” means a service station or a servicecentre or an establishment providing or rendering the services in rela tion to maintenance of carsor automobiles, including the services of inspecting, detailing, washing, cleaning, polishing,

waxing, oil coating, lubricating, tuning, changing of oils, filters and plugs, denting, painting,repairing and other similar services;”;

ducation Services [Section (*+)"#“education services” includes the services in relation to pre-primary, primary, elementary,secondary, higher secondary, General Certificate of Education, General Certificate of Secondary

Education, International General Certificate of Secondary Education, college or universityeducation (but not including special education for handicapped children and education underadult literacy programme) and vocational, professional, instructional, technical and continuingeducation services and trainings rendered or provided by institutions like schools, colleges,universities, academia, institutes, teaching hospitals and degree, diploma or certificateawarding institutions and also includes the services provided or rendered by tuition, coaching,practical and training centres;”;

xchange [Section (*,)"#“exchange” has the same meaning as in clause (da) of sub-section (1) of section 2 of theSecurities and Exchange Ordinance 1969 (Ordinance No. XVII of 1969);”;

Fashion &esigner [Section (- )"#“fashion designer” means a person providing or rendering the services of fashion designingincluding the economic activities relating to conceptualizing, outlining and creating designs andpreparing designs and patterns for costumes, apparels, garments, clothing, accessories,

jewellery, foot wears or any other services incidental or ancillary to such fashion designing;”;

Fumigation Services [Section (-+)"#“fumigation services” means the services provided or rendered by a person in relation to pest



control and insect control and includes the services of disinfecting and sterilizing of premises, buildings, factories and complexes, including commercial complexes, shopping complexes, officecomplexes, apartment or residential complexes, multiplexes, exhibition centres, residentialunits, commercial units, offices and commercial goods, but does not include the public healthfumigation services provided or rendered by the Federal Government, Provincial Government,Local Government or Cantonment Board and the services in relation to agriculture, horticulture,

animal husbandry and dairy farming;

Fund "sset Management Services [Section (-+)'#“fund and asset management services” includes the services provided or rendered in relationto asset management, portfolio management and all kinds of fund management;”;

/ospitals Clinics [Section (0!)"#“hospitals and clinics” means the hospitals or institutions as defined in clause (a) of section 2of the Medical and Dental Council Ordinance, 1962 (Ordinance XXXII of 1962), and includes aperson or an establishment, institution, organization or a facility engaged in providing orrendering the services like medical, surgical, psychiatric, obstetric, dental or ophthalmologicaltreatment and care, whether preventive, prophylactic or curative, of persons including patientsor sick and injured persons;”;

Interior &ecorator [Section (0-)"#“interior decorator” means a person providing or rendering, directly or indirectly, any advice,consultancy, technical assistance or, in any other manner, the services related to planning,design or beautification, embellishment, ornation, decoration or furnishing any interior orexterior space, whether man-made or otherwise, and includes a landscape designer;”;

1a%our Manpo2er Suppl3 Services [Section (00)"#“labour and manpower supply services” includes the services provided or rendered by aperson to another person, for a consideration, for use of the services of a person or anindividual, employed, hired or supplied by him;

1aundries &r3 Cleaners [Section (00)'#“laundries and dry cleaners” means a person providing or rendering, to any person, theservices of washing, pressing, stain removing, darning or dry cleaning of any kind of textile orfur or leather materials like apparels, clothes, garments, floor coverings, curtains, draperies,linens, bed-wears, and their accessories;”;

Maintenance $r Cleaning Services [Section (04)"#“maintenance or cleaning services” means the services provided or rendered in relation torepair, maintenance and cleaning, including specialized cleaning services such as disinfecting,exterminating or sterilizing, of –

(i) office equipment, office buildings, commercial or industrial building andpremises thereof;

(ii) commercial complexes including multiplexes, shopping complexes, officecomplexes, exhibition centres, apartment or residential complexes; and

(iii) factories and the plants or machinery or equipment of such factoriesand, elevators, escalators, tanks or reservoirs of such factories or of office orcommercial or industrial buildings or commercial complexes,

But does not include such services in relation to agriculture, horticulture, animal



husbandry, and dairy farming;”;

Medical &ental 5ractitioners Consultants [Section (0,)"#“Medical and dental practitioners and consultants” means the registered medicalpractitioners and the registered dental practitioners as defined in clauses (q) and (r) of section 2of the Medical and Dental Council Ordinance, 1962 (Ordinance No. XXXII of 1962);”;

5roduction /ouse [Section (4+)"#“Production house” means a person or an establishment producing a programme or providingor rendering various services, facilities, utilities or advantages in relation to production ofprogrammes;

5rogramme [Section (4+)'#“programme” means any audio or visual matter, live or recorded, intended to be disseminated

by transmission of electro-magnetic waves through space or through cables to be received bygeneral public either directly or indirectly through the medium of cables, telecommunication orrelay stations;

5rogramme 5roducer [Section (4+)C#“programme producer ” means a person who produces a programme on behalf of, or for use by,another person;

5ropert3 &ealer [Section (4+)&#“property dealer ”, by whatever name called, means a person who is engaged in providing orrendering the services, directly or indirectly and in any manner, in relation to sale, purchase,leasing, renting, supervision, maintenance, marketing, acquisition or management of real estate,and includes a realtor, a real estate agent, a real estate broker, a real estate consultant;”;

Real state [Section (4,)"#

“real estate” means the land and includes –

(i) all attachments above and below the land;

(ii) all things that form a natural part of the land;

(iii) all things that are developed or installed, including buildings and site improvements; and

(iv) all permanent building attachments such as plumbing, heating and cooling systems,electrical wiring and built-in items such as elevators and allied equipment, and all rightsand interests therein, whether the interest is freehold or leasehold, and whether thepurpose or use thereof is residential, commercial or industrial;

Recruiting "gent [Section (4,)'#“recruiting agent”, by whatever name called, includes recruiting consultants or consultancyand means a person engaged in providing or rendering any service, directly or indirectly, to anyperson in any manner, for the recruitment of manpower, temporarily or otherwise.

Explanation .— For the purpose of this clause, “recruitment” includes inviting of applications forrecruitment, receipt of applications from candidates, pre-interview or pre-recruitment screeningof applications and applicants, shortlisting of applicants, interview of candidates, verification of



credentials and antecedents of the candidates, verification of authenticity of the documentssubmitted by the candidates;

Registrar To "n Issue [Section (4,)C#“registrar to an issue” means a person providing or rendering the services in relation toissue of securities, including collection of application forms from investors, keeping a record ofapplications and money received from investors or paid to seller of securities, assisting indetermining the basis of allotment of securities, finalizing the list of persons entitled toallotment of securities and processing and dispatching of allotment letters, refund orders orcertificates and other related documents;”;

Rent6"6Car "utomo%ile Rental Service [Section (+ )"#“rent-a-car and automobile rental service” means the services provided or rendered by aperson engaged, whether directly or indirectly, in the economic activity of renting cars, cabs,

vans or any other passenger motor vehicle;”;

Securities [Section (++)"#“securities” has the meaning as assigned to it in clauses (d) and (l) of sub-section (1) of section2 of the Securities and Exchange Ordinance, 1969 (Ordinance No. XVII of 1969);”;

Share Trans7er "gent [Section (+,)"#“share transfer agent” means a person who maintains the record of holders of securities, anddeals with all matters connected with the transfer or redemption of securities or activitiesincidental thereto;”;

Tax Fraud [Section (,-)#Scope for definition of “TAX FRAUD” is now enlarge to include non-payment of tax collected onsupply of service or tax withheld being withholding agent under withholding special procedure,

wrong claim of input or refund and non-fi ling of sales tax return for consecutive four tax periods

in scope of “tax fraud”. Accordingly following further categories were inserted within thedefinition of tax fraud

Failing to pay an amount of tax collected under section 16, and failing to pay theamount of tax withheld under the provisions of sub-section (2) of section 13 or therules made thereunder; or

Under-stating or under-paying the tax liability or over-stating the entitlement of taxcredit or adjustment or claiming or obtaining in-admissible tax credit, refund oradjustment; or

Not filing the prescribed tax return or the prescribed statement for four consecutivemonths or more;”;

Technical8 Scienti7ic ngineering Consultants [Section (,4)"#“Technical, scientific and engineering consultants” means a person providing or renderingthe technical, scientific and engineering service, advice, consultancy, assistance or supervision,in any manner, either directly or indirectly, to any person, in one or more disciplines oftechnology, science and engineering and includes a person known as a consulting engineer orprofessional engineer for the purpose of the Pakistan Engineering Council Act, 1975 (Act No. V of



1976) or known as a structural engineer for the purpose of the Sindh Building ControlOrdinance, 1979 (Sindh Ordinance No. V of 1979);

Technical Testing "nal3sis [Section (,4)'#

“Technical testing and analysis” means a service provided or rendered in relation to physical,chemical, biological or any other scientific testing or analysis of goods or material or informationtechnology software or any immovable property, and includes listing and analysis undertaken forclinical testing of drugs, pharmaceuticals and formulations, but does not include any testing oranalysis service provided in relation to human beings or animals;”; and

Tour $perator [Section (,9)"#“tour operator” means a person engaged in providing or rendering the services of planning,scheduling, organizing or arranging tours or package tours (which may include arrangements foraccommodation, sightseeing, tourism or other similar services in Pakistan or abroad) by anymode of transport, and includes a person engaged in the business or economic activity ofoperating tours.

Explanation .— for the purpose of this clause, the expression “tour” does not include a journey organized or arranged for use by an educational institution, other than a commercial,training or coaching centre, for imparting skill or knowledge or lessons on any subject or field;

Transportation $r Carriage $7 Goods [Section (,9)'#(98B) “transportation or carriage of goods” includes the services provided or rendered by agoods transport agency and means the services of transportation of goods by road or throughpipeline or conduit, including the services of cargo handling like loading, unloading, packing,un-packing, stacking and storage of goods by the person providing or rendering the services oftransportation and carriage of goods;”;

nhancement In The 5o2er $7 The 'oard [Section * (-)8 ,(*)8 :0(:)8 -08 + #

The Board can now exercise following powers without the approval of Sindh Government:

Determining conditions under which a particular service or class of services will beconsidered to be provided by a person from his registered office or place of business inSindh.Specifying the services or class of services in respect of which the liability to pay taxshall be on the person providing the taxable service / person receiving the taxableservice / any other person.

Allowing registered person to claim adjustments, deductions and refunds in respect ofsales tax paid on or in respect of taxable services or class of taxable services provided bythat person.Providing exemptions to registered persons or class of registered persons from paymentof penalty and default surcharge imposed under the Act.Making rules for carrying out the purposes of this Act.

At the Federal level we have seen an attempt by the government to curtail regulations prevailed through SRO and notifications. However here role of the provincial governments role is seek to be curtai led / eliminated in certainlegislation of rules.



conomic "ctivit3 [ Section -(:)#In order to bring clarity in the definition of "Economic Activity", all activities undertaken by theperson for the provision of services to another person whether on a continuous/ regular basis orotherwise is proposed to be included within the scope of economic activity.

Time8 Manner Mode (Section :+)

In order to harmonize the Act with the rules with regards of time and manner of sales taxpayment it is proposed to suitable amend the relevant section of the Act, which confirms thatthe sales tax return is to be filed within 3 days of due date for the payment of sales tax.

"ssessment $7 Tax (Section *)

There is a time limit of 120 days provided under section 23 to conclude the proceeding againstshow cause notice u/s 23(3). Beside an additional 30 days are available to the taxation officeron account of account of stay or adjournment sought by the registered person. Now themaximum limit of 30 days is proposed to be omitted, meaning thereby that if adjournmentexceeding 30 days is sought by the registered person then the actual time of adjournment will beexcluded for the purpose of time limitation.

We believe deletion of time limit is not a good idea, it may adversely affect the right of thetaxpayers and check and balance placed in timely assessment order may affects.

Records [Section 4(:)#Retention of record is proposed to be made in Sindhi Language as well as Urdu and English. Theamendment would facilitate to taxpayers operating from internal Sindh.

It is also proposed that the registered person whose accounts are subject to audit under any lawincluding the Companies Ordinance, 1984 is required to submit a printed copy of the annualaudited accounts to the Assistant Commissioner - SRB within 60 days from the date of auditreport of the auditors.

It seems to be an additional burden put on by the board. Shifting such unnecessary limitationand condition is only creates hassle to taxpayers rather bringing simplification.

&elegation $7 5o2ers(Section *4)It is proposed that powers of Commissioner (Appeals) can be delegated to Deputy CommissionerSRB through notification in official gazette by the Board.

The amendment reflects the lack of appropriate H.R. resource within the board.

$77ences 5enalties (Section -*) Various penalties have been enhanced as under:



S EC T

I O

N

DESCRIPTION PROPOSED AMENDMENT

2 Where a person fails to furnish areturn within a due date

Such person shall be liable to apenaltyof Rs.10,000/- per month or afractionthereof provided that if a return isfiledwithin 15 days of the due date apenaltyof Rs. 00/- for each day of default

shallbe paid. 3 Where a person fails to deposit

the amount of ta! due or any partthereof in the time or manner laiddown under this "ct or the rulesmade there under.

Such person shall be liable to apenaltyof Rs.10, 000/- per month or afractionthereof or five percent of the totalta!payable for that period #if defaultismore than days whichever isearlier$

#a% &f the amount of ta! due isnot paid even after thee!piry of a period of si!tydays of issuance of thenotice for such payment byan officer of the SR', notbelow the ran( of "ssistant)ommissioner SR', the

person shall, further beliable *pon conviction by aSpecial +ud e, toimprisonment for a termwhich may e!tend to threeyears, or with fine whichmay e!tend to the amountof unpaid ta!, or with both.



o penalty shall be payable if anymiscalculation is made for the firsttimedurin a years.

5 Where a re istered person who,without any reasonable cause, innon compliance with the provisionof this "ct fails to produce recordon receipt of notice from theboard or any officer of the SR'directin him to produce suchrecord.

Where such person is a company,it shallbe liable to pay a penalty of10,000/-rupees in other case penalty willbe5,000/- rupees.

rovided that if record is notproducedwith 0 days of receipt of notice,he shallbe liable to pay the penalty10,000/- orfive percent of the total ta!payable forthe ta! period # % for which he hasfailedto maintain the re uired recordwhichever is hi her.

In case of serial numbers of table of section 43(1) other then mentioned above penalty has beenenhanced from 5,000/- to 10,000/- being fixed and from 3% to 5% of total tax payable whereever it is applicable.

"ppeals [Section 0+( )8 (*)#Fee for filing an appeal with the Commissioner (Appeals) - SRB is proposed to be increased asper following schedule:

Appellant Current Prescribed fee

(Rs.)

Proposed Prescribed fee

(Rs.)Company 1,000 2,000Person other than company 200 1,000

Since laws of provincial services are an emer in law, we e!pect fre uent le al dispute and in this bac(drop increase in appeals fee is not an ood idea. he overnment in-fact re uires sendin messa e forta!payer friendly institute throu h more rela!in le islature such as no coercive action be made tillconclusion of at-least first appeal.



&ecision In "ppeal [Section 0, (4)8 (+) (9)#

It is proposed to transfer the undecided appeals to the Appellate Tribunal for its decision uponexpiry of time limitation of 120 days.

In the existing law if the Commissioner (Appeals) has not passed an order within the prescribedtime limit then the undecided appeal is deemed to have been allowed to the appellant.

The proposed amendment thus indicates a negative approach to2ards taxpa3er;s right arises onaccount o7 limitation. The taxpa3ers ma3 7urther drag in litigation upon incompetenc3 o7 the taxationo77icer 2ithout an3 7ault at their part. It is also o%served that in this %ill8 additional limitation andlia%ilities 2ere put on taxpa3ers and at the same time their rights arises on account o7 limitations2ere attempted to <eopardi=e.

"ppointment $7 The "ppellate Tri%unal (Section 4!)Eligibility criteria for judicial member of appellate tribunal have been revised as:

Who is or has been a Judge of the Sindh High Court or is or has been Judge of District &Session Court with at least two years of service as a District & Session Judge..

"ppeal To The "ppellate Tri%unal (Section 4:)Provisions for filing appeal against revision order passed by the Commissioner SRB u/s 55 or bythe Board u/s 56 are proposed directly before the Appellate Tribunal.

5roposed addition in Taxa%le ServicesCertain new definitions are proposed to be inserted in the Act.

The following services are proposed to be taxed as per the Finance Bill, as the same are to beincluded in the Second Schedule to the Act, being the description of taxable services:

SECOND SCHEDULE“9805.5100 Tour operators 15%

9805.6000 Recruiting agents 15%

“9805.9000 Share transfer agents 15%”;

98.06 Services provided or rendered in the matter of sale,purchase or hire

9806.1000 Purchase or sale or hire of immovable property 15%

9806.2000 Property dealers 15%

9806.3000 Car or automobile dealers 15% ”;



9811.0000 Services provided or rendered by laundries and drycleaners

15%

“9814.9000 Interior decorators 15%”;

“9815.1000 Medical and dental practitioners and consultants 15%”;

“9815.5000 Technical, scientific and engineering consultants 15%”;

9816.0000 Services provided or rendered by pathologicallaboratories

15%

9817.0000 Services provided or rendered by medical diagnosticlaboratories including clinical and radiologicallaboratories, X-Rays, ultra-sound, CT scan, MRImaging, etc. 15%”;

“9819.3000 Rent a car and automobile rental service 15%”;

“9819.9400 Technical testing and 15%analysis service

9819.9500 Services provided or rendered by a registrar to an

issue

15%”;

“9820.3000 Workshops for electric or electronic equipments orappliances, etc., including computer hardware

15%

0820.4000 Car or automobile washing or similar service stations 15%”;

98.22 Services provided or rendered for specified purposes

9822.1000 Fumigation services 15%9822.2000 Maintenance or cleaning services 15%

9822.3000 Janitorial services 15%

9832.0000 Services provided or rendered by programme producersand production houses

15%

9833.0000 Services provided or rendered by corporate lawconsultants

15%


http://slidepdf.com/reader/full/comments-on-ssta-2014-15 13/13

9834.0000 Services provided or rendered by fashion designers 15%

9835.0000 Services provided or rendered by call centres 15%

9836.0000 Services provided or rendered by persons engaged ininter-city transportation or carriage of goods by road orthrough pipeline or conduit

15%

9837.0000 Education services 15%9838.0000 Services provided or rendered by hospitals and clinics 15%

Documents

Comments on SSTA 2014 15