Karachi customs agents to pay sales tax twice if their clients deposit withheld amount to Punjab Revenue Authority

KARACHI: Sindh Revenue Board (SRB) has informed the sales tax deducted by importers based in Lahore on services provided in Karachi by customs clearing agents and paid to Punjab Revenue Authority, in this case customs agents would be liable to pay the same amount to local revenue board.
Karachi Customs Agents Association (KCAA) has approached the SRB over the issue and informed that PRA directed the importers based in Punjab to withhold total amount of 16 percent sales tax on the services of Karachi customs agents and should deposit the same with Punjab Revenue Authority and Karachi customs agents can claim it as withholding tax from SRB for which the PRA would also provide the certificate.
The customs agents said that it would be double taxation on services provided to Lahore based clients.
In the response of KCAA letter, the SRB said that services provided or rendered by the customs agents at any customs station including customs port, air port, dry port, terminal, warehouse etc, in Sindh is liable to Sindh sales tax at 16 percent under tariff heading 9805.4000 of the Second Schedule to the Sindh Sales Tax on Services Act, 2011, and the tax involved has to be deposited in Sindh government’s head of account ‘B-02384’ in the manner prescribed under Section 9 (1) of the said 2011-Act, read with the procedures prescribed in the rules under Chapter-III of the Sindh Sales Tax on Services Rules, 2011.
“Irrespective of the location of the services recipient client of the customs agent, the service provider (customs agent, providing the taxable services of tariff heading 9805.4000 at any customs station in Sindh) is required to e-register with SRB in terms of Section 24 of the Sindh Sales Tax on Services Act, 2011 read with rules 3, 4, & 5 of the Sindh Sales Tax on Services Rules, 2011, and is also required to e-deposit the full amount of Sindh sales tax in Sindh government’s head of account ‘B02384’ by the prescribed due date in the manner prescribed in the said 2011-Rules,” the SRB said.
It further said that regarding withholding of sales tax, the amount of Sindh sales tax cannot be withheld by any person except in a manner prescribed under the Sindh Sales Tax Special Procedure (Withholding) Rules, 2011.
The SRB advised the KCAA that to inform its members that in any case service-recipient desires to withhold any amount of Sindh sales tax, he may be required to show compliance of the procedure prescribed in sub-rules (1) and (1A) of the Sindh Sales Tax Special Procedure (Withholding) Rules, 2011, and also to submit (to the Customs agent/service provider) a notice in the format SSTW-05 (as appended to the said 2011-Withholding Rules) and also a certificate of deduction / withholding in the format SSTW-06 (as appended to the said 2011-Withholding Rules). “In case otherwise, the liability to pay the amounts of Sindh sales tax in Sindh government’s head of account ‘B02384’ shall remain that of the service provider (i.e. the customs agent, in this case),” the SRB said.

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