RASG_Monthly_Tax_Update_October_2021

MONTHLY UPDATES
October, 2021

- INCOME TAX LAWS

- SALES TAX LAWS

RIAZ AHMAD, SAQIB, GOHAR & CO. A member of
Chartered Accountants

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Preamble:

Riaz Ahmad, Saqib, Gohar & Co. Chartered Accountants is pleased to present herewith its “Tax Updates”
for the month of October, 2021. This document aims to provide an update with respect to the changes in
the Income Tax Ordinance, 2001 (the Ordinance) and the Sales Tax Act, 1990 (the Act) and related rules
therein, introduced through various SROS/circulars issued during the month of October, 2021.

Disclaimer: This memorandum is prepared to the best of our knowledge and belief. It is intended to
provide only a general outline of the matters covered in the document. It should neither be regarded as
comprehensive nor sufficient for decision making purposes nor should it be used in place of professional
advice. Riaz Ahmad, Saqib, Gohar & Co. Chartered Accountants does not accept any responsibility for
any loss arising due to any action taken or not taken by the readers of this publication.

Click here to download our android application for all the latest updates.

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UPDATES PERTAINING TO FEDERAL INCOME UPDATES PERTAINING TO SALES TAX LAWS –
TAX LAWS –
SALES TAX RATE OF PETROLEUM PRODUCTS –
EXEMPTION ON IMPORT OF DRONES FOR SRO 1327(I)/2021:
AGRICULTURAL PURPOSES – SRO 1407(I)/2021:
The Federal Board of Revenue through its SRO
The Federal Board of Revenue has through its 1327(I)/2021 has amended the rate of
SRO 1407/(I)/2021 inserted clause 12O to the chargeability of sales tax on petroleum products
Part IV of the Second Schedule of the Ordinance and the applicable rates are illustrated in the
whereby the applicability of Section 148 (Tax on table below, chronologically:
import stage) of the Ordinance on the import of
drones donated by Ministry of Agriculture and Description September October 01,
Rural Affairs (MARA), Government of China to 16, 2021 and 2021 and
Pakistan through sea route has been exempted. MS (Petrol) onwards
onwards 6.84% ad
ATTACHMENT OF BANK ACCOUNTS - High speed 10.54% ad valorem
C.No.(4)S(IROperations)/2020 diesel oil valorem 10.32% ad
Kerosene 11.64% ad valorem
The Federal Board of Revenue had through its valorem 6.70% ad
letters bearing No. 2(24) Rev-Bud/2019, dated Light Diesel 6.70% ad valorem
5th May 2019 and No. 6(25)S(IR- oil valorem 0.20% ad
Operations)/2019 dated October 10th 2019 0.20% ad valorem
issued instructions to its field formations to valorem
obtain the approval of the Honorable Chairman
of the Federal Board of Revenue for attachment CHARGEABILITY OF SALES TAX ON TOLL
of any taxpayer’s bank accounts and intimating MANUFACTURING - C.No.1(106)STM/2017/
the CEO/Principal officer/Owner of the business
at least 24 hours prior to attachment. The Federal Board of Revenue has through its
letter bearing C.No.1(106)STM/2017/180608-R
However, now the Federal Board of Revenue has dated October 28, 2021 while referring to a
through its letter bearing Ref. No. meeting of the National Tax Council intimated
C.No.6(4)S(IROperations)/2020, dated 11th that the right to charge sales tax on “Toll
October 2021, withdrawn the above instructions Manufacturing” vests with the Federal Board of
being void ab-initio. Revenue rather than the Provincial Revenue
Authorities.

This matter was a long outstanding dispute
between the Federal and Provincial Authorities.
It is yet to be seen when the decision would be
implemented in its true letter and spirit and the
Provincial Revenue Authorities will stop
demanding tax on toll manufacturing.

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CLARIFICATION ON THE ISSUE OF TRADE
DISCOUNT FOR RETAILERS – C.No.
05/POS/IR/2021:

The Federal Board of Revenue has through its
letter bearing C.No. 05/POS/IR/2021/164662-R
dated October 13, 2021 clarified that the
definition of “trade discount” mentioned in the
meaning of value of supply is only applicable for
Business to Business transactions and not
Business to Consumer transactions i.e. for
Retailers.

Furthermore, on the queries raised by various
tax bar associations, it has clarified that a retailer
issuing a sales tax invoice is required to depict
whatever discount given to its customers on its
sales tax invoice as per the prescribed format of
the invoice issued by the Federal Board of
Revenue.

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Members of

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Road, Karachi.
Tel.: (92-21) 34945427, Block, New Garden Town, plaza, Fazl-ul-Haq Road, Blue
Lahore. Area, Islamabad.
(92-21) 34931736
Email: [email protected] Tel.: (92-42) 35940246 – 8 Tel.: +92-051-2804245-6
+92-051-2540503

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