KARACHI: Sind Revenue Board (SRB) has said that out of pocket expenses charged or collected by a service provider in relation to provision of service chargeable to tax on the basis of gross amount of consideration will not be excluded from the value of taxable services.
In a circular issued by the SRB, it further said that in case such out of pocket expenses are utilized by the service provider for acquiring any taxable input being an ingredient of the service liable to tax under the 2011-Act, such service provider may claim the admissible amount of input tax credit/adjustment from the output tax payable by him, in accordance with the provisions of the 2011-Act and the rules/notifications issued thereunder.
The SRB issued clarification on question had raised whether the out of pocked expenses received or charged by a service provider is included in the value of taxable services in cases where such a service is assessable on gross value basis.
The issue has been examined and it is clarified that in terms of Section 2(99) read with Section 5 of the Sindh Sales Tax on Services Act, 2011, the value of a taxable service is the consideration in money including all federal and provincial duties and taxes, if any, which the person providing a service receives from the recipient of the service but excluding the amount of sales tax payable under the 2011-Act. Accordingly, the 2011-Act does not envisage exclusion of any amount from the value of a taxable service except for the amount of Sindh Sales Tax charged or collected by the service provider.
