ISLAMABAD: The Federal Board of Revenue (FBR) has restored input adjustment on provincial sales tax adjustment through Tax Laws (Amendment) Ordinance, 2016.
The FBR has also issued SRO 814(1)/2016 in this regard, which would be applicable retrospectively from July 1, 2016.
Sales tax paid on services against provincial laws, ie, Islamabad Capital Territory (Tax on Services) Ordinance, 2001, Khyber Pakhtunkhawa Finance Act, 2013, Balochistan Sales Tax on Services Act, 2015, Sindh Sales Tax on Services Act, 2011 and Punjab Sales Tax on Services Act, 2012 would now be adjustable under federal Sales Tax Act on supplies of goods.
Under the SRO, the sales tax levied under the Islamabad Capital Territory (Tax on Services) Ordinance, 2001, Khyber Pakhtunkhawa Finance Act, 2013, Balochistan Sales Tax on Services Act, 2015, Sindh Sales Tax on Services Act, 2011 and Punjab Sales Tax on Services Act, 2012, shall be provincial sales tax for the purpose of input tax.
The FBR, exercising the powers conferred by clause (22A) of section 2 of the Sales Tax Act, 1990, has declared that the tax levied under the following laws shall be provincial sales tax for the purpose of input tax under the said Act, namely:
The FBR issued another SRO 814(I)/2016 and explained the tax levied under the following laws shall be provincial sales tax for the purpose of input tax under the Sales Tax Act, 1990:
(a) The Islamabad Capital Territory (Tax on Services) Ordinance, 2001;
(b) The Khyber Pakhtunkhwa Finance Act, 2013;
(c) The Balochistan Sales Tax on Services Act, 2015;
(d) The Sindh Sales Tax on Services Act, 2011; and
(e) The Punjab Sales Tax on Services Act, 2012.
