Pakistan sales tax refund allowed on courier services
The Central Board of Revenue (CBR) has allowed the registered exporters to claim refund of sales tax paid on courier services, says a sales tax ruling issued here on Saturday.
The department has notified that the registered exporters are entitled to claim sales tax refund paid on courier services in lieu of exported goods as the supplies made by the exporters were zero-rated under Sales Tax Act, 1990.
It was brought to the notice of the tax authorities that regional offices did not allow such refunds to the exporters, which resulted in the blockage of huge amounts.
In this regard, the sales tax department has clarified the issue through ruling No 10/2002.
The CBR has issued instructions to all collectorates of sales tax to finalise the pending cases on top priory, keeping in view the admissibility of refund on courier services.
Sources said that most of the cases relating to the admissibility of refund on courier charges were pending in Karachi (East and West), followed by Lahore, Faisalabad, Hyderabad and Rawalpindi. The regional authorities would separately finalise all such cases on individual basis.
Responding to the adjustment of refund of income tax under section 104(2) of Income Tax Ordinance, 1979, they stated that sales tax could be set off against admissible income tax refund provided the income tax department certifies it.
It is pertinent to mention here that the courier industry had raised objection that in cases where couriers were exporting their services, and receiving remittance in foreign exchange through normal banking channels or through adjustment in onward foreign remittance, they were entitled to zero-rating. Since no sales tax was being charged on goods that were being exported, same treatment is applicable on services.
On the other hand the CBR has responded that as these services were rendered within the country, the same are thus chargeable to sales tax. Copyright 2002 Business Recorder.
