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021012
GOVERNMENT OF PAKISTAN REVENUE DIVISION CENTRAL BOARD OF REVENUE
SALES TAX INSTRUCTIONS/RULING NO. 63/ 2002
(SALES TAX WING)
C. No. 4(80)STR/98.
Islamabad, the 12th October, 2002.
(1) The Collector,
Collectorate of Sales Tax & Central Excise,
Peshawar/Rawalpindi/Lahore/Karachi (East/West).
(2) The Collector,
Collectorate of Customs, Sales Tax & Central Excise,
Gujranwala/Multan/Hyderabad/Quetta.
(3) The Collector,
Collectorate of Sales Tax,
Faisalabad.
SUBJECT: -
APPLICATION OF GST THRESHOLD FOR SERVICE PROVIDERS (HOTELS).
A question
has been raised whether or not exemption or turnover threshold prescribed under
section 3A and serial No. 42 of the Sixth Schedule to the Sales Tax Act, 1990 is
applicable on hotels rendering services chargeable to sales tax under the
respective Provincial Sales Tax Ordinances (all 2000). Board has examined this
question.
2. Scope of sales tax leviable on services is specified under section 3 of the
said Ordinances. Sub-sections (2) and (3) of section 3 say that the tax under
these Ordinances shall be charged and levied on the specified services in the
same manner and at the same time as if it were a sales tax leviable under
sections 3, 3A and 3AA of the Sales Tax Act, 1990 and all the provisions of the
said Act and rules, notifications and orders and instructions issued thereunder
shall, mutatis mutandis, apply to the collection and payment of tax under the
Ordinances so far as they relate to the matters covered under items (a) to (f)
of sub-section (3) of section 3 of the aforesaid Ordinances. Item (f) covers
all other allied and ancillary matters.
3. Board is of the view that most of the service providers especially
hotels/hotels-cum-restaurants combine the services of manufacture and retail.
Therefore, in view of the exclusion of manufacturers from the definition of
retailer given under section 2(28) of the Sales Tax Act, 1990, such hotels shall
be treated as manufacturers and threshold and annual turnover limits prescribed
for the manufacturer under the said Act i.e. section 3A and serial No. 42 of the
Sixth Schedule of the Sales Tax Act, 1990 shall apply on them. Thus, hotels
with annual turnover less than Rs. 0.5 million are not required to charge
provincial sales tax while hotels with annual turnover from Rs. 0.5 million to
Rs. 2.5 million are required to pay turnover tax @ 2% without charging any sales
tax on hotel receipts/invoices issued to their clients. However, hotels with
turnover more than Rs. 2.5 million per annum are required to maintain records as
prescribed under the Sales Tax Act, 1990 and issue invoices/receipts charging
sales tax @ 15%.
4. All Collectors of Sales Tax are advised to inform the Chambers of Commerce &
Industry and concerned associations and take necessary action accordingly.
(Iftikhar Qutab)
Chief (Sales Tax-III)
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