Home » News » Finance » Restaurants allowed power bill as input adjustment

Restaurants allowed power bill as input adjustment

The Central Board of Revenue (CBR) has allowed the registered restaurants to claim input tax adjustment on the electricity consumed in preparation/supply of food items in the service area, says an order issued here on Monday.

However, no input adjustment on electricity bill for the area used as children's park and fun fair would be available.

According to sales tax ruling 13/2003, it was not clear whether restaurants registered under the Sales Tax Act, 1990, paying 15 percent levy on taxable supplies of food items, could claim input tax adjustment on electricity consumed by them in preparation or supply of food items in the service areas.

After examination of issue, the CBR issued the ruling that restaurants can claim input tax adjustment on electricity consumed by them in the service areas in terms of Rule 3(7) of the Special Procedure for Supply of Food Rules, 1999.

This would, however, be subject to adherence to the provisions of sections 7 and 8 of the Sales Tax Act, 1990 read with Rule 7(2) of the Special Procedure for Collection and Payment of Sales Tax (Electric Power) Rules, 2000.

However, no input adjustment of electricity bill for the area used as children's park etc not subjected to sales tax would be available.

Thus, restaurants having services of children's park or fun fair and other activities not subject to sales tax have to claim electricity bill input adjustment as per provisions of Apportionment of Input Tax Rules, 1996 issued vide SRO 698(I)/96 dated 22-08-1996.The Central Board of Revenue (CBR) has allowed the registered restaurants to claim input tax adjustment on the electricity consumed in preparation/supply of food items in the service area, says an order issued here on Monday.

However, no input adjustment on electricity bill for the area used as children's park and fun fair would be available.

According to sales tax ruling 13/2003, it was not clear whether restaurants registered under the Sales Tax Act, 1990, paying 15 percent levy on taxable supplies of food items, could claim input tax adjustment on electricity consumed by them in preparation or supply of food items in the service areas.

After examination of issue, the CBR issued the ruling that restaurants can claim input tax adjustment on electricity consumed by them in the service areas in terms of Rule 3(7) of the Special Procedure for Supply of Food Rules, 1999.

This would, however, be subject to adherence to the provisions of sections 7 and 8 of the Sales Tax Act, 1990 read with Rule 7(2) of the Special Procedure for Collection and Payment of Sales Tax (Electric Power) Rules, 2000.

However, no input adjustment of electricity bill for the area used as children's park etc not subjected to sales tax would be available.

Thus, restaurants having services of children's park or fun fair and other activities not subject to sales tax have to claim electricity bill input adjustment as per provisions of Apportionment of Input Tax Rules, 1996 issued vide SRO 698(I)/96 dated 22-08-1996.

Leave a Reply