08-11-2011, 08:26 PM
What do you mean by tax applicable on rent a car? Income Tax, Sales Tax or Withholding Income Tax.
any person who is in the business of rent a car has to pay income tax upon his earning under the head income from business.
If you mean to say that while making payment to rent a car do you have to deduct tax as withholding income tax, then the answer is yes. The tax shall be deducted u/s 153(1)(b). I think rate of tax deducted shall be 2% as applicable on transport business. [Division III of Part III of First schedule]. Section 50(4) was the section in the repealed Income Tax Ordinance, 1979, corresponding to current s.153 of Income Tax Ordinance, 2001. Under s.50(4) also, tax was to be withheld while making payments on account of services. Explaining this section, FBR, then CBR, in its letter C.No.1(17)WHT/91 dated 18.11.1992 clarified that renting of vehicles amounts to provision of services to which provisions of s.50(4) of the ITO, 1979 are applicable. As earlier stated s.50(4) of ITO, 1979 and s.153 of ITO, 2001 are corresponding provisions.
If you mean whether any sales tax is payable on rent a car service, then the answer is NO, as far as province of Sindh is concerned. Sales tax on services is a provincial subject. Sindh Sales Tax Act, 2011 enlists in its Second Schedule, Services upon which sales tax is chargeable. Rent a car bears Custom Tariff heading No. 9819.3000. This heading is not included in Second schedule of Sindh sales Tax on services act, 2011. Therefore no sale tax is chargeable to rent a car service.
any person who is in the business of rent a car has to pay income tax upon his earning under the head income from business.
If you mean to say that while making payment to rent a car do you have to deduct tax as withholding income tax, then the answer is yes. The tax shall be deducted u/s 153(1)(b). I think rate of tax deducted shall be 2% as applicable on transport business. [Division III of Part III of First schedule]. Section 50(4) was the section in the repealed Income Tax Ordinance, 1979, corresponding to current s.153 of Income Tax Ordinance, 2001. Under s.50(4) also, tax was to be withheld while making payments on account of services. Explaining this section, FBR, then CBR, in its letter C.No.1(17)WHT/91 dated 18.11.1992 clarified that renting of vehicles amounts to provision of services to which provisions of s.50(4) of the ITO, 1979 are applicable. As earlier stated s.50(4) of ITO, 1979 and s.153 of ITO, 2001 are corresponding provisions.
If you mean whether any sales tax is payable on rent a car service, then the answer is NO, as far as province of Sindh is concerned. Sales tax on services is a provincial subject. Sindh Sales Tax Act, 2011 enlists in its Second Schedule, Services upon which sales tax is chargeable. Rent a car bears Custom Tariff heading No. 9819.3000. This heading is not included in Second schedule of Sindh sales Tax on services act, 2011. Therefore no sale tax is chargeable to rent a car service.
