Supplies tax 3.5% , services tax 6%

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Supplies tax 3.5% , services tax 6%

why,where and when these tax apply ?
and on which people these taxes will apply

and what is the entry of these two taxes

[LapTop]

<b>153. Payments for goods and services.- </b>
(1) Every prescribed person making a payment in full or part including a payment by way of advance to a resident person or permanent establishment in Pakistan of a non-resident person -
(a) for the sale of goods;
(b) for the rendering of or providing of services;
(c) on the execution of a contract, other than a contract for the sale of goods or the rendering of or providing of services.
Shall, at the time of making the payment, deduct tax from the gross amount payable at the rate specified in Division III of Part III of the First Schedule.

(4) The Commissioner may, on application made by the recipient of a payment referred to in sub-section (1) and after making such enquiry as the Commissioner thinks fit, allow, by order in writing, any person to make the payment without deduction of tax.

(5) Sub-section (1) shall not apply to –
(a) a sale of goods where –
(i) the sale is made by the importer of the goods;
(ii) the importer has paid tax under section 148 in respect of the goods; and
(iii) the goods are sold in the same condition they were in when imported;
(b) a refund of any security deposit.
(ba) a payment made by the Federal Government, a Provincial Government or a Local Government to a contractor for construction materials supplied to the contractor by the said Government or the authority.
(c) the purchase of an asset under a lease and buy back agreement by a modaraba, leasing company, banking company or financial institution.
(d) any payment for securitization of receivables by a Special Purpose Vehicle to the Originator.

(6) The tax deducted under this section shall be a final tax on the income of a resident person arising from transactions referred to in sub-section (1) or (1A)
Provided that sub-section (6) shall not apply to companies in respect of transactions referred to in clause (b) of sub-section (1).
Provided further that this sub-section shall not apply to payments received on account of—
(i) advertisement services, by owners of newspapers and magazines.
(ii) sale of goods and execution of contracts by a public company listed on a registered stock exchange in Pakistan.
(iii) the rendering of or providing of services referred to in sub-clause (b) of sub-section (1)
Provided that tax deducted under sub-clause (b) of subsection (1) of section 153 shall be minimum tax.

(6A) The provisions of sub-section (6) in so far as they relate to payments on account of supply of goods from which tax is deductible under this section shall not apply in respect of a company being a manufacturer of such goods.

<b>Definitions-</b>
“services” includes the services of accountants, architects, dentists, doctors, engineers, interior decorators and lawyers, otherwise than as an employee.

“sale of goods” includes a sale of goods for cash or on credit, whether under written contract or not.

“manufacturer” for the purpose of this section means, a person who is engaged in production or manufacturing of goods, which includes-
(a) any process in which an article singly or in combination with other articles, material, components, is either converted into another distinct article or produce is so changed, transferred, or reshaped that it becomes capable of being put to use differently or distinctly.
(b) a process of assembling, mixing, cutting or preparation of goods in any other manner.

[mzbshah]

dear friends

i am a new fellow. just entering into this forum. this is mt first reply. and i not accountant. just learner...... if you found any mistake correct me

Basically these taxes are applied on every supply and services exculedig exemption items.....

Withholding concept are mater in it. whenever you will payemt to your supplier you will deduct 3.5 % on Services and 6 % on Supplies. and you gave the challan to relevant pary. and at the end of the year this party will sattle thier tax.

but if your exemption from fbr then no one will deduct tese taxes


and entery for withholding person. he will credited the tax. because you will submted these taxes to FBR on behalf of these parties

i hope you got it.....


shah@jee