SRO.669(I)/2013 dated 19.07.2013

FBR has issued SRO.669(I)/2013 on 19.07.2013. Text of the SRO is as under:-

In exercise of powers conferred by sub-section (2) of section 53 of the Income Tax Ordinance, 2001, the Federal Government is pleased to direct that the following further amendment shall be made in the Second Schedule to the said Ordinance, namely;

In the aforesaid Schedule, in Part-IV, in clause (45A), in sub-clause (a), (i) after the word, “the” occurring for the second time, the words, “taxpayers falling in the “shall be inserted; and (ii) the words “of sales tax zero-rated taxpayers” shall be omitted.

According to this SRO, rate of deduction of withholding tax under clause (a) and (b) of sub-section (1) of section 153 shall be one percent on local sales, supplies and services provided to the following categories of taxpayers:-

i.            Textile and articles thereof,

ii.            Carpets;

iii.            Leather and articles thereof including artificial leather footwear;

iv.            Surgical goods; and

v.            Sports goods.

After abolishing of sales tax zero rating in respect of above categories, there was confusion about the rate of deduction of tax under clause (a) and (b) of sub-section (1) of section 153. It was commonly understood that normal rates will be applicable after abolishing sales tax zero rating.

Above SRO has clarified the above confusion. Rate of withholding tax in respect of above categories of taxpayers will be one percent in respect of local sales, supplies and services provided.