Sindh Sales Tax on Services (Amendment) Act 2021: Key Changes and Impact on Businesses
Hey there, business owners! Have you checked out the latest updates to the Sindh Sales Tax on Services Act? The Sindh Sales tax on Services (Amendment) Act, 2021 has brought some important changes that you definitely need to know about, as they could affect your business’s finances and operations.
First up, there’s a new term you should know about – “active taxpayer.” This refers to a registered person who’s in good standing, meaning thereby, they don’t have suspended registration or haven’t missed e-filing their returns for four consecutive tax periods. This new term aims to promote timely return filing and tackle non-compliance. So, remember to file those returns on time to avoid any trouble!
Another change you should be aware of is the expanded definition of “Software or IT-based system development consultant.” This now covers a wider range of IT-related services, like software development, network maintenance, web-hosting, cloud services, and more. Plus, it now includes services involving the provision of the right to use software through licensing or otherwise.
Oh, and there’s a new definition for “truck aggregator” too! This term refers to someone who connects truck owners or drivers with business enterprises through electronic or digital means. Just so you know, the service provided by truck aggregators is now taxable at 13%.
Additionally, the amendment has broadened the scope of “business support service” to include processing, clearing, and settlement services related to securities, commodities, and futures contracts.
Another update you should be aware of is the change in Taxable Service (Section 3(1)). Previously, a service was taxable if provided by a registered person from their registered office in Sindh. Now, the amendment removes the term “registered,” making a taxable service provided by any person through their office in Sindh subject to sales tax. This change broadens the scope of taxable services, so make sure you’re up-to-date on which services are now taxable.
Moreover, there’s a new clarification regarding Economic Activity (Section 4(3)(a)). The amendment introduces a proviso stating that activities of an employee, for which they earn any fee or commission from their employer, shall be treated as an economic activity. This means that if you’re an employee earning fees or commissions from your employer, your activities will now be considered economic activities and might be subject to sales tax.
Lastly, be aware that there are new restrictions on claiming input tax credit. You won’t be able to claim, reclaim, adjust, or deduct input tax if you receive services from a person who should be registered but isn’t, or if they aren’t an active taxpayer.
So, there you have it! Make sure you keep up with these changes to stay on top of your tax game and keep your business running smoothly. Good luck!