Sindh slaps 15pc sales tax on inter-provincial POL supplies

KARACHI: Sindh government fixed a 15 percent service sales tax on tankers supplying petroleum, oil and lubricant (POL) products outside the province, keeping exemption intact for some territories, officials said on Saturday.

The officials said Sindh Revenue Board (SRB) notified the new rules to end the long-standing conflict regarding sales tax on services.

They, however, said the sales tax on service is 13 percent if supply is made within the province.

SRB issued rules ‘Sindh Sales Tax Special Procedure (Transportation or Carriage of Petroleum Oils through Oil Tankers) Rules, 2018’, which would apply to the services of transportation or carriage of petroleum oils by road, provided or rendered through oil tankers.

The board said oil tankers should provide their consent for higher tax rate (15 percent) within 14 days of the issuance of rules. It further said the service provider will pay 13 percent of tax if the service is rendered within the province and such service providers are not required to submit their consent.

In the new rules, the SRB made it mandatory for service recipients to withhold the whole amount of sales tax from the service providers and deposit it to the provincial kitty.

The withholding tax will, however, not be applicable if supply is made to non-tariff areas, including Azad Jammu and Kashmir, Gilgit Baltistan, Islamabad Capital Territory and other similar territories where sales tax on transportation of oil has not been levied.

Last year, provincial authorities agreed to levy a flat 15 percent sale tax on freight services by oil transporters (petroleum products transported through road only).

But, the provincial tax authority suspended the tax till December 31, 2017. It decided to ‘hold in abeyance’ the collection of sales tax as the levy was leading to protests by oil tankers, resulting in halt of supply of petroleum products’ to the country.  

Now, the service providers for oil supplies are required to file monthly sales tax returns to explain the details of activities during a month. Similarly, the withholding agent or service recipient will also be required to file monthly returns, which would help the authorities to match the services rendered and tax collected.