The Central Board of Revenue (CBR) has directed collectors of sales tax that the special procedure for GST collection on vehicles will not be applicable on commercial transport, like buses and trucks.
The CBR has also issued 'Sales Tax General Order 4 of 2005' to guide motor dealers for properly filing the monthly sales tax return. As per the STGO, a dealer shall give total value of old, used and second-hand vehicles which have been sold through him and on which he is required to charge, collect and pay sales tax, taking 10 percent of the sale price as assessable value for the purpose of calculating sales tax liability.
A dealer is also required to pay sales tax on the amount of commissions charged on the sale of such vehicles. No input tax adjustment is admissible in such cases.
The CBR has also issued instructions to all regional collectors, Chief Secretaries of all four provinces, National Bank of Pakistan (NBP), government of Azad Kashmir and Nadra about the applicability of new procedure on buses and jeeps and registration of these dealers.
According to the directive, a question had been raised whether the special procedure was applicable on commercial transport vehicles, like buses and trucks.
The question was examined in the CBR and it has clarified that notwithstanding the definition of vehicles given in clause (i) of rule 125 of the Sales Tax Special Procedure Rules, 2005, the scheme shall apply on motor cars and motor cycles falling under PCT headings 87.03 and 87.11 and NOT on buses and trucks.
The collectors have been advised to ensure that necessary measures are taken to immediately register dealers of such vehicles falling in their jurisdiction and that efficient co-ordination is made with the concerned registration authorities that sales tax on the transfer of registration is charged and paid as per law.
Meanwhile, the 'Sales Tax General Order 4 of 2005' has elaborated the procedure for properly filing the return forms by car dealers.
THE CBR THROUGH ITS NOTIFICATION SRO 951(1)12005 HAS ISSUED: a special procedure for collection and payment of sales tax on motor vehicles, including three- and two-wheelers.
In this regard, a new chapter, ie Chapter XVII has been added in the Sales Tax Special Procedure Rules, 2005. While assemblers and importers of vehicles will be filing their monthly sales tax returns in the format prescribed under rule 15 of the Sales Tax Rules, 2005, a separate format has been prescribed for the monthly sales tax return-cum-payment challan for dealers of vehicles vide Annex II of the said notification. In order to facilitate the dealers of vehicles for filling of the relevant columns of their monthly sales tax returns and to assist them in the filing of such sales tax returns, the Central Board of Revenue has issued the guidelines and instructions as follows:-
(01) In this column, dealer shall mention his Sales Tax registration number.
(02) In this column, dealer shall mention his National Tax Number.
03) In this column, dealer's name and telephone number, as declared and mentioned in his application for sales tax registration and registration certificate shall be mentioned.
(04) In this column dealer shall mention the number of the relevant month with year for which the return is being filed.
(05) (a) In this sub-column dealer shall enter the total value of such vehicles that he has sold on behalf of the assemblers and importers as authorised dealer in respect of which sales tax on commissions has already been paid by the assemblers and importers.
(b) In this sub-column dealer shall mention the total value of vehicles which he has sold after purchase on which he is required to pay sales tax. The amount of net sales tax payable on the sale of such vehicles may also be mentioned. Input tax adjustment in case of these vehicles shall be available only to the extent allowed under rule 131 of the Sales Tax Special Procedure Rules, 2005.
(c) In this sub-column, a dealer shall give the total value of old, used and second-hand vehicles which have been sold through him and on which he is required to charge, collect and pay sales tax taking 10 percent of the sale price as assessable value for the purpose of calculating sales tax liability. A dealer is also required to pay sales tax on the amount of commissions charged on the sale of such vehicles. No input tax adjustment is admissible in respect of such vehicles.
(d) In this sub-column, a dealer shall enter the total value of other taxable supplies like auto parts etc, if any, along with the amount of sales tax payable thereon. Input tax adjustment on such supplies is available in terms of sections 7 and 8 of the Sales Tax Act, 1990. Zero-rated supplies, if any, may also be covered in this value without accounting or mentioning the amount of sales tax involved thereon.
(e) In this column, a dealer shall mention the total value of such supplies as are exempt from payment of sales tax. No input tax adjustment is admissible in respect of such supplies.
(06) (a) In this sub-column, the dealer shall state the total value and amount of sales tax of his tax-paid imports. The value and the amount of sales tax in respect of vehicles covered under the second proviso to sub-rule (4) of rule 131 of the said rules may be covered in this sub-column.
(b) In this sub-column, the dealer shall enter the total value and amount of sales tax involved in the taxable purchases made by him.
(c) Here, only the value of exempt imports and purchases, if any, shall be mentioned.
(d) In this sub-column, the value of utilities like telephone, gas and electricity along with sales tax paid thereon shall be declared. Adjustment of such sales tax is admissible only if the dealer is using these utilities exclusively in connection with his registered business, provided that all the relevant requirements or conditions of the Sales Tax Law are fulfilled.
(07) In this column, all arrears including default surcharge, if any, which is payable along with other liabilities on the return, shall be mentioned.
(08) In case dealer is filing return after due date, he is required to pay penalty as well as default surcharge in terms of section 33 and 34 of the Sales Tax Act, 1990, in addition to sales tax payable under section 3 ibid.
2. In order to calculate and declare the net payable amounts of sales tax, the first box under the head 0220000 shall be used to enter the sales tax amount payable on all kinds of commissions charged by a dealer. In the second box under the head 02250000, net payable sales tax amount on the supply of imported and purchased vehicles whether new or old shall be declared. In the third box, the amount of sales tax payable on the sale of old, second-hand and used vehicles shall be declared. The sales tax amount payable on the commissions charged on such vehicles shall, however, not be included here, which shall be shown in the first box as aforesaid. Sales tax payable on all other supplies (other than vehicles) shall be declared in the fourth box. In all these boxes the net sales tax amounts payable by a dealer shall be declared and other amounts intended to be paid on account of arrears and penalties, if any, shall be added to work out the total payable sales tax liability of the relevant tax period.
3. The return shall be prepared and filed in triplicate. The bank shall send one copy to the Sales Tax Collectorate while one copy shall be retained by the bank and one copy shall be returned to the registered person. If there is any change in the tax rate during a tax period, separate returns will have to be filed by the dealer for each tax rate for the corresponding periods. A return is to be filed for each tax period, even if no tax is payable or no taxable transaction has taken place.
Failure to file a return or pay the tax by the due date shall attract levy of default surcharge and imposition of penalties. However, if no tax is payable during a tax period, such default surcharge will not be charged. A revised return may be filed to correct any omission or wrong declaration in the previous return. The return is required to be certified as correct. The person who makes return and signs the return must be the authorized representative of the dealer, It may be ensured that the entries in the return are correct, before signing and filing it in the designated branch of National Bank of Pakistan.
4. The Collectors of Sales Tax & Federal Excise have been directed to proactively publicise these guidelines/instructions and extend maximum assistance and facilitation to the dealers of automobiles in their efforts to comply with sales tax obligations. Seminars may be conducted at Collectorate' level in co-ordination with the concerned associations.
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