Immovable property: court rules that Sindh''s sales tax on rent is illegal

Sindh Sales Tax on rent of immovable property has been declared ultra vires by Sindh High Court (SHC). Sources told Business Recorder that the case was placed on August 18, 2017 in the cause list for announcement of judgment before a divisional bench of SHC (Tax DB). The court allowed the constitutional petition where the levy and collection of Sindh Sales Tax on rent of immovable property was challenged.
The detailed judgment is expected to be released in coming days. It is important to note that similar matters are also challenged in legal suit before single bench of the SHC as well where the proceedings are not yet concluded. The Sindh Board of Revenue has levied Sindh Sales Tax @ 6 percent which was subsequently enhanced to 8 percent. The Board in the provincial finance bill 2017-18 has reduced the rate of Sindh Sales Tax on immovable property from 8 percent to 3 percent. The impugned law requires a landlord to charge sales tax whereas tenant was also under obligation to withhold the entire amount of sales tax and deposit the same through filing of withholding statement.