Federal Board of Revenue (FBR) has extended the Sales Tax Withholding Regime through its notification SRO 98(1)/2013, dated 14-02-2013. The said SRO says that all companies as defined in Income Tax Ordinance, 2001 as are registered for sales tax, FED or Income Tax, shall be subjected to Withholding tax at one-fifth (l/5th) of the applicable rate of sales tax on all purchases.

Furthermore, the persons registered as exporters are also now to be subjected to withholding tax of one-fifth (l/5th) of the applicable rate of sales tax on all purchases from registered persons.

Earlier, from corporate sector only LTU registered person was required to withhold 1% Sales Tax of the value of taxable supplies from persons registered outside LTU (this has now been amended) and all companies are required to withhold sales tax. This amendment is effective from 14, February 2013.

The relevant SRO (number 98(1)/2013) is available on the FBR website.

Mohammad Shahzad
Secretary PR