Sales Tax Instructions

Sales Tax Instructions, 2009
SUBJECT:-
EXEMPTION FROM PAYMENT OF SALES TAX – PROJECT
NO.046201-0107 LAW ENFORCEMENT, DEMAND REDUCTION
AND AREA DEVELOPMENT PROJECT
The undersigned is directed to refer to this Davison‘s O. M. of even number dated 20 th
January, 2004 on the subject mentioned above and to the letter from the US Embassy dated 24 th
February, 2004 addressed to the Member (Sales Tax), CBR with a copy to this Division.
In this regard, it is again reiterated that it becomes a legal binding on GOP once a letter of
agreement and subsequent Revisions are signed with the US. Authorities. Clause 7-a and b(1) of
Revision No.20 (copy enclosed) regarding taxes / duties clearly stipulate that:
Any funds, materials and equipments introduced into Pakistan by the USG pursuant to this
agreement shall be exempt from taxes, services charges and investment or deposit requirements
and currency control in Pakistan, and the import, export, acquisition, use or disposition of any
such property of funds in connection with this Agreement shall be exempt from any tariffs
customs duties, import and export taxes, taxes on purchases or disposition and any other taxes or
similar charges in Pakistan.
B (1) Any foreign contractor, including any consulting firm, and any foreign
personnel of such contractor financed under the program and any property or transaction related
directly to such contacts, and
(2) any commodity/procurement transaction financed under the program are exempt
from identifiable taxes, tariffs, duties, or other levies imposed under laws in effecting Pakistan.
In addition to above, the passing of stringent laws by the US Congress against imposition of any
direct or indirect local taxation including custom duties will result in US Government withholding
an amount of 200% of any such imposition of taxes. Failure to comply with the above would
introduce additional financial implications as the US grant could be substantially reduced. The
concerns of the US authorities regarding GST exemption are causing operational problems in the
implementation of high priority projects of the GOP.
In view of the sensitivity and urgency of the issue. Central Board of Revenue may kindly take
necessary action for early resolution of the case.
[Issued by Economic Affairs Davison, under signature of Syed Mujtaba Hussain, Section
Officer, Economic Affairs Divisions.]
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C. NO.1(62)STP/97 (Pt.I) DATED 19 TH MARCH, 2004
SUBJECT:- REQUEST FOR CLARIFICATION REGARDING LEVY OF
FURTHER TAX UNDER SECTION 3(1A) OF THE SALES TAX
ACT, 1990 ON SUPPLY OF UNIFORM SETS TO ARMY
OFFICERS/JAVANS
I am directed to refer to your letter dated March 16, 2004 on the subject cited
above and to say that after the amendment in the definition of retailer in section 2(28) of
the Sales Tax Act, 1990 by the Finance Act, 2003, a manufacturer may get simultaneous
registration as a retailer for the purpose of making supplies at retail level.