Sales Tax Instructions

Sales Tax Instructions, 2009
A question has been raised as to whether or not payments received by clubs in
the form of admission fee, subscription fee, or any other fee for award of membership etc.
excluding refundable deposit or security (unless the same is deducted or adjusted as
settlement of dues for services) would be subjected to sales tax.
2. The question has been examined in the Board and it is held that all
services which involve the charging of any kind of fee or consideration in money for
rendering or providing, directly or indirectly, any services by the club to its members are
liable to sales tax. However, sales tax shall not be payable on refundable deposit or
security unless the same is deducted/adjusted in full or in part as settlement/recovery of
dues for services. The definition and scope of the expression ‗services‘ have already been
clearly explained in Board‘s letter of even number dated 28 th February, 2001. Under the
respective Provincial Ordinances, all services rendered or provided by clubs have come
under the ambit of provincial sales tax.
3. As regards the question of ‗mutuality‘ raised by various clubs to take the
benefit of exemption from sales tax, it is clarified that the concept of ‗mutuality‘ as
reflected in the item No.(vii) of Serial No.3 of the Sixth Schedule to the Sales Tax Act,
1990 is not relevant in the case of services rendered/ provided by clubs which are liable
to provincial sales tax through the respective Provincial Ordinances. The doctrine of
‗mutuality‘ is relevant only in case of such ‗messes‘ serving cooked or prepared good
stuff, as are run on the basis of mutuality.
4. The Collectorates are, therefore, advised to ensure proper compliance