Tax Talks

This article delves into the The Sindh Revenue Board (SRB) withholding tax regime for services provided to government departments. This article will provide an overview of the regime, including the withholding rates, exemptions, and compliance requirements.

Withholding Rates

The standard withholding rate for services provided to government departments is 13%. However, there are a number of reduced rates that apply to certain services, such as:

• Inter-city transportation of goods: 5%
• Road advertising: 8%
• Letting of property: 5%

Exemptions

A number of services are exempt from withholding tax, including:

• Services provided by a government department to another government department
• Services provided by a foreign supplier
• Services provided by a small taxpayer (i.e., a taxpayer with an annual turnover of less than Rs. 10 million)

Sales Tax Withholding Rates:

For Government departments: 100%

Other than Government entities: 20%Compliance Requirements

Less Than Standard Rate: 100%

Withholding agents are required to deduct the withholding tax from the amount payable to the service provider and deposit it with the SRB within 15 days of the end of the month in which the payment was made.

Withholding agents are also required to file a monthly withholding tax return with the SRB.

Penalties

Failure to comply with the withholding tax requirements can result in a number of penalties, including:

• A fine of up to 100% of the tax not withheld
• Imprisonment for up to one year

Conclusion

The withholding tax regime for services provided to government departments is a complex area of law. Withholding agents should seek professional advice to ensure that they are complying with the requirements.