The Federal Board of Revenue (FBR) has clarified that no new Sales Tax was imposed on IT Services and IT Enabled Services as claimed in different news reports.
FBR said in a statement while responding to the news report published in different newspapers said: “IT and IT Enabled Services were subject to Sales Tax at 16 percent since July 2015 under Islamabad Capital Territory (Tax on Services) Ordinance, 2001”.
Later, FBR reduced the rate of Sales Tax on these services to 5 percent vide SRO 781 (I)/2018 dated 21st June 2018, it added. The FBR clarified that the scope and extent of IT Services were not defined under Islamabad Capital Territory (Tax on Services) Ordinance, 2001.
This was giving rise to a dispute between Tax Authorities and Taxpayers’, the statement added. The board explained that the definition of IT and IT Enabled Services was available under the Income Tax Ordinance, 2001.
The same definition has been adopted for Sales Tax purposes vide SRO 77 (I)/2021 dated 21st January 2021.
The recent SRO has been issued as a clarification to reduce disputes on the definition of IT and IT Enabled Services. The FBR has vehemently clarified that no new tax has been imposed.