The Federal Board of Revenue (FBR) has announced the decision to collectsales tax from sales and purchases of vehicles and has issued a procedurefor calculating sales tax in this regard.
The FBR has issued an SRO 931(I)2020 to amend Sales Tax Rules, 2006,Wednesday.
According to the FBR, where a registered person is engaged in the businessof purchasing and selling used vehicles from the general public on whichsales tax had already been paid at the time of import or manufacturing, thevalue of supply shall be worked out in accordance with the followingformula, namely: A-B.
Where ‘A’ is the consideration in money, including all charges and fees butexcluding the amount of sales tax charged, received by the registeredperson from the buyer of the used vehicle.
‘B’ is the consideration in money, including all charges and fees, paid bythe registered person to the seller of the used vehicle. Provided, that thewhole amount paid or received against the above-mentioned transactions ismade through banking channel as required under Section 73 of the Sales TaxAct.
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In case, a vehicle is sold at a price lower than its purchase price, thevalue determined under this sub-rule shall be deemed to be zero.
No input tax credit shall be allowed to the registered person, which isattributable to any goods or services acquired for the purposes of sellingused vehicles, the FBR added.
