Introduction
Federal Board of Revenue (Inland Revenue Policy Wing) had issued Sales Tax General Order No. 1 of 2020 dated January 16, 2020, in order to remove difficulty arising from insertion of new sub-section in section 73 of the Sales Tax Act, 1990 through Tax Laws (Second Amendment) Ordinance, 2019.
Commentary
The aforesaid newly inserted sub-section (4) of Section 73 of the Sales Tax Act, 1990 restricts manufacturers to make all the supplies to a registered person excluding supplies not exceeding value of 10 million per month / 100 million per year, failing which the supplier shall not be entitled to claim input tax attributable to such supplies to unregistered person.
However, in order to clear certain queries of manufacturers regarding supplies to persons who are not liable to be registered under the Act, FBR had issued the above mentioned Sales Tax General Order No. 1 of 2020, wherein it has been clarified that the provisions of sub-section (4) of Section 73 shall not apply to supplies made to:
- Federal/Provincial/Local Government departments, authorities, etc. not engaged in making of taxable supplies;
- Foreign Missions, diplomats and privileged persons;
- All other persons not engaged in supply of taxable goods.
Moreover, the threshold of 10 million per month / 100 million per year is applicable on goods supplied to one specific person by the registered manufacturer.
Link of Document
20201161211519971STGONO.01OF2020DATED16.01.2020
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