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SHC rules Sindh’s ST on rent of immovable property illegal

SHC rules Sindh’s ST on rent of immovable property illegal

KARACHI: Sindh High Court (SHC) has ruled Sindh’s sales tax on rent of immovable property declared ultra vires.

The case was placed on August 18, 2017 in the cause list for announcement of judgment before a divisional bench of SHC (Tax DB). The court allowed the constitutional petition where the levy and collection of Sindh Sales Tax on rent of immovable property was challenged.

The detailed judgment is expected to be released in coming days. It is important to note that similar matters are also challenged in legal suit before single bench of the SHC as well where the proceedings are not yet concluded. The Sindh Board of Revenue has levied Sindh Sales Tax at 6 percent which was subsequently enhanced to 8 percent. The Board in the provincial finance bill 2017-18 has reduced the rate of Sindh Sales Tax on immovable property from 8 percent to 3 percent.

The impugned law requires a landlord to charge sales tax whereas tenant was also under obligation to withhold the entire amount of sales tax and deposit the same through filing of withholding statement.