Deleted items of sixth schedule: government yet to clarify ST application

The government has yet to clarify the application of sales tax on items deleted from Sixth Schedule of the Sales Tax Act 1990 which are now subject to sales tax at standard rate of 16 percent. Tax experts told Business Recorder here on Friday that the sectors, including software industry on which sales tax exemptions have been withdrawn from June 4, 2011, are waiting for the modalities for collection of sales tax, without facing legal complications.
They said that the Board has to clarify the methodology of collection of sales tax on sectors from which exemptions have been withdrawn from June 4, 2011. For example, software industry is unclear about the specific application of tax on branded or licensed software.
Sources related to the software industry have said that in case of sales of authorisation code, the user may not be entitled for the entire rights of the software and would only be eligible to use the software for certain period as authorised through the computerised code. Such activity in this contention does not fall into the purview of software sale. However, the Bard has not issued any guideline which precisely defines the scope of software sale. The question arises whether such authorisation for using the software would be subjected to sales tax, sources added.