ISLAMABAD: The Federal Board of Revenue (FBR) has clarified that no new tax has been imposed on the IT Services and IT Enabled Services and the recent SRO 77 (I)/2021 dated 21st Jan, 2021 has been issued as a clarification to end dispute between the tax authorities and the taxpayers on the definition of IT and IT Enabled services.
The FBR stated that IT and IT Enabled Services were subject to 16 percent Sales Tax 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.
The FBR clarified that the scope and extent of IT Services was not defined under Islamabad Capital Territory (Tax on Services) Ordinance, 2001. This was giving rise to dispute between tax authorities and taxpayers. The FBR has 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.
Copyright Business Recorder, 2021