GST calculation, levy: FBR clarifies discount on standardized tax invoice

ISLAMABAD: The Federal Board of Revenue (FBR), Friday, clarified that the sales tax will be calculated and charged on the actual value received after discount on sales of goods by the retailers/integrated suppliers.

In this connection, the FBR has issued a fresh clarification on the issue of discount on the Standardized Tax Invoice as provided under SRO 1006 (1)/2021.

This sales tax will be calculated as provided in terms of definition for the value of supply provided under sec 2(46) of the Sales Tax Act 1990.

According to the details, the FBR had earlier issued clarification dated October 13, 2021 on the same subject, ie, standardised format of the sales tax invoice notified vide SRO 1006(1)/2021 dated 09-08-2021.

The FBR contends that number of various representations from the taxpayers’ and Bar Councils’ have again been received by the Board seeking further clarification of the “trade discount”.

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The FBR stated that the “Value of supply” as per section 2 (46) of the Sales Tax Act, 1990 in respect of taxable supply means the consideration in money received by the retailer from the consumer against the supply but excluding the amount of tax.

The FBR said that the cash discount is allowed and permissible in the form of reduction of prices in seasonal sales/sales as per trade practice.

The FBR now further clarified that the value of supply for sales tax purposes is the actual value received in monetary terms excluding the amount of sales tax and not the gross value, hence, the sales tax will be calculated and charged on the actual or discounted price accordingly.

According to the SRO 1006(I)/2021, the name is required to be recorded when the customer is liable for the tax or credit or invoice value is above Rs100,000.

Under rule 150ZEB of the Sales Tax Rules, 2006, the registered persons (integrated suppliers) shall install such fiscal electronic device and software, as approved by the Board, available on its website with complete technical instructions for installation, configuration, and integration.

Copyright Business Recorder, 2022