KPRA exempts sales tax on cash distribution services under EECTI

• The banks including Bank Alfalah and Habib Bank Limited, who have entered into arrangement with the branchless banking operators, would neither charge or pay nor withhold any sales tax on the service charges.
• No tax input adjustment would be admissible against the output tax exempted under this notification, it added.

ISLAMABAD: The Khyber Pakhtunkhwa Revenue Authority (KPRA) Thursday exempted the payment of sales tax on services for distribution of emergency cash assistance under the Ehsaas Emergency Cash Transfer Initiative (EECTI) undertaken in response to the COVID-19.

The exemption would be valid till June 30, 2020 unless rescinded earlier or extended further, according to KPRA notification issued on Thursday.

“The KPRA is pleased to exempt the payment of sales tax on such services as are provided or rendered exclusively by the branchless banking operators (Retailers) in respect of distribution of emergency cash assistance under EECTI undertaken in response to the COVID-19 pandemic within the framework of Ehsaas Kafaalat Program (EKP) under Benazir Income Support Programme (BISP).

However, the notification added, the banks including Bank Alfalah and Habib Bank Limited, who have entered into arrangement with the branchless banking operators, would neither charge or pay nor withhold any sales tax on the service charges to the concerned branchless banking operators on account of the relevant service transaction(s) under the said emergency cash distribution scheme.

Benefit of the exemption would not be admissible or available to the banks themselves in respect of charges or commission retained, received, paid or payable to them exclusively on account of their own banking services in respect the emergency cash distribution scheme.

No tax input adjustment would be admissible against the output tax exempted under this notification, it added.