FBR clarification on ST on IT services & IT enabled services

ISLAMABAD: Federal Board of Revenue has issued a clarification on the news item appearing in Daily Business Recorder on 22nd January, 2021 regarding imposition of 16 % Sales Tax on IT Services and IT Enabled Services. FBR has stated that IT and IT Enabled Services were subject to Sales Tax at 16 % 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 % vide SRO 781 (I)/2018 dated 21st June, 2018.
FBR has 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’.
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. The recent SRO has been issued as a clarification to reduce disputes on the definition of IT and IT Enabled Services. FBR has vehemently clarified that no new tax has been imposed.
TLTP adds: Meanwhile, the Federal Board of Revenue has said that a person can share information of tax evasion and get monetary reward from it after getting himself registered for the purpose.
According to Income Tax Rules, 2002 a procedure has been laid down for registration of an informer. According to the rules, any person desirous of getting himself registered as an informer may make an application to the Chief Commissioner for registration. The application shall be in the prescribed form and shall be verified in the prescribed manner.
The application shall be accompanied by the documents including a copy of the computerized national identity card of the applicant, a copy of national tax number certificate, and a duly sworn in affidavit stating therein that the information being provided is correct and nothing has been concealed there from and that in case any incorrect information is provided or any information is concealed he shall be liable to penal action under the laws for the time being in force.
The rules also explain the procedure for submission of information and further action thereupon. An informer shall submit any information regarding concealment or evasion of tax leading to detection or collection of taxes, fraud, corruption or misconduct that is in his possession to the Chief Commissioner giving precise details of the alleged act along with all supporting evidences that are in his possession:
Provided that no information shall be entertained unless it gives precise details of the alleged act and is accompanied with the supporting evidence.
On receipt of the information, the chief commissioner shall scrutinise the information and forward it to the concerned commissioner. On receipt of the information from the chief commissioner, the concerned commissioner shall conduct such further enquiry as he may deem fit and submit his report to the Chief Commissioner.
On completion of the enquiry, the concerned commissioner shall take such further action as may be required under the tax laws or any other law for the time being in force, as may be necessary on the basis of the facts of the case, and furnish his report to the chief commissioner.