January 8, 2003	Wednesday	Ziqa’ad 4, 1423

ISLAMABAD, Jan 7: The Central Board of Revenue has notified the minimum limits for levy of general sales tax (GST) on services provided by beauty parlours, laundries and dry cleaners.

A sales tax official in the CBR said on Tuesday that the service providers with annual turnover of less than Rs1 million were not required to charge provincial sales tax, while those with annual turnover of more than Rs1 million, but less then Rs5 million, were required to pay turnover tax at the rate of 2 per cent without charging any sales tax on receipts/invoices issued to their clients.

However, beauty parlours and laundries and dry cleaners with turnover more than Rs5 million per annum were required to maintain records as prescribed under the Sales Tax Act, 1990, and issue invoices/receipts charging sales tax at the rate of 15 per cent.

According to sales tax ruling issued on Tuesday, laundries and dry cleaners having separate washing/laundries for catering to retail outlets at different places would, however be treated as manufacturers liable to pay sales tax at the rate of 15 per cent in case of supplies of above Rs2.5 million per annum and turnover tax at rate of 2 per cent, if their turnover was from Rs0.5 million to Rs2.5 million per annum.

The CBR has also advised all collectors of sales tax to conduct meetings with respective associations to ascertain minimum turnover through mutual consultation for each registered person in a way that input tax did not exceed 10 per cent of turnover in case of beauty parlours, etc., and 25 per cent in case of dry cleaners and laundries.

The issue was discussed at length following the question whether or not exemption or turnover threshold prescribed under section 3A and serial No 42 of the Sixth Schedule to the Sales Tax Act, 1990 was applicable to (I) services provided or rendered for personal care by beauty parlours, beauty clinics, slimming clinics and (ii) laundries and dry cleaners chargeable to sales tax under the respective Provincial Sales Tax Ordinance (all 2000).

The CBR was of the view that beauty parlours and laundries and dry cleaners provided services at the retail level and therefore these service providers were covered by the definition of retailer given under section 2(28) of the Sales Tax Act, 1990. Hence, they shall be treated as retailers and threshold and annual turnover limits prescribed for retailers under the said Act — section 3A and serial No42 of the Sixth Schedule of the Sales Tax Act, 1990 shall apply on them.