ISLAMABAD, April 3: The Central Board of Revenue has clarified that general sales tax (GST) will be levied on services provided by beauty parlours, laundries and dry cleaners at the retail level according to Sales Tax Act.

Official statement issued on Thursday said the CBR had issued instructions to all collectors of sales tax and central excise duty that these services will be covered by definition of retailer given under section 2(28) of the Sales Tax Act, 1990.

It further said that the threshold and annual turnover limits for these services will be calculated as prescribed under section 3A and serial No 42 of the sixth schedule of the Sales Tax Act.

The service providers with annual turnover of less than Rs1 million are not required to charge provincial sales tax, while those with annual turnover of more than Rs1 million but less than Rs5 million are required to pay turnover tax at the rate of 2 per cent without charging any sales tax on receipt/invoices issued to their clients.

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

The laundries and dry cleaners having separate washing/laundries for catering to retail outlets at different places should, however, be treated as manufacturers liable to pay sales tax at the rate of 15 per cent in case of supplies of above Rs2.5m per annum.

The instructions were issued at the direction of Federal Tax Ombudsman Justice Saleem Akhtar in the cases of six dry cleaners of Sarghoda, who had demanded exemption of compulsory registration for GST.