GOVERNMENT OF PAKISTAN
MINISTRY OF FINANCE, ECONOMIC AFFAIRS,
STATISTICS & REVENUE
CENTRAL BOARD OF REVENUE
*****
Islamabad, the 23rd October, 2004.
NOTIFICATION
(SALES TAX)

             S.R.O. 872(I)/2004.-  In exercise of the powers conferred by section 71 of the Sales Tax Act, 1990, read with clause (9) of section 2, sections 3, 3AA and 4, sub-section (2) of section 6, section 7A, clause (b) of sub-section (1) of section 8, clause (a) of sub-section (2) of section 13, sections 26AA and 34A and the first and second provisos to section 45 thereof, the Federal Government is pleased to direct that the following further amendments shall be made in the Sales Tax Special Procedures Rules, 2004, namely:-

 

                        In the aforesaid Rules, -

 

(a)       before the rule 108, following new chapter shall be inserted, namely:-

 

“CHAPTER XV

 

SPECIAL PROCEDURE FOR COLLECTION AND PAYMENT OF

SALES TAX BY ADVERTISING AGENCIES

 

108.   Application.-   The provisions of this Chapter shall apply to every registered advertising agency which supplies or supervises the supply of printed material to its clients.
 
109.    Definitions.-   (1)    In this Chapter, unless there is anything repugnant in the subject or context,-
 
                                        (a)    “Act” means the Sales Tax Act, 1990;
 
                                        (b)    “advertising agency” means a person who is engaged in the advertising
                                                business including supply of printed material, directly or indirectly to its clients;

 

                                        (c)    “client” means a person to whom supplies of printed materials are made or on
                                                whose behalf the advertising agencies are arranging or supervising the supply of
                                                such material;
 
                                        (d)    “commission” means an amount agreed between the advertising agency and its
                                                client for the arrangement of supervision of supply of printed material; and
 
                                        (e)    “supplier” means a manufacturer engaged in the production and supply of printed
                                                material to a client of an advertising agency directly or indirectly or through such
                                                agency.
 
(2)       All other words and expressions used, but not defined in this Chapter shall have the same meaning as assigned to them under the Act.
 
110.   Registration.-       Every advertising agency engaged in business including making arrangement or doing supervision of  the supply of printed material on commission basis, if not already registered, shall get registration under section 14 of the Act read with Chapter 1 of the Sales Tax Rules, 2004.
 
111.   Levy and collection of sales tax.-      Every advertising agency shall charge, collect and pay sales tax at the rate specified in sub-section (1) of section 3 of the Act on the total value of printed and promotional material inclusive of its commission;
 
                   Provided that in case of an advertising agency getting the printing job done through a registered vendor or
                   printer, shall be liable to charge, collect and pay sales tax to the extent of the commission charges only.
 
112.   Determination of tax liability:-  (1)     While determining its tax liability, an advertising agency shall be entitled to claim input tax credit for the tax paid on account of taxable purchases or imports made and utilities like telephone (excluding mobile telephone), gas and electricity consumed for furtherance of taxable activity, against its output tax liability, subject to the conditions, limitations and restrictions prescribed under section 7 and 8 of the Act and the rules or notifications issued thereunder; and subject to fulfillment of the conditions laid down under section 73 of the Act;
 
Provided that no input tax adjustment shall be allowed against the purchase invoice or the bill of entry
or utility bill, which is not in the name of advertising agency or does not contain its registration
number;
 
Provided further that the input tax credit shall be admissible only for the amount of tax that has been
paid on the purchases or imports made or utilities consumed during the tax period for which return is
being submitted.
 
(2)       The advertising agency which is providing or rendering taxable as well as non-taxable supplies, can claim only such proportion of input tax as is attributable to the taxable supplies, in accordance with sub-section (2) of section 8 of the Act.
 
113.    Invoicing and filing of monthly return.-    (1)    The advertising agency while making supply of printed material to its clients in the manner as aforesaid, shall issue a sales tax invoice in the format prescribed under section 23 of the Act and each such invoice shall indicate the amount of charges agreed to be received from client on account of agency’s commission and the sales tax chargeable thereon.
 
(2)       Every registered advertising agency using computerized accounting system may issue a computer generated sales tax invoice and keep record on the computer in the prescribed format.
 
(3)       The advertising agency shall file monthly return under section 26 of the Act before the prescribed date and declare its total purchases related to the supplies made in the manner as aforesaid and make corresponding adjustments as provided under section 7 read with section 8 of the Act.
 
114.    Record keeping.-    Every advertising agency for the purpose of this Chapter shall maintain records as prescribed under section 22 of the Act.
 
115.    Audit.-    Audit of the records of advertising agency for verification of correct payment of sales tax on monthly basis shall be conducted once in a year;
 
                   Provided that in case the Collector has information or sufficient evidence that any advertising agency is
                   involved in tax fraud or evasion of tax, he may authorize an officer of sales tax, not below the rank of
                   Assistant Collector to conduct an inquiry or investigation under section 38 of the Act in respect of such
                   agency. 
 
116.    Responsibility of the association.- The concerned association of advertising agents shall be responsible to ensure that all advertisers engaged in the aforesaid business are registered and pay sales tax in the manner specified in these rules and in case of non-compliance by any advertising agency, the association shall actively assist the concerned Collectorate of Sales Tax for enforcement and recovery of sales tax due under the Act.
 
117.    Past liabilities.-        The past liabilities of an advertising agency in excess of tax payable on commissions received by it and additional tax and penalty leviable thereon shall stand exempt under clause (a) of sub-section (2) of section 13 and section 34A of the Act, if such agency gets itself registered under section 14 of the Act, and discharge past liability assessed on the commissions received during last three years by 15th November, 2004 in terms of sub-section (2) of section 36 of the Act.
 
118.    Miscellaneous.-       All provisions of the Act and the rules made thereunder, in so far as these are not inconsistent with this Chapter shall mutatis mutandis, apply to the advertising agencies registered under the Act.”; and
 
                (b)       rule 108 shall be renumbered as 119.
 
[C. NO.1(17)STR/2000]
 
 
                                                                                                                                           (SHAHID AHMAD)
                                                                                                                                         Additional Secretary