Almost all questions have been answered here, if you have more questions, consult Shabbar bhai. All tax related posts may be made a part of this thread. Any random posts on tax going forward will be deleted.
Recently there has been a lot of confusion around sales tax charged by restaurants so below is a basic explanation to guide customers visiting a restaurant.
A customer has every right to ask about GST registration from a restaurant but at the same time it should be noted Pakistan unfortunately has a parallel tax system with overlap between Federal and Provincial governments for example the 7.5% GST for restaurants in Islamabad versus rest of the country. Some of the queries are often technical in nature so be patient as not all restaurant staff are educated or like everyone else are confused by this parallel system.
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A simple two way check can be done by any customer 1) from SRB website and 2) asking the restaurant for the sales tax certificate. But everyone should take time out to understand the key differences between NTN/STRN and SNTN.
1) What is NTN, STRN and SNTN?
NTN is National Tax number issued by Federal Board of Revenue (FBR) for individuals, Sole Traders, Association of Person and Companies. This is for Income Tax and is NOT related to Sales tax/GST.
STRN is Sales Tax Registration Number issued by Federal Board of Revenue (FBR). STRN is issued under the sales tax act 1990 (law pertaining to general sales tax) which is a federal law applies to goods only AND on services is levied by the Federal Government under The Islamabad Capital Territory (Tax on Services) Ordinance, 2001.
SNTN is Sindh Sales Tax registration Number or SNTN issued by Sindh Revenue Board (‘SRB’) under the Sindh Sales Tax on Services Act 2011 extending to the whole Province of Sindh.
SRB requires registration from all persons who are resident, provide services listed in Second schedule and fulfill criteria prescribed by SRB under sub section 2 of the ACT. Services provided by Hotels, Restaurants and Caterer come under this ACT as per No 98.01.
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2) I am a visiting a restaurant in Sindh, what should I be looking out for on the Receipt/Bill?
The restaurant in Sindh should have 1) SNTN and 2) A clear break up of the Sales tax charged @ 13% (current Sales tax on services rate in Sindh) on the receipt.
‘Prices are inclusive of Sales tax’ is NOT allowed i.e. a proper break up (bill amount exclusive of tax plus 13% GST equals total Bill amount) needs to be shown.
3) I asked the restaurant in Sindh for the STRN but they only had the SNTN on their Bill?
The restaurant is correct to show SNTN on their bill as after the 18th amendment to the constitution of Pakistan, the collection of sales tax on services (which includes restaurants) have become the subject matter of the provinces. Accordingly all restaurants in the province of Sindh are required to register with SRB for sales tax.
The term ‘SNTN’ stands for Sindh NTN and can be verified from SRB website by entering the number from the restaurants Bill https://e.srb.gos.pk/Registration/onlinesearchTaxpayer.aspx)
4) How can I verify the SNTN on the Restaurant Bill?
a) By entering the number on: https://e.srb.gos.pk/Registration/onlinesearchTaxpayer.aspx
b) Asking the restaurant to show you their SINDH REVENUE BOARD certificate of registration. The registration number on the certificate should match the SNTN on your bill.
5) The restaurant provided me with their SRB Registration certificate but the name and the registered address on the certificate is different to the Restaurants name? Also the certificate is either registered to an Individual/Association of person (AOP)/Company?
The Business name and the brand name can be completely different. The restaurant owner is allowed to register for sales tax as an individual, AOP or a company. The brand name could be completely different to this business name, often an owner with multi brands or multi unit stores. Similarly the business can have one registered head office for all their outlets.
6) I noticed that on a restaurant’s bill, the NTN and the SNTN are the same number?
When a restaurant applies to Sindh Revenue Board (‘SRB’) for sales tax registration, the number issued by SRB is the same number as the NTN. For example if the NTN is 123456 then the SNTN would be S123456. This can be seen from No. Legal/231/2011 SRB Notification:
The existing taxpayers shall not be required to file application for registration. They will be automatically registered for Sindh Sales Tax on Services and the registered person shall be intimated through email or SMS and by courier or post assigning them S as prefix to NTN(S+NTN).
This has also led to confusion and given a loophole to some restaurants to put their NTN as their SNTN despite not being registered with SRB. For example a restaurant would have NTN for their income tax. On their bill they might put this NTN (being the same) as SNTN even though they can only charge GST if they are registered with SRB.
Therefore always verify the SNTN on SRB website or by asking the restaurant for the certificate.
7) Do I need to be concerned if a restaurant is registered with FBR for Income tax?
Income tax registration is between the restaurant and FBR and it solely relates to Income tax. Where as sales tax is collected on behalf of SRB from customers to be paid to the authority therefore the primary concern of a customer would be that the restaurant is registered for sales tax.
8) What is the threshold for a restaurant to be registered for sales tax under SRB?
It is pertinent to note that SRB is fairly active in registering restaurants particularly those opening in posh areas/localities.
No. Legal/231/2011 SRB Notification part IX
Every such person whose total annual turnover from the service of such food items exceeds rupees 3.6 million per annum of all the outlets of such registered person in the Province of Sindh, shall, if not already registered, obtain registration in the manner as specified in chapter II of these rules. The determination of the turnover will be made on monthly turnover basis, keeping in view area, location, city, menu served, capacity and by delivery and sale/supply, if not otherwise determinable.
Per annum revenue of Rs 3.6 million means Rs 300,000/ revenue per month. There are a significant number of restaurants in the province that are easily meeting this threshold but are not registered for sales tax. Bringing these in the tax net would increase the revenue for the authority
9) What further steps should I take as a customer to ensure restaurant is depositing their GST liability to SRB?
The simple answer is to pay by credit card as these sales are deposited by the respective bank directly in the business bank account.
P. S. Significant input to this post has been provided by an experienced restaurateur
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