RECORDER REPORT

ISLAMABAD: Sindh Revenue Board (SRB) has clarified that the rate of Sindh sales tax is 5 percent on ride hailing services involving the service of the cab drivers with effect from July 1, 2019.

According to the SRB, in the Sindh Budget 2019, the services provided or rendered by Cab Aggregators (also known as "ride hailing services") including the service of the cab drivers (also known as "cab services" or "rent-a-car services" or ''taxi services'') using the online platform of the cab aggregators (Uber, Careem and the like) have been declared a taxable service with a reduced rate of Sindh sales tax rate of 5% on the total component (i.e. the component of the cab aggregation and the component of its cab driven, both). There is no truth that the rate will be 13% having any effect of 26%.

It is pertinent to mention here that rent-a-car service and vehicle renting service (including the radio cab service like metro cab, white cab etc.) were already paying 10% Sindh sales tax on their services. Although the services of the cab aggregators and the cab driven related thereto compete with such rent-a-car services or radio cab services, the former remained outside the tax net on one pretext or other, causing discriminatory tax disadvantage to their competitors. The tax measure of levy of Sindh sales tax at the reduced rate of 5 % on their taxi services based on online market platform still provides a tax advantage to the service providers.

There is no force in the argument that tax advantage be provided to the taxi services based on online market platform on the ground that it provides employment to general public. The goods and services of every manufacturer or producer or service provider envisage generation of employment but those too pay the taxes.

It is pertinent that the ride hailing services and the cab services based on their online market platform pay sales tax/service tax/VAT on the total price at the respective standard rates in India, UK, EU countries and other countries.

At the end, it is once again clarified for information of all concerned that rate of Sindh sales tax is 5% on ride hailing services with effect from July 01, 2019. At the end, it is once again clarified for the information of all concerned that the rate of Sindh sales tax is 5 percent (and neither 13 percent nor 26 percent) on ride hailing services involving the service of the cab drivers with effect from July 1, 2019.