Update on VAT Deduction at Sources in 2012

Back in November 2011 I published a post on sectors to deduct VAT at source. There I mentioned 35 sectors from which VAT to be deducted at sources at various rates. In 2012 there are a few changes regarding deduction rate as well as guideline on how to deduct VAT at sources.

The update regarding changes in rates with reference for you is as follows:

Sl.	Service provider		Rates
1	Decorators & caters		15%
2	Motor garage & workshops		4.5%
3	Dockyard		4.5%
4	Construction firms		5.5%
5	Advertising firms		15%
6	Printing press		15%
7	Auction firms		15%
8	Land development firms		1.5%
9	Building construction firms		1.5%
10	Indenting firms		15%
11	Survey firms		15%
12	Plant or capital equipment lender firms		15%
13	Furniture marketing center	Manufacturing stage	6%
		Marketing stage (show room) [Subject to availability of 6% VAT paid challan at manufacturing stage]	4%
14	Courier & express mail service		15%
15	Person, institution or organization engaged in repairing or servicing of taxable products in exchange of value		15%
16	Consultancy & supervisory firms		15%
17	Lessor		15%
18	Audit & accounting firms		15%
19	Procurement providers		4%
20	Security service providers		15%
21	Lawyer		15%
22	Transport contractor	Incase of transportation of petroleum made products	2.25%
		Incase of transportation of any other	4.5%
23	Vehicle lenders		15%
24	Architect, interior designer or interior decorator		15%
25	Graphic designer		15%
26	Engineering firms		15%
27	Sound & lighting equipments lender firms		15%
28	Attendants in the Board Meetings		15%
29	Advertisement publisher through satellite channel		15%
30	Chartered aircraft or helicopter lender firms		15%
31	Buyer of auctioned goods		4%
32	Building floor & yard cleaning/maintenance firms		2.25%
33	Seller of lottery tickets		15%
34	Program organizers		15%
35	Human resources supply & management firms		15%

Note that there are nine sectors for which rates has been changed from time to time through Mushak orders from National Board of Revenue. References are as follows:

1. Deduction rate on furniture marketing center at marketing stage (Sl. no 13 in the list): Earlier the rate was 3% which is now increased to 4%.
2. Deduction rate on bills of consultancy & supervisory firms: Earlier the rate was 4.5% which is now increased to 15%.
3. Deduction rate on bills of audit & accounting firms: Earlier the rate was 4.5% which is now increased to 15%.
4. Deduction rate on bills of security service providers: Earlier the rate was 4.5% which is now increased to 15%.
5. Deduction rate on bills of lawyer: Earlier the rate was 4.5% which is now increased to 15%.
6. Deduction rate on bills of vehicle lenders: Earlier the rate was 4.5% which is now increased to 15%.
7. Deduction rate on bills of buyer of auctioned goods: Earlier the rate was 3% which is now increased to 4%.
8. Deduction rate on bills of program organizers: Earlier the rate was 4.5% which is now increased to 15%.
9. Deduction rate on bills of human resources supply & management firms: Earlier the rate was 4.5% which is now increased to 15%.

All the rates above changed through "Special Order No.-7/Mushak/2012 dated 7 June 2012".

Changes regarding guideline on VAT deduction at sources will be published shortly. Till then stay tuned. Please comment if you have and update or suggestions.