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Before Registration and Filing of your Sales Tax Return, it is recommended that one should establish basic understanding regarding these processes. Knowledge of basic concepts would not only ensure that the tasks are performed easily but also in the prescribed manner.
Sales Tax is a tax levied by the Federal Government under the Sales Tax Act, 1990, on sale and supply of goods and on the goods imported into Pakistan. Sales Tax on services is levied by the Federal Government under Azad Jammu and Kashmir Sales Tax (Tax on services) Act, 2001.
Input tax is the tax paid by registered person on the taxable goods and services purchased or acquired by him. This also includes the sales tax paid on imports.
It is the sales tax charged and levied on the sale or supply of goods or services on which sales tax is leviable.
Sales tax applies to the following:
All goods are taxable except those that have been exempted under section 13 as mentioned under 6th Schedule of the Sales Tax Act, 1990. For sales tax purposes goods include every kind of movable property other than actionable claims, money, stocks, shares and securities.
All goods imported into Pakistan are liable to sales tax at the time of import, except goods specifically exempted under section 13 as mentioned in Sixth Schedule to the Act.
Under section 13 of The Sales Tax Act 1990, the Sixth Schedule of the Sales Tax Act, 1990 specifically and explicitly mentions those goods on which exemption of sales tax is available. Other exemptions are available through various notifications (SROs) issued by the Government under section 13.
The first step before filing your Sales Tax Return is to get yourself registered with Central Board of Revenue (CBR).
The registration with CBR provides you with a Sales Tax Registration Number (STRN) or User ID and password. These credentials allow access to e-file portal, the online portal for filing Sales Tax Return.
Online Sales Tax Return can only be filed while logging into efile portal.
The Automated System for Sales Tax Registration will be effective from July 1st, 2022, allowing for registration of the person for Sales Tax through the Iris Portal.
Only those persons having active Iris Portal credentials can Register for Sales Tax.
The person must visit Regional Tax Office (RTO) for registration of sales tax alongwith following information:
On submitting the above information and documents, the system shall register the person for Sales Tax.
In case there is a change in the name address, or other particulars as stated in the registration certificate, the registered person shall notify the change in the prescribed form to the Tax Office within fourteen days of such change.
The change in the business category shall be allowed after Tax Office has verified the manufacturing facility and confirmed the status as industrial consumer of the electricity and gas distribution companies.
In case a registered person intends to shift his business activity from the jurisdiction of one Tax Office to another Tax Office or as the case may be to a Tax Office , or he has any other valid reason for such transfer, he shall apply to the Tax Office for transfer of his registration.
The Tax Office may subject to such conditions, limitations or restrictions as it may deem fit to impose, by an order , transfer the registration of a registered person from the jurisdiction of one ? Tax Office, to another Tax Office, or as the case may be to the LTU or RTO.
The return for the tax period in which the registration is transferred shall be filed in the RTO/LTU from where the registration is transferred.
In case of multiple registrations, the registered person shall apply to RTO/LTU for single registration to the RTO/LTU which after ascertaining tax liabilities from concerned RTO/LTU shall issue revised registration certificate in which previous registration number shall be merged.
To deregister a person shall submit an application to Commissioner Inland Revenue having appropriate jurisdiction. Within ninety days from the date of such application or the date all the dues outstanding against such person are deposited by the person, whichever is later shall cause the person to be de-registered through the computerized system.
Following persons can be deregistered:
Every person registered under the Sales Tax Act,1990, or the Federal Excise Act, 2005, is required to file a Sales Tax Return.
A Sales Tax return is the taxpayer’s document of declaration through which taxpayer not only furnishes the details of transactions during a tax period but also deposits his Sales Tax liability.
On the return form, the taxpayer declares for a particular tax period and respective input tax and output tax, at prescribed rate of Sale Tax. In case input tax exceeds output tax, the amount of refund claimed or excess input tax is also declared in the return.
A registered person shall file a single return for all the possible sectors that the registered person is operating in. Due date for the single return for the sectors would be the due date applicable to his major activity in terms of sales tax or federal excise duty payable.
Where a Sales Tax Return is not filed within a period of six months after the due date, the same shall be filed only after approval of the Commissioner Inland Revenue having the appropriate jurisdiction.
The Active Taxpayer List (ST) is a central record of online active Sales Tax Return filers.
Taxpayers belonging to their respective categories have to file Sales Tax returns in monthly, quarterly or annual return format.
Under the standard procedure a registered person is required to file monthly return Annexure C on 10th and Payment on 15th and e-file return by the 18th day of the month following the period in which the supplies were made, in the designated Branches of National Bank of Pakistan. In case of certain categories as mentioned below Procedure has been devised to file return on monthly and quarterly basis.
The taxpayers falling exclusively in the category of CNG required to file the return on quarterly basis.
A manufacturer is to file annual Sales Tax return, for a financial year by the 30th September of the following financial year.
If the input tax paid by a registered person on taxable purchases made during a tax period exceeds the output tax on account of zero rated local supplies or export made during that tax period, the excess amount of input tax shall be refunded to the registered person not later than forty five days of filing of refund claim in such manner and subject to such conditions as the board may, by a notification in the official Gazette specify.
To pay your sales tax dues, the person can pay through E-payment.
A registered person must keep a record in English or Urdu of all the goods and services supplied, purchased or imported in the course of business.
The record of sales should indicate the following details of goods supplied or services rendered:
At the end of each month, a registered person must add up the sales tax shown in these records, and transfer the total to sales tax account as output tax.
The record of purchases and imports should indicate the following details of goods purchased or received or services hired:
All payment so receipts of amount of sales tax on purchases or supplies above Rs. 50,000 (except utility bills) should be made through bank instruments indicating specified bank accounts of both the persons i.e., sellers and purchasers. It is recommended that records/ photocopies of all bank instruments through which payments of sales tax are made or received must be kept along with bank statements for the purpose of compliance of section 73 of the Act and to avoid audit complications.
A registered person should also keep record of:
A registered person is required to maintain a record and documents for a period of six (6) years after the end of the tax period to which such record and documents relate.
The electronic sales tax return and its relevant attachments, if any, shall be kept in electronic record of the registered person and shall be produced to the officer-in-charge on demand along with the supportive documents. If the delay is beyond 15 days, a penalty of Rs.5000/month is payable.
Through Finance Act, 2018 Sales Tax Audit under section 25 of the Sales Tax Act, 1990 to be conducted only once in every three (3) years.
An appeal can be filed with the Collector (appeals) against the order-in-original passed by the Additional Collector, Deputy Collector, Assistant Collector and Superintendent.
An appeal before the Collector (appeals), has to be filed within thirty days of the receipt of decision or order passed by the Additional Collector, Deputy Collector, Assistant Collector or Superintendent.
An appeal preferred after the expiry of thirty days may be admitted by the Collector (appeals). If he is satisfied that the appellant has sufficient cause for not preferring the appeal within the specified period.
The Collector of Sales Tax (appeals) may, after giving both parties to the appeal an opportunity of being heard, pass such order as deemed fit, confirming, varying, altering, setting aside or annulling the decision or order appealed against.
An appeal can be filed against the order of the Collector (appeals) before the Appellate Tribunal.
The limitation for preferring an appeal against any order or decision of an officer of Sales Tax under the Act is 60 days from the date of receipt of such order or decision. The day on which the order is passed and the period up to issue and receipt of the order is to be excluded in computing the period of limitation of 60 days.
The Appellate Tribunal has been empowered to condone the delay in filing the appeal, if it is satisfied that the appellant had sufficient cause for not filing the appeal within time.
The person aggrieved by the order of Appellate Tribunal may prefer an application to the High Court.
The reference has to be filed within ninety days of the communication of the order of the Appellate Tribunal.
Reference to the High Court can be filed if a question of law arises out of the Appellate Tribunal’s order, against which application is being preferred.
Against the order of the High Court a leave to appeal can be sought from the Supreme Court of AJ&K.
A basic understanding of Federal Excise Duty (FED) concepts would not only ensure that the tasks are performed easily but also in the prescribed manner.
deduction of amount of duty paid on goods used in the manufacture or production of other goods from the amount of duty payable on such other goods in the prescribed manner
a person appointed by a manufacturer in or for a specified area to purchase goods from him for sale to a wholesale dealer in that area;
in relation to furnishing a return under section 4, means the 15th day of the month following the end of the month, or such other date as the Board may, by notification in the official Gazette, specify and different dates may be specified for furnishing of different parts or annexures of the return.
all excisable goods specified in the First Schedule except those which are exempt under section 16 of the Act;
a supply of dutiable goods made by a manufacturer other than a supply of goods which is exempt under section 16 of the Act;
an authority given by a franchiser under which the franchisee is contractually or otherwise granted any right to produce, manufacture, sell or trade in or do any other business activity in respect of goods or to provide service or to undertake any process identified with franchiser against a fee or consideration including royalty or technical fee, whether or not a trade mark, service mark ,trade name, logo, brand name or any such representation or symbol, as the case may be, is involved;
goods leviable to excise duty under this Act or as specified in the First Schedule and includes goods manufactured or produced in non-tariff area and brought for use or consumption to tariff area;
includes fire, marine, theft, accident and other such miscellaneous insurance;
respectively bringing into, and taking out of Pakistan by sea, land or air and shall be deemed to have always been so defined;
Karachi Inter Bank Offered Rate prevalent on first day of each quarter of the financial year
Azad Jammu and Kashmir, Northern Areas and such other territories or areas to which this Act does not apply;
an authority given by a franchiser under which the franchisee is contractually or otherwise granted any right to produce, manufacture, sell or trade in or do any other business activity in respect of goods or to provide service or to undertake any process identified with franchiser against a fee or consideration including royalty or technical fee, whether or not a trade mark, service mark,trade name, logo, brand name or any such representation or symbol, as the case may be, is involved;
a person who isregistered or is required to be registered under this Act provided that a person who is not registered but is required to be registered shall not be entitled to any benefit or privilege under this Act or rules made there under, unless he is registered and such benefit and privilege, unless allowed by Board, shall be confined to period of registration;
with their grammatical variations and cognate expressions, mean any transfer of the possess on of goods or rendering and providing of services by one person to another in the ordinary course of trade or busi ness for cash or deferred payment or other consideration;
services, facilities and utilities leviable to excise duty under this Act or as specified in the First Schedule read with Chapter
includes sale, lease or other disposition of goods and shall include such transaction as the Federal Government may notify in the official Gazette from time to time;
area other than the non-tariff area;
a person who buys or sells goods wholesale for the purpose of trade or manufacture, and includes a broker or commission agent who, in addition to making centrals for the sale or purchase of goods for others, stocks such goods belonging to others as an agent for the purpose of sale;
duty of Federal excise levied and charged at the rate of zero per cent under section 5 of this act.
For further information and clarification on various Federal Excise Duty (FED) concepts, kindly refer to the: