At Ebridge, we have a team of legal consultants from different areas of expertise and with years of experience.
When it comes to handling matters related to taxes, you can rely on our timely services to get the job done.
From careful documentation to timely registrations, submissions, and from post verifications, to filing of annual returns, we value attention to detail and make sure all your tax-related matters are covered without any inconvenience.
Sales Tax Act, 1990
Sales Tax is imposed by the Federal Government and is levied under the Sales Tax Act, 1990 on the supply and sale of goods and on the goods that are imported into the country.
The Sales Tax Act 1990 was established for the purpose of levying, adjusting, collecting, altering, and remitting sales tax and all the matters that arise in relation therewith.
Subject to the provisions of this Act, there shall be levied, a tax known as Sales Tax at the rate of 15% (as amended from time to time through the finance acts) of the value of taxable items made in Pakistan by a registered person in the course or furtherance of any taxable activity carried by him and goods imported into the country.
The Sales Act 1990, is in force and extends to the whole country.
Understanding Sales Tax in Service Industries
Sales Tax on services is levied by the Federal Government following the The Islamabad Capital Territory (tax on services) Ordinance, 2001. Sales tax on services is imposed all over Pakistan in all 4 provinces, at rates ranging from 13% to 16%.
For your respective province, you can also check the websites of KPRA (Khyber Pakhtunkhwa Revenue Board), PRA (Punjab Revenue board), and SBR (Sindh Revenue Board) for further details.
Sales Tax Registration and Iris Portal
Before filing for sales tax, one needs to register first with the Federal Board of Revenue (FBR).
The registration will provide you with a Sales Tax Registration Number (STRN) or User ID and password. These credentials allow access to the efile portal the online portal for filing Sales Tax Returns.
An Automated System for Sales Tax Registration has been effective since July 1st, 2019. The system allows for registration for Sales Tax through the online Iris Portal.
Only with an active Iris Portal credential can one register for Sales Tax.
Procedure for Sales Tax Registration
Using the Iris portal, one can log in, and select Form 14 (1) from the drop-down menu. In the form, the following info will be added:
- Tax Period
- Sales Tax information
- Business details including Business Name, Capacity and Business Activity, Acquisition Date along with particulars of all branches
- GPS-tagged photographs of the business locations
- Bank account details
- Registration/consumer number with the electricity and gas supplier along with pictures of utility meter
- Attach GPS-tagged photographs of machinery along with industrial electricity and gas meter installed (in case of the manufacturer)
BIOMETRIC VERIFICATION
After the sales tax registration, the person is required to visit the NADRA e-Sahulat Center within 30 days.
POST VERIFICATION – MANUFACTURER
In the case of the manufacturer, the Board may require post verification through field offices, or a 3rd party authorized by the Board.
REGISTRATION VIA IRIS MOBILE APP
Using the Tax Asaan Mobile Application, one can now easily register for sales tax from the comfort of his/her home.
Filing of Sales Tax Return
It is mandatory for every person registered for sales tax under the Sales Tax Act,1990, or the Federal Excise Act, 2005, to timely file a sales tax return.
A Sales Tax return is basically a document of a declaration by the taxpayer through which the taxpayer not only furnishes the details of transactions during a certain tax period but also submits his Sales Tax liability.
Sales tax returns can be filed electronically by all registered persons.
Sales Tax Exempted Items in Pakistan – 2022
According to the budget 2022-23, below are the Sales Tax exempted items in Pakistan:
- Sales tax exemption granted on import and supply of all kinds of seeds
- The exemption granted on imports by UN diplomats and diplomatic missions and to privileged persons
- Sales Tax is withdrawn on tractors
- Supply and Import of solar panels (PV modules) exempted from sales tax
- Goods supplied to charitable hospitals with 50 beds or more, exempted from taxes
- Exemption on the import of oxygen cylinders for medical purposes
- Exemption on import of onions and tomatoes
- Exemption on the supply and import of goods as certified by PDMA and NDMA for flood victims
- Goods are exempted from sales tax that has been donated or imported for non-profit charitable hospitals
- Temporary imports exempted from sales tax
Sales Tax Due Dates
Taxpayers can file taxes in quarterly, monthly, or annual return formats.
Quarterly
If a taxpayer falls in the category of CNG, he is required to file the return on a quarterly basis.
Monthly
A person is required to file monthly return Annexure-C on the 10th and payment on the 15th and e-file return till the 18th day of the month.
Annual
A manufacturer can submit an annual sales tax return by the 30th of September of the following financial year.
Summary of Tax Expenditure 2022
In the Tax Expenditure Report-2022, the FBR has stated that although the federal and provincial tax systems interact with one another, the FBR’s tax expenditure is exclusive of the tax exemption estimates of provinces.
The report revealed that tax expenditures are classified based on types of the tax measure, like allowances, exemptions, credits, reduced rates, etc.
From 2021-22, the overall income tax expenditure came out to be 27% of the total expenditure.
The report also revealed that 49.9% of the total expenditure during the FY 2021- 22, came from the tax expenditure in sales tax.
At the import stage, a larger share of exemptions is granted which makes nearly 44% of the total sales tax expenditure.
Connect with Ebridge!
From sales tax registrations to verifications and from filing sales tax returns to following key sales tax dates, we ensure every step is carried out without any hassle.
Our team of legal experts have years of experience and knowledge about provisions of sales tax matters in Pakistan.
Connect with Ebridge today for all legal services relevant to taxation!