5. 5
Sales Tax
IS A TAX PAID TO
A GOVERNING BODY FOR THE SALES OF
CERTAIN GOODS AND SERVICES.
LAWS ALLOW (OR REQUIRE) THE SELLER
TO COLLECT FUNDS FOR THE TAX FROM
THE CONSUMER
AT THE POINT OF PURCHASE.
7. 7
Sales Tax is chargeable
on all locally produced and imported goods
except
Computer software
Poultry feeds
medicines and
unprocessed agricultural produce of
Pakistan other goods specified in Sixth
Schedule to The Sales Tax Act, 1990.
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PERSONS MUST BE REGISTERED UNDER SALES TAX
A manufacturer not having a cottage industry
A retailer whose supplies values exceeds 5 million any time
in last 12 months
An importer
A wholesaler, dealer and distributer
A person who is required under any law i.e under provincial
or federal law is bound to be registered
Any commercial exporter
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COTTAGE INDUSTRY
Annual sales for taxable supplies must not exceed 5 million any time
in last 12 months
Annual utility bills during last 12 months must not exceed Rs.700,000
10. 10
SALES TAX INVOICE
Sales tax invoice can be issued only by the sales tax
registered person
It is required for a registered person to issue it wither he
sells to a registered person or not
A further tax of 2% is to be charged to un-registered person
An unregistered person can not issue sales tax invoice
A person who purchased goods from an unregistered
person cannot claim his credit refund as he has not paid it
Sales invoice is an evidence of input tax and output tax
12. 12
Procedure of Registration
Setups Involves:
Submit an application using Form STR-1 at any tax facilitation counter at the nearest
Regional Tax Office (RTO).With all required documents.
The local RTO forwards all applications to the Central Registration Office.
After verification, the CRO issues a Registration Certificate bearing the registration
number and mails the same to the registered company, on prescribed Form STR-5.
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RETURNS
Return means any return required to be furnished under
Chapter-V of the Sales Tax Act.
A return is required to be furnished each 15 of a month,18 was
last date (only for a Registered person).
The sales tax department may require the filing of following
different types of returns:
i. Sales tax return
ii. Returns under Sales Tax Special Procedures Rules.
iii. Special return
iv. Final return
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SPECIAL RETURN
The collector may require any person whether, registered or not, to furnish a
return (whether on his own behalf or as an agent or trustee) in a prescribed
form.
Such person shall furnish the return not later than the date specified in this
regard.
FINAL RETURN
If a person applies for de-registration in terms of section 28, he shall before
such de-registration, furnish a final return to the Collector in the specified form
in such manner and at such time as directed by the Collector.
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Maintenance of Records
All registered persons are required to maintain records at their
business premises of the goods purchased and supplied made by them.
All the records are required to be kept for a period of 5 years.
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Sales Tax Act 1990:
the Sales Tax Act ,1990 originally contained seven(7) schedules..
Currently ,the following schedules are Active and enforceable:
THIRD SCHEDULE: which specifies the goods in respect of which
the tax is levied on the retail price fixed by the manufacturer.
FIFTH SCHEDULE: which specifies the goods which are taxable at
the rate of zero percent.
SIXTH SCHEDULE: which contains the list of such goods that are
exempt from the Sales Tax.
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Taxable Supplies
A supply made by the following persons
Retailer
Wholesaler
Manufacturer
Distributer
Importer
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Input Tax Output Tax
it is the amount paid
by the registered
person on business
purchases and
imports. He/she can
claim a deduction for
the sales tax paid as
input tax if used in the
manufacture of taxable
supplies.
It is the total amount
of sales tax charged at
current rate of sales
tax on taxable sales
made during the
month i.e. total sales
excluding exempt and
zero-rated supplies
24. 24
Tax Refunds
In cases where the Input Tax exceeds the Output Tax due from the
registered person in respect of a tax period because of exports or other
zero-rated supplies, the excess amount of input is refunded back to the
taxpayer within 45 days.
In all other cases of excess input tax, the Board can specify the procedure
for refund.
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Important Points
Sales tax is a multi-stage tax The rate of tax is 17%
It is also known as Value Added Tax (VAT) Value addition
The Ultimate burden will be on the end use