Category: Taxation

KARACHI: A person is required to pay sales tax, which was collected under misapprehension of any provision of the act and was not collectable or in excess of tax.

The FBR recently updated Sales Tax Act, 1990 and its Section 3B explained the collection of excess sales tax.

Section 3B: Collection of excess sales tax etc

Sub-Section (1): Any person who has collected or collects any tax or charge, whether under misapprehension of any provision of this Act or otherwise, which was not payable as tax or charge or which is in excess of the tax or charge actually payable and the incidence of which has been passed on to the consumer, shall pay the amount of tax or charge so collected to the Federal Government.

Sub-Section (2): Notwithstanding anything contained in any law or judgement of a court, including the Supreme court and a High court, any amount payable to the Federal Government under sub-section (1) shall be deemed to be an arrear of tax or charge payable under this Act and shall be recoverable accordingly and any claim for refund in respect of such amount shall neither be admissible to the registered person nor payable to any court of law or to any person under direction of the court.

Sub-Section (3): The burden of proof that the incidence of tax or charge referred to in sub-section (1) has been or has not been passed to the consumer shall be on the person collecting the tax or charge.

KARACHI: A normal sales tax rate at 17 percent is applicable on taxable supplies made by registered person.

Federal Board of Revenue (FBR) issued recently the updated Sales Tax Act, 1990 under which its Section 3 explained the scope of tax.

Section 3: Scope of tax

Sub-Section (1): Subject to the provisions of this Act, there shall be charged, levied and paid a tax known as sales tax at the rate of seventeen percent of the value of–

(a) taxable supplies made by a registered person in the course or furtherance of any taxable activity carried on by him; and

(b) goods imported into Pakistan, irrespective of their final destination in territories of Pakistan.

Sub-Section (1A): Subject to the provision of sub section (6) of section 8 or any notification issued thereunder, where taxable supplies are made to a person who has not obtained registration number, there shall be charged, levied and paid a further tax at the rate of three percent of the value In addition to the rate specified in sub sections (1), (1B), (2), (5), (6) and section 4 provided that the Federal Govt. may, by notification in the official Gazette, specify the taxable supplies in respect of which the further tax shall not be charged, levied and paid.

Sub-Section (1B): The Board may, by notification in the Official Gazette, in lieu of levying and collecting tax under sub section (1) on taxable supplies, levy and collect tax –

(a) On the production capacity of plants, machinery, undertaking, establishments or installation producing on manufacturing such goods; or

(b) On fixed basis, as it may deem fit, from any person who is in a position to collect such tax due to the nature of the business.

Sub-Section (2): Notwithstanding the provisions of sub-section (1): –

(a) taxable supplies specified in the Third Schedule shall be charged to tax at the rate of seventeen per cent of the retail price or in case such supplies are also specified in the Eighth Schedule, at the rates specified therein and the retail price thereof, along with the amount of sales tax shall be legibly, prominently and indelibly printed or embossed by the manufacturer on each article, packet, container, package, cover or label, as the case may be;
Provided that the Federal Government, may, by notification in the official Gazette, exclude any taxable supply from the said Schedule or include any taxable supply therein;

(aa) goods specified in the Eighth schedule shall be charged to tax at such rates and subject to such conditions and limitations as specified therein; and

(b) the Federal Government may, subject to such conditions and restrictions as it may impose, by notification in the official Gazette, declare that in respect of any taxable goods, the tax shall be charged, collected and paid in such manner and at such higher or lower rate or rates as may be specified in the said notification.

Sub-Section (3): The liability to pay the tax shall be,-

(a) in the case of supply of goods, of the person making the supply, and

(b) in the case of goods imported into Pakistan, of the person importing the goods.