Sales Tax Act 1990: 17 percent applicable on taxable supplies

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.

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