KARACHI: Any change in the rate of sales tax shall apply at the time of supply or clearance of imported goods, as clarified by Section 5 of the Sales Tax Act, 1990, updated by the Federal Board of Revenue (FBR). This section outlines the specific rules for applying sales tax when rates are adjusted and provides detailed guidelines for taxable supplies and imports.
Section 5: Change in the Rate of Tax
When a sales tax rate is revised, the applicable rate is determined based on the timing of the transaction:
1. Taxable Supplies: Sales tax on supplies by a registered person is charged at the rate in force at the time of supply.
2. Imported Goods:
• If goods are entered for home consumption, the applicable sales tax is based on the rate effective on the date the goods declaration is presented under Section 79 of the Customs Act, 1969.
• For goods cleared from a warehouse, sales tax is applied at the rate in effect on the date a goods declaration is presented under Section 104 of the Customs Act.
Provisions for Delayed Payments:
Sales tax may also be adjusted based on the date of payment. If the tax is unpaid within seven days of the goods declaration, the applicable rate is the one in force on the actual payment date.
Section 6: Time and Manner of Payment
The method and timing of sales tax payments for imported goods mirror those for customs duties. Under Sub-section (1), sales tax is collected and paid as if it were a customs duty under the Customs Act, 1969. This includes enforcement and recovery provisions where necessary.
Sub-section (1A) ensures that no person can claim exemptions or refunds due to a lack of specific provisions in the Sales Tax Act. This overrides prior judgments or commitments.
For taxable supplies, Sub-section (2) mandates that registered persons pay sales tax for a given tax period by the prescribed due date. The FBR may specify alternative methods or timings for collecting and paying sales tax for certain goods or supply categories.
Finally, under Sub-section (3), sales tax can be paid via deposits in designated banks or any other method specified by the Board.
These provisions underline the importance of aligning sales tax practices with legal frameworks to ensure compliance and prevent disputes. The precise timing of sales tax applicability remains a critical factor for businesses and importers operating in Pakistan.
