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Tag: Sales Tax Act 1990

  • List of items for sales tax on retail printed prices

    List of items for sales tax on retail printed prices

    The Federal Board of Revenue (FBR) has updated the list of items on which the sales tax will be collected on the basis of printed retail price.

    The sales tax at the rate of 17 per cent on the retail printed price shall be applicable for tax year 2021/2022.

    The items are included in the Third Schedule of Sales Tax Act, 1990 which is updated by the FBR up to June 30, 2021.

    Following is the list of items:

    Fruit juices and vegetable juices at harmonized system (HS) Code 20.09

    Ice Cream with HS Code 2105.0000

    Aerated waters or beverages with HS Code 22.01 and 20.02

    Syrups and squashes with respective headings

    Cigarettes with HS Code 2402.2000

    Toilet soap with HS Code 3401.1100 and 3401.2000

    Detergents with HS Code 3402.2000

    Shampoo with HS Code 3305.1000

    Toothpaste with HS Code 3306.1010

    Shaving cream with HS Code 3307.1000

    Perfumery and cosmetics with HS Code in respective sub-headings of 33.03 and 33.04

    Tea with HS code of respective sub-headings of 09.02

    Powder drinks with HS Code of 21.06

    Milky drinks with HS Code of 2106.9090

    Toilet paper and tissue paper with HS Code 4818.1000 and 4818.2000

    Spices sold in retail packing bearing brand names and trade marks with HS codes 09.04, 09.06, 09.08 and 09.10

    Shoe polish and shoe cream with HS Code 3405.1010

    Fertilizers with HS Code of respective heading

    Cement sold in retail packing with HS Code of respective heading

    Mineral/bottled water with HS Code of respective headings

    Household electrical goods, including air conditioners, refrigerators, deep freezers, televisions, recorders and players, electric bulbs, tube-lights, electric fans, electric irons, washing machines and telephone sets with HS Code of respective headings

    Household gas appliances, including cooking range, ovens, geysers and gas heater with HS code of respective headings

    Foam or spring mattresses and other foam products for household use with HS code of respective headings

    Paints, distempers, enamels, pigments, colors, varnishes, gums, resins, dyes, glazes, thinners, blacks, cellulose lacquers and polishes sold in retail packing with HS codes of respective headings

    Lubricating oils, brake fluids, transmission fluid, and other vehicular fluids sold in retail packing with HS codes of respective headings

    Storage batteries excluding those sold to automotive manufacturers or assemblers with HS code of respective headings

    Tyres and tubes excluding those sold to automotive manufacturers or assemblers with HS code of respective headings

    Motorcycles with HS code of respective headings

    Auto rickshaws with HS code of respective headings

    Biscuits in retail packing with brand name with HS code of respective headings

    Tiles with HS code of respective Headings

    Auto-parts, in retail packing, excluding those sold to automotive manufacturers or assemblers with HS code in respective Headings

    Sugar except where it is supplied as an industrial raw material to pharmaceutical, beverage and confectionery industries with HS code of respective heading.

    Note: the implementation of sales tax on retail price on supply of sugar has been deferred by the FBR till November 30, 2021 through SRO 989(I)/2021 dated August 5, 2021.

  • Tax on sugar retail sale to be imposed from December 01

    Tax on sugar retail sale to be imposed from December 01

    The Federal Board of Revenue (FBR) has announced the deferral of the imposition of sales tax on the retail sale of sugar until December 1, 2021.

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  • FBR redefines Tier-1 retailers for integration

    FBR redefines Tier-1 retailers for integration

    The Federal Board of Revenue (FBR) has redefined Tier-1 retailers, making it mandatory for them to integrate sales data on a real-time basis.

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  • Retailers accepting debit, credit cards payment to be treated as Tier-I

    Retailers accepting debit, credit cards payment to be treated as Tier-I

    ISLAMABAD: The Federal Board of Revenue (FBR) will bring more retailers into sales tax ambit after the proposal made through Finance Bill, 2021 related to Tier-I retailers.

    Tier-I retailers are commonly known for having huge volume sales and operating in a mall, air conditioned environment etc.

    Sources in the FBR said that retailer receiving payment through debit card and debit card would also qualify for Tier-I retailers.

    KPMG Taseer Hadi & Co. Chartered Accountants in its commentary on Budget 2021/2022 stated that the Section 2(43A) of Sales Tax Act, 1990 provides threshold limit and qualification criteria for tier-1 retailers.

    The Finance Bill now proposes to enhance the qualification criteria of tier-1 retailers by following additions

    – Retailers of furniture whose shop measures two (2) thousand square feet or more.

    – Retailer operating an online market place supplying goods through e-commerce platform, whether the goods are owned by him or not.

    – A retailer who has acquired point of sale for accepting payment through debit or credit cards from banking companies or any other digital payment service provider authorized by State Bank of Pakistan.

    The Bill further proposes to do away with on incentive of the cash back, up to five percent of the tax involved, to customers of Tier-1 retailer who have integrated their retail outlets with the Board’s computerized system for real-time reporting of sales.

  • Wholesaler defined under Sales Tax Act

    Wholesaler defined under Sales Tax Act

    Sales Tax Act, 1990 has defined the word ‘wholesaler’ for the purpose of levying tax on supply of goods.

    Sales Tax Act, 1990 – updated up to June 30, 2020 issued by the Federal Board of Revenue (FBR) – explained the word ‘wholesaler’ as:

     “Wholesaler” includes a dealer and means any person who carries on, whether regularly or otherwise, the business of buying and  selling goods by wholesale or of supplying or distributing goods, directly or indirectly, by wholesale for cash or deferred payment or for commission or other valuable consideration or stores such goods belonging to others as an agent for the purpose of sale; and includes a person supplying taxable goods to a person who deducts income tax at source under the Income Tax Ordinance, 2001.

  • Value of supply defined for applying sales tax

    Value of supply defined for applying sales tax

    Sales Tax Act, 1990 has defined “value of supply” in respect of taxable supply, as the consideration in money including all federal and provincial duties and taxes, if any, which the supplier receives from the recipient for that supply.

    The Sales Tax Act, 1990 updated up to June 30, 2020 issued by the Federal Board of Revenue (FBR), explained the value of supply as

    “Value of supply” means:–

    (a) in respect of a taxable supply, the consideration in money including all Federal and Provincial duties and taxes, if any, which the supplier receives from the recipient for that supply but excluding the amount of tax:

    Provided that –

    (i) in case the consideration for a supply is in kind or is partly in kind and partly in money, the value of the supply shall mean the open market price of the supply excluding the amount of tax;

    (ii) in case the supplier and recipient are associated persons and the supply is made for no consideration or for a consideration which is lower than the open market price, the value of supply shall mean the open market price of the supply excluding the amount of tax; and

    (iii) in case a taxable supply is made to a consumer from general public on installment basis on a price inclusive of mark up or surcharge rendering it higher than open market price, the value of supply shall mean the open market price of the supply excluding the amount of tax.

    (b) in case of trade discounts, the discounted price excluding the amount of tax; provided the tax invoice shows the discounted price and the related tax and the discount allowed is in conformity with the normal business practices;

    (c) in case where for any special nature of transaction it is difficult to ascertain the value of a supply, the open market price;

    (d) in case of imported goods excluding those as specified in the Third Schedule, the value determined under section 25 of the Customs Act, including the amount of customs-duties and central excise duty levied thereon;

    (e) in case where there is sufficient reason to believe that the value of a supply has not been correctly declared in the invoice, the value determined by the Valuation Committee comprising representatives of trade and the Inland Revenue constituted by the Commissioner;

    (f) in case of manufacture of goods belonging to another person, the actual consideration received by the manufacturer for the value addition carried out in relation to such goods;

    (g) in case of a taxable supply, with reference to retail tax, the price of taxable goods excluding the amount of retail tax, which a supplier will charge at the time of making taxable supply by him, or such other price as the Board may, by a notification in the official Gazette, specify.

    (h) in case of supply of electricity by an independent power producer or WAPDA, the amount received on account of energy purchase price only; and the amount received on

    account of capacity purchase price, energy purchase price premium, excess bonus, supplemental charges etc. shall not be included in the value of supply;

    (i) in case of supply of electric power and gas by a distribution company, the total amount billed including price of electricity and natural gas, as the case may be, charges, rents, commissions and all duties and taxes local, provincial and federal but excluding the amount of late payment surcharge and the amount of sales tax; and

    (j) in case of registered person who is engaged in purchasing used vehicles from general public on which sales tax had already been paid at the time of import or manufacturing, and which are, later on, sold in the open market after making certain value addition, value of supply will be the difference between sale and purchase price of the said vehicle on the basis of the valuation method prescribed by the Board.

    Provided that, where the Board deems it necessary it may, by notification in the official Gazette, fix the value of any imported goods or taxable supplies or class of supplies and for that purpose fix different values for different classes or description of same type of imported goods or supplies:

    Provided further that where the value at which import or supply is made is higher than the value fixed by the Board, the value of goods shall, unless otherwise directed by the Board, be the value at which the import or supply is made.

  • Sales tax law explains ‘time of supply’

    Sales tax law explains ‘time of supply’

    Sales Tax Act, 1990 has explained ‘time of supply’ for collection of sales tax.

    The Sales Tax Act, 1990 [updated up to June 30, 2020 issued by the Federal Board of Revenue (FBR)] explained the term as:

    “Time of supply”, in relation to,–

    (a) a supply of goods, other than under hire purchase agreement, means the time at which the goods are delivered or made available to the recipient of the supply” “or the time when any payment is received by the supplier in respect of that supply, whichever is earlier;

    (b) a supply of goods under a hire purchase agreement, means the time at which the agreement is entered into; and

    (c) services, means the time at which the services are rendered or provided;

    Provided that in respect of sub clause ( a) ,(b) or (c), where any part payment is received, –

    (i) for the supply in a tax period, it shall be accounted for in the return for that tax period; and

    (ii) in respect of exempt supply, it shall be accounted for in the return for the tax period during which the exemption is withdrawn from such supply .

  • Who are Tier-1 retailers under Sales Tax Act?

    Who are Tier-1 retailers under Sales Tax Act?

    The term ‘Tier-1 retailer’ was introduced through Finance Act, 2017 by inserting relevant clause into Sales Tax Act, 1990.

    All Tier-1 retailers are required to integrate all their Point of Sales (POSs) with computerized system of the Federal Board of Revenue (FBR).

    The Sales Tax Act, 1990 (updated up to June 30, 2020 issued by the FBR), defined Tier-1 retailer as:

     “Tier-1 retailer” means a retailer falling in any one or more of the following categories, namely:-

    (a) a retailer operating as a unit of a national or international chain of stores;

    (b) a retailer operating in an air-conditioned shopping mall, plaza or centre, excluding kiosks;

    (c) a retailer whose cumulative electricity bill during the immediately preceding twelve consecutive months exceeds Rupees twelve hundred thousand;

    (d) a wholesaler-cum-retailer, engaged in bulk import and supply of consumer goods on wholesale basis to the retailers as well as on retail basis to the general body of the consumers”;

    (e) a retailer, whose shop measures one thousand square feet in area or more; and

    (f) any other person or class of persons as prescribed by the Board.”

  • What is tax fraud?

    What is tax fraud?

    Sales Tax Act, 1990 has defined ‘tax fraud’ as doing of any act knowingly without lawful excuse.

    The Sales Tax Act, 1990 [updated up to June 30, 2020 issued by the Federal Board of Revenue (FBR)] explained ‘tax fraud’ as:

    “Tax fraud” means knowingly, dishonestly or fraudulently and without any lawful excuse (burden of proof of which excuse shall be upon the accused) –

    (i) doing of any act or causing to do any act; or

    (ii) omitting to take any action or causing the omission to take any action, including the making of taxable supplies without getting registration under this Act; or

    (iii) falsifying or causing falsification the sales tax invoices,

    in contravention of duties or obligations imposed under this Act or rules or instructions issued thereunder with the intention of understating the tax liability or underpaying the tax liability for two consecutive tax periods or overstating the entitlement to tax credit or tax refund to cause loss of tax.

  • Sales Tax Act defines ‘supply’

    Sales Tax Act defines ‘supply’

    Sales Tax Act, 1990 has explained the word ‘supply’ for the purpose of imposition and collection of tax.

    The Sales Tax Act, 1990 [updated up to June 30, 2020 issued by the Federal Board of Revenue (FBR)] has defined the word ‘supply’ as:

    “Supply” means a sale or other transfer of the right to dispose of goods as owner, including such sale or transfer under a hire purchase agreement, and also includes –

    (a) putting to private, business or non-business use of goods produced or manufactured in the course of taxable activity for purposes other than those of making a taxable supply;

    (b) auction or disposal of goods to satisfy a debt owed by a person;

    (c) possession of taxable goods held immediately before a person ceases to be a registered person; and

    (d) in case of manufacture of goods belonging to another person, the transfer or delivery of such goods to the owner or to a person nominated by him:

    Provided that the Board, with the approval of the Federal Minister-in-charge, may, by notification in the official Gazette, specify such other transactions which shall or shall not constitute supply;

    The law also explained “supply chain” as the series of transactions between buyers and sellers from the stage of first purchase or import to the stage of final supply.