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Tag: Sales Tax Act 1990

  • Pakistan amends laws to tax retailers

    Pakistan amends laws to tax retailers

    ISLAMABAD: Pakistan on Monday revised laws to impose tax on retailers after suspending fixed tax scheme. President Arif Alvi has signed the bill namely Tax Laws (Second Amendment) Ordinance, 2022 to promulgate the revised taxation on the retailers.

    Through the immediate ordinance, amendments have been made to Sales Tax Act, 1990 under which retailers are required to pay sales tax through electricity bill.

    READ MORE: FBR allows tax refund deducted through electricity bills

    The retailers/shopkeepers are now required to pay 5 per cent of the electricity bill is amounting up to Rs20,000.

    The rate of tax is not applicable on the Tier-1 retailers as a separate mechanism for charging sales tax is in vogue.

    The sales tax rate shall be 7.5 per cent in case the electricity bill is above Rs20,000.

    The amendments have been applicable from July 01, 2022. This means the retailers have to pay the tax on their electricity bill issued for the month of July 2022.

    A commissioner of Inland Revenue, Federal Board of Revenue (FBR) has been authorized to issue order to the electricity supplier regarding exclusion of a person who is either a Tier-1 retailer or not a retailer.

    READ MORE: Pakistan decides to roll back fixed tax scheme

    According to the latest ordinance, notwithstanding anything contained in this Act, the Federal Government may, in lieu of or in addition to the tax under sub-section (9), by notification in the official Gazette, levy and collect such amount of tax at such rates and from such date as it may deem fit, from retailers, other than those falling in Tier-1, through their monthly electricity bill, and may also specify the mode, manner or time of payment of such tax:

    Provided that different rates or amounts of tax may be specified for different persons or class of persons.

    The ordinance also amended Income Tax Ordinance, 2001 and introduced special provision relating to payment of tax through electricity connections.

    READ MORE: FTO investigates tax collection through electricity bills

    It said that notwithstanding anything contained in the Ordinance, a tax shall be charged and collected from retailers other than Tier-I retailers as defined in the Sales Tax Act, 1990 (VII of 1990) and specified service providers on commercial electricity connections at the rates specified in the income tax general order issued in terms of sub-section (2).

    Sub-Section (2): For the purposes of this section, the Federal Government or the Board with the approval of the Minister in-charge pursuant to the approval of the Economic Coordination Committee of the Cabinet may, issue an income tax general order to-

    (a) provide the scope, time, payment, recovery, penalty, default surcharge, adjustment or refund of tax payable under this section in such manner and with such conditions as may be specified;

    (b) provide the collection of tax on the amount of bill or on any basis of consumption, in addition to or in lieu of advance tax collectible under sub-section (1) of section 235, at such rates or amounts, from such date and with such conditions as may be specified;

    READ MORE: Withdrawal of sales tax through electricity bills demanded

    (c) provide record keeping, filing of return, statement and assessment in such manner and with such conditions as may be specified;

    (d) provide mechanism of collection, deduction and payment of tax in respect of any person;

    (e) include or exempt any person or classes of persons, any income or classes of income from the application of this section, in such manner and with such conditions as may be specified; and

    (f) provide that tax collected under this section shall in respect of such persons or classes of persons be adjustable, final or minimum, in respect of any income to such extent and with such conditions as may be specified.

    The provisions of sub-section (1) of section 235 shall apply to the persons as specified therein unless specifically exempted under the income tax general order issued under sub-section (2).

    The provisions of section 100BA and rule 1 of the Tenth Schedule shall not apply to the tax collectible under this section unless specifically provided in respect of the person or class of persons mentioned in the income tax general order issued under sub-section (2).”

  • Pakistan implements new amendments to tax laws

    Pakistan implements new amendments to tax laws

    In a move aimed at enhancing revenue generation during the current fiscal year, Pakistan has implemented new amendments to both direct and indirect tax laws.

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  • Significant changes to sales tax laws through Finance Act 2022

    Significant changes to sales tax laws through Finance Act 2022

    KARACHI: Significant changes have been made to sales tax laws through Finance Act, 2022 and that are applicable from July 01, 2022.

    PwC A.F. Ferguson & Co interpreted the changes made to Sales Tax Act, 1990 through the Finance Act, 2022, which are as follow:

    READ MORE: Key changes to income tax laws through Finance Act 2022

    1. The requirement of CNIC / NTN for the purposes of invoices issued to unregistered persons and restriction of input tax attributed to such supplies retained to the extent of supplies to unregistered distributors.

    2. Sales tax regime of pharma sector revamped with 1 per cent final sales tax on manufacturers and importers without any input adjustment.

    3. The rate of fixed tax on other than Tier-1 retailers shall be increased by 100 per cent if the said retailers are not appearing on the Active Taxpayer List.

    4. Fertilizers exempted from sales tax.

    READ MORE: Non-ATL retailers to pay double amount of fixed tax

    5. Value of supply not to include the amount of subsidy provided by the Federal Government or Provincial Government to the electricity consumer.

    6. Through the Bill, ‘locally produced coal’ was proposed to be taxed at 17 per cent which has not been approved in the Act. It has now been subject to sales tax at higher of 17 per cent ad valorem or Rs 700 per metric tonne.

    7. The proposed increase in sales tax rate from 5 per cent to 10 per cent for following has not been approved in the Act.

    READ MORE: Tampering PSW data to attract 4-year jail sentence

    — natural gas

    — Phosphoric acid

    8. Electric vehicle in CBU condition of 50 kwh battery or below is now subject to sales tax at 12.5 per cent.

    9. Electric vehicle transport buses of 25 seats or more in CBU condition are now subject to sales tax at 1 per cent.

    10. Changes proposed in the rate of sales tax on different categories of mobile / satellite phones have not been approved in the Act.

    11. Online marketplace is now required to withhold sales tax at 1 per cent (instead of 2 per cent).

    READ MORE: NA approves levy on petroleum products up to Rs50/liter

  • Budget 2022/2023: Salient features of sales tax

    Budget 2022/2023: Salient features of sales tax

    ISLAMABAD: Following are the salient features of amendment made to Sales Tax Act, 1990 through Finance Bill, 2022.

    The proposed budgetary measures pertaining to Sales Tax for FY 2022-23 are:

    RELIEF MEASURES:

    1. The condition of CNIC/NTN in case of supply to unregistered persons have been removed.

    READ MORE: Budget 2022/2023: Salient features of income tax

    2. Sales Tax exemption has been granted on import and supply of all types of seeds.

    3. Sales Tax on Tractor is withdrawn.

    4. Exemption has been granted on imports by UN diplomats/diplomatic missions and privileged persons.

    5. Import and supply of solar panels (PV module) has been exempted from sales tax.

    6. Goods imported by or donated to non-profit charitable hospitals have been exempted. Furthermore, goods supplied to charitable hospitals of fifty beds or more have also been exempted from sales tax.

    7. Temporary imports have been exempted from the levy of the sales tax.

    READ MORE: Pakistan allocates Rs800 billion for FY23 PSDP

    8. Made up jewellery has been made chargeable to 3 per cent fix tax on local supply and 4 per cent fix tax on imports.

    9. Plant and machinery imported by power generation projects that entered into implementation agreement with GoP has been exempted from sales tax.

    10. Rs.90 per kg is reduced to Rs.60 per kg on potassium chlorate.

    11. Import by EPZ has been exempted from sales tax.

    READ MORE: Federal government presents budget 2022-2023

    REVENUE MEASURES:

    12. The scope of further tax has been enhanced to include non-active taxpayers as well.

    13. Regime of other then Tier-1 retailers has been streamlined.

    14. VAT has been imposed on compressor scrap, motor scrap and copper cutting scrap even when imported by manufacturers.

    READ MORE: Tax exemptions cost Rs1.76 trillion in FY22

  • Fee and service charges under Sales Tax Act

    Fee and service charges under Sales Tax Act

    Section 76 of the Sales Tax Act, 1990, sheds light on the imposition and regulation of fee and service charges by the Federal Board of Revenue (FBR).

    (more…)
  • Application of the provisions of Act IV

    Application of the provisions of Act IV

    Section 75 of the Sales Tax Act, 1990, provides a mechanism for the application of certain provisions of Act IV of the Customs Act, 1969, in relation to the imposition and exemption from customs duties, draw-back of duty, warehousing, confiscation, and procedural aspects concerning offenses and appeals.

    (more…)
  • Validation of notifications and orders

    Validation of notifications and orders

    Section 74A of Sales Tax Act, 1990 has explained validation of all notifications and orders issued.

    The Federal Board of Revenue (FBR) issued the Sales Tax Act, 1990 updated up to June 30, 2021. The Act incorporated amendments brought through Finance Act, 2021.

    Following is the text of section 74A of the Sales Tax Act, 1990:

    74A. Validation.– (1) All notifications and orders issued and notified in exercise of the powers conferred upon the Federal Government, before the commencement of Finance Act, 2018 shall be deemed to have been validly issued and notified in exercise of those powers.

    (2) Notwithstanding any omission, irregularity or deficiency in the establishment of or conferment of powers and functions on the Directorate General (Intelligence and Investigation), Inland Revenue and authorities specified in section 30A, all orders passed, notices issued and actions taken, before commencement of the Finance Act, 2018, in exercise or purported exercise of the powers and functions of the officers of Inland Revenue under this Act by the Director General (Intelligence and Investigation), Inland Revenue or the authorities specified in section 30A shall be deemed to have been validly passed, issued and taken under this Act.

    (Disclaimer: The text of above section is only for information. Team PkRevenue.com makes all efforts to provide the correct version of the text. However, the team PkRevenue.com is not responsible for any error or omission.)

    Condonation of time-limit under Sales Tax Act
  • Condonation of time-limit under Sales Tax Act

    Condonation of time-limit under Sales Tax Act

    Section 74 of Sales Tax Act, 1990 has described condonation of time limit.

    The Federal Board of Revenue (FBR) issued the Sales Tax Act, 1990 updated up to June 30, 2021. The Act incorporated amendments brought through Finance Act, 2021.

    Following is the text of section 74 of the Sales Tax Act, 1990:

    74. Condonation of time-limit.– Where any time or period has been specified under any of the provisions of the Act or rules made there under within which any application is to be made or any act or thing is to be done, the Board may, in any case or class of cases, permit such application to be made or such act or thing to be done within such time or period as it may consider appropriate:

    Provided that the Board may, by notification in the official Gazette, and subject to such limitations or conditions as may be specified therein, empower any Commissioner to exercise the powers under this section in any case or class of cases.

    Explanation.– For the purpose of this section, the expression “any act or thing is to be done” includes any act or thing to be done by the registered person or by the authorities specified in section 30 of this Act.

    (Disclaimer: The text of above section is only for information. Team PkRevenue.com makes all efforts to provide the correct version of the text. However, the team PkRevenue.com is not responsible for any error or omission.)

    Cash transactions above Rs50,000 not admissible
  • FBR explains cash discount under sales tax laws

    FBR explains cash discount under sales tax laws

    ISLAMABAD: The Federal Board of Revenue (FBR) has explained cash discount related to invoices issued through Point of Sale (POS) by Tier-1 retailers.

    The FBR explained through an official note dated March 17, 2022 that cash discount has been allowed in the form of reduction of prices in seasonal sales / sales and the consideration in money is received after cash discount has been allowed.

    It is clarified that the value of supply for sales tax purpose is the actual value received in monetary terms excluding the amount of sales tax and not the gross value. “Hence, the sales tax will be calculated and charged on the actual or discounted price accordingly,” the FBR added.

    The FBR previously issued clarification in this regard through the official order dated October 13, 2021 on the standardized format of the sales tax invoice notified through SRO 1006(I)/2021 dated August 09, 2021.

    The revenue body said that representations from the taxpayers and bar councils were received seeking further clarification of the ‘trade discount’.

    It said that value of supply as per section 2 (46) of the Sales Tax Act, 1990 in respect of taxable supply means the consideration in money which the supplier receives from the recipient for that supply but excluding the amount of tax.

    In the previous explanation dated October 13, 2021, the FBR clarified that the discount if any to be given by a retailer has to be depicted on the invoice horizontally i.e. from left to right.

    READ MORE: Trade discount should be displayed on invoice: FBR

    “The captions such as total, sales tax, discount allowed appearing at the bottom of the invoice are standalone notations and do not necessarily add or subtract one another.”

  • Cash transactions above Rs50,000 not admissible

    Cash transactions above Rs50,000 not admissible

    The Federal Board of Revenue (FBR) may disallow taxpayers’ transactions under sales tax laws if those are made through cash above Rs50,000.

    The Federal Board of Revenue (FBR) issued the Sales Tax Act, 1990 updated up to June 30, 2021. The Act incorporated amendments brought through Finance Act, 2021.

    Following is the text of section 73 of the Sales Tax Act, 1990:

    73. Certain transactions not admissible.– (1) Notwithstanding anything contained in this Act or any other law for the time being in force, payment of the amount for a transaction exceeding value of fifty thousand rupees, excluding payment against a utility bill, shall be made by a crossed cheque drawn on a bank or by crossed bank draft or crossed pay order or any other crossed banking instrument showing transfer of the amount of the sales tax invoice in favour of the supplier from the business bank account of the buyer:

    Provided that online transfer of payment from the business account of buyer to the business account of supplier as well as payments through credit card shall be treated as transactions through the banking channel, subject to the condition that such transactions are verifiable from the bank statements of the respective buyer and the supplier.

    Provided further that adjustments made by a registered person in respect of amounts payable and receivable to and from the same party shall be treated as payments satisfying the provisions of this sub-section subject to following conditions, namely:–

    (a) sales tax has been charged and paid by both parties under the relevant provisions of this Act and rules prescribed thereunder, wherever applicable; and

    (b) the registered person has sought prior approval of the Commissioner before making such adjustments.

    (2) The buyer shall not be entitled to claim input tax credit, adjustment or deduction, or refund, repayment or draw-back or zero-rating of tax under this Act if payment for the amount is made otherwise than in the manner prescribed in sub-section (1), provided that payment in case of a transaction on credit is so transferred within one hundred and eighty days of issuance of the tax invoice.

    (3) The amount transferred in terms of this section shall be deposited in the business bank account of the supplier, otherwise the supplier shall not be entitled to claim input tax credit, adjustment or deduction, or refund, repayment or draw-back or zero-rating of tax under this Act.

    Explanation— For the purpose of this section, the term “business bank account” shall mean a bank account utilized by the registered person for business transactions, declared to the Commissioner in whose jurisdiction he is registered through Form STR-1 or change of particulars in registration database.

    “(4) A registered person shall not be entitled to deduct input tax (credit adjustment or deduction of input tax) which is attributable to such taxable supplies exceeding, in aggregate, one hundred million rupees in financial year or ten million rupees in a tax period as are made to certain person who is not a registered person under this Act:

    Provided that the aforesaid shall not apply to supplies made to.-

    (a) Federal / provincial / local Government departments, authorities, etc. not engaged in making of taxable supplies;

    (b) Foreign Missions, diplomats and privileged persons;

    (c) all other persons not engaged in supply of taxable goods; and

    (d) persons or classes of person, specified by the Board through notification in the official Gazette subject to such conditions and restrictions as may be specified therein.

     (Disclaimer: The text of above section is only for information. Team PkRevenue.com makes all efforts to provide the correct version of the text. However, the team PkRevenue.com is not responsible for any error or omission.)

    Reward to IR officials, whistleblowers on tax detection