The Federal Board of Revenue (FBR) has emphasized that traders and businesses must clearly understand how a change in the rate of sales tax affects their transactions under the updated Sales Tax Act, 1990 for tax year 2025-26.
Why Rate Change Awareness Matters
Sales tax is a key source of revenue, and any change in its rate directly impacts pricing, imports, and overall business planning. Section 5 of the Act provides detailed guidance on how supplies and imports are to be taxed when a new rate is introduced.
Key Provisions on Rate Change
• For taxable supplies by registered persons, the tax is applied at the rate in effect at the time of supply.
• For imported goods:
o If goods are declared for home consumption, the applicable tax rate is that which is in force when the goods declaration is presented under Section 79 of the Customs Act, 1969.
o If goods are cleared from a warehouse, the applicable tax rate is determined by the date the declaration for clearance is presented under Section 104 of the Customs Act, 1969.
Additionally, if a declaration is filed before a vessel or aircraft arrives, the rate on the day the conveyance’s manifest is submitted will apply. If tax is delayed beyond seven days after the declaration, the rate in force on the date of actual payment will be charged.
This clarification helps traders adjust pricing strategies, avoid compliance issues, and manage financial risks arising from unexpected tax rate changes.
Disclaimer:
This article is for informational purposes only and does not constitute legal, financial, or tax advice. Tax laws and rates are subject to change, and their application may vary based on individual circumstances. Readers should consult the Federal Board of Revenue (FBR) or a qualified tax professional for the latest updates and guidance specific to their business.