Sales Tax Consultant:

Sales Tax or VAT (Value Added Tax) is an indirect tax that is charged on goods supplied/imported/services provided into Pakistan and ultimately borne by the end consumer. The General rate of GST is 17% which is charged, collected, and paid on

  • All Imported goods at the time of clearance of goods from Pakistan customs.
  • Locally Supplied Goods at the time of filing of monthly returns with FBR.

The VAT or GST is structured in a such way that it will be paid at each stage of the manufacturing process which added value to the goods. For better understanding let’s take an example. A manufacturer imports raw material from abroad for 100 plus GST 17% (100+17=117) and pays taxes at the import stage. After the process, the manufacturer supplied finished goods to the Wholesaler for 150 plus GST 17% (150+25.5=175.5). The Retailer purchased these goods from a Wholesaler and finally sell to the end consumer for 300 plus GST 17% (300+51=351).

Input and output Tax:

The difference between Input and output can be explained as follows.

  • Businesses pay input GST on their purchases of
  • Goods (local and imported)
  • Input tax is adjustable and can be refunded from FBR
  • Output tax is payable to the FBR

The net liability is determined by the following formula :

The liability to pay the taxes shall be :

  • Local supply of goods in Pakistan, the person who has supplied goods
  • Goods imported into Pakistan, of the person importing the goods

Compulsory Registration: 

The following persons are required to be registered for GST

  • Importers
  • Exporters (For the claim of refund of taxes against his zero-rated supplies)
  • Distributors wholesalers and dealers
  • Manufacturers whose annual turnover exceeding three million rupees
  • Retailers

    Required Documents :

The  application can be filed  using Iris  Form 14(1)  or manually  the following Documents are required:

  • Bank Account certificates
  • Paid Electricity Bill
  • Picture of office /Business Premises
  • In case of Manufacturer Picture of Machinery
  • Business details including
  • Business Name
  • Acquisition Date
  • To complete the verification process biometric verification from e-Sahulat Centre of NADRA is mandatory.

De-Registration:
An application  for  De-registration can be filed due to any of the following reasons: 

  • Business ceases  or windup
  • Transfers or sale of business
  • Failed to file the return for six consecutive months

Returns:

All registered persons are required to file tax returns that contain the details of the business transactions during the particular tax period. Under the sales act, 1990  the Following returns may be  required to file 

Monthly Return:

Every registered person (STRN Holder)  is required to file Monthly Returns by the 18th day of the month following the period in which the supplies were made. Annexure C is to be filed on the 10th and Payment on the 15th day of the month. For example, the due date for GST returns for the month of  October 2021  shall be 18 November 2021.

Annual returns:

According to rules, all private and public companies are required to file  annual sales tax returns with FBR. The last date for filing  returns is 30th September.

Special return:

The Commissioner may require from any person whether he is registered or unregistered shall furnish the return in a prescribed form containing information relating to:

  • Quantity of goods manufactured or processed
  • Purchases made
  • Sales made

Tax invoices:
The rules for issuing invoices is as under :  

  • Name, address, and registration number of the supplier and customer
  • CNIC or NTN of the unregistered person where the amount inclusive of sales tax amount does not exceed rupees 100,000
  • Issue date
  • Quantity of goods
  • Total value exclusive of GST
  • Amount of GST
  • Value inclusive of sales GST

Sales tax on services: 
It is a provincial subject and all four provinces in Pakistan are empowered to charged taxes on services. Standard rate of Tax on Services In Khyber Pakhtunkhwa  is 15% , Punjab 16% ,Sindh  13%, Islamabad 16 %, and Balochistan 15%. The taxation laws of Pakistan are very complex and continuously updated.  Al-Muhasib & Co. has a team of Sales Tax Consultant who is specialists and capable of handling all types of taxation problems faced by the business. For any query please contact with our Sales Tax Consultant who is ready to help you.

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