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Sales Tax (GST) Registration with FBR

Updated on 23 April 2022

GST-FBR Sales Tax Registration, Filing & SST

A complete guide about GST-Sales Tax Registration, Return Filing & Refund is being provided for the information of our clients and other Taxpayers. Our tax lawyers and consultants offer informative services for sales tax (GST) registration and monthly return filings in Karachi, Islamabad, Rawalpindi and other cities of Pakistan.

 

History of Sales Tax (GST) in Pakistan

Sales Tax was a provincial matter when Pakistan was founded. In Punjab & Sindh, the levy was administered as a provincial levy. General Sales Tax Act, 1948 was enacted in 1948, establishing sales tax as federal tax, and in 1952, the Central Government permanently acquired this Tax. Every time a sale was made, sales tax was charged at the standard rate of six pies per rupee. Sales Tax Act 1951 was enacted as a result of protests by the trading community against this system.

The government established a system in which approved manufacturers and wholesalers were allowed to purchase goods from one another without payment of sales taxes and to pay tax on sales to unlicensed traders. Licensees were allowed to import goods without paying Sales Tax, while imports were subject to Sales Tax. In time, sales tax started being charged at the time of sales and imports of locally produced & imported goods. The Central Excise Department has also been provided with the power to collect tax on non-excisable items in accordance with a 1981 amendment in the Sales Tax Act, 1951.

After the advent of the Value Added Tax in the early 1980s, the government decided to replace Sales Tax with VAT in the framework of its structural adjustment program, which aimed at correcting anomalous and distorting aspects of the Sales tax and non-tax policies. As a result, the Sales Tax Act of 1951 was repealed by the Sales Tax Act of 1990.

GST Sales Tax & Filing

Sales Tax Liabilities

The following sectors require Sales Tax Registration and Monthly Return Filing:

  •     Manufacturing
  •     Import
  •     Services
  •     Distribution, Wholesale & Retail stage.

The Sales Tax had previously been applied to manufacturing & import, and it has now been extended to the remaining sectors.

It applies to goods produced and imported into Pakistan with the exception of the computers, software, poultry feed, medicines, and unprocessed agricultural produce of Pakistan, as well as items listed in Section 6 of the Sales Tax Act, 1990.

Sales Tax (GST) Registration

The Sales Tax Act requires that everyone who makes a taxable supply in Pakistan, including those in the sectors mentioned above, register with the FBR. Companies with annual revenues below five million rupees. Retailers having a total turnover under Rs. Five million for the last twelve months can claim the sales tax exemption.

Taxes on supplies are based on 17% of the price. Depending on the item being supplied, taxes must be applied at 18.5% or 21% (see SRO 644(I)/2007 as amended by SRO 537(I)/2008 dated 11th June 2008).

Persons liable to be registered under the Sales Tax Act are required to submit the Registration Form(s) to the Registration Office, FBR, or local sales tax collectors/ RTOs for the allocation of a Registration Number. An online Certificate of Registration is then issued to the taxpayer.

Monthly GST Return Filing

GST registered persons are required to file a monthly return for sales made during the previous month by the 18th of the month.

The FBR’s e-portal requires electronically filed Sales tax returns from all registered persons and companies. The payment must be made by the 15th and the return submitted by the 18th.

The Sales Tax General Order No. 04 of 2007 provides detailed instructions on this subject. There are segments that need to file quarterly (tri-monthly) returns, such as certain retailers, CNG dealers, dealers of specified electric goods, etc.

Maintenance of Sales Record

The business premises of all registered persons must maintain records of all goods purchased and supplied by them. A five-year period is required for the keeping of all records.

GST (Sales Tax) Refund Matters

The excess input tax is refunded to the taxpayer within 45 days when an individual’s input tax exceeds their output tax because of exports, etc. The Board can determine the refund procedure for excess input tax in all other cases. 

SST-Sindh Sales Tax on Services By SRB:

Sales taxes on services (SST) were collected by FBR at 17% for the year 2010-11, which resulted in FBR collecting and transferring Rs. 18.28 billion. Under the Sindh Sales Tax on Services Act, 2011, SRB was given the responsibility of administering, levying, and collecting the sales tax for the 2011-12 fiscal year, reducing the standard rate from 17% to 16%. 

Filing of (SST) Sindh Sales Tax Return-Recent Development

Currently, the Federal Board of Revenue (FBR) has developed and implemented a National Sales Tax return. According to FBR, this return is only applicable to FBR-registered individuals at this stage. The FBR is currently consulting with the provinces about the extension of the National Sales Tax Return.

In this respect, SRB has requested the taxpayers that the Sindh Sales Tax on Services Act, 2011 and its rules require all persons registered with SRB to continue filing their Sindh sales tax returns in the form SST-03 over the SRB website http://e.srb.gos.pk.

Additional Tax

If In the event that a registered person fails to pay the tax within the specified time, claims a tax credit or refund that is not admissible to him, or applies the zero percent rate incorrectly, a tad will be charged at the following rates:

An amount equal to one-half percent of the tax due or a part thereof each month;

The rate of additional tax in cases of tax fraud, however, is two percent per month.

GST Arrears

In the following situations, work on arrears is initiated:

  •     Not submitting the returns on time
  •     The tax amount paid is less than the tax amount owing
  •     Following an audit or scrutiny, a request is upheld after adjudication

Sales Tax Lawyers and Senior Consultants Offer GST Registration and Monthly Filing Services

Our Tax Lawyers and Senior Consultants keep our clients up-to-date with the latest developments and new regulations concerning sales tax matters in Pakistan. Tax laws and reforms are so complex these days that it is extremely difficult to make sure you do not incur any serious penalties or business losses. Our professional GST consultants in Karachi will guide you about the taxation system, get yourself registered with the sales tax department, and will take the responsibility to document your periodic tax returns.

Our services include GST registration, GST returns, and of course, GST refunds, as well. We offer the best sales tax consulting services in Karachi and Islamabad, so contact us now for further guidance.

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