WHO IS REQUIRED TO BE REGISTERED UNDER SALES TAX ACT 1990?

Pakistan’s tax landscape comprises various types of taxes, categorized as Direct and Indirect. Direct Taxes are levied directly on the taxpayer, while Indirect Taxes shift the burden to the end-consumer. Sales Tax, an Indirect Tax in Pakistan, is applied at multiple points of sale. With the 18th Amendment granting financial autonomy to provinces, Sales Tax on services now falls under provincial jurisdiction. This article focuses solely on the process of filing Sales Tax returns concerning the sale of goods, which remains under the domain of the Federal government and is governed by the Sales Tax Act 1990.

The Sales Tax Act 1990 applies to businesses involved in the import, export, sale, and purchase of goods. Whether you’re a startup entrepreneur or a seasoned business owner in Pakistan, if you engage in commercial transactions involving goods, you’re obligated to file Sales Tax returns.

WHO NEEDS TO REGISTER UNDER THE SALES TAX ACT 1990?

  • Importers
  • Wholesalers and distributors
  • Manufacturers (excluding cottage industries)
  • Retailers with a turnover exceeding 5 million rupees in any tax period over the last 12 months
  • Service providers such as hotels, clubs, caterers, etc., mandated by law to register
  • Zero-rated suppliers, including commercial exporters seeking sales tax refunds against zero-rated supplies

STEPS TO FILE SALES TAX RETURNS:

Follow these simple steps to file Sales Tax returns in Pakistan:

  1. Register for Sales Tax with FBR using the TRF 1 form, available at the district FBR office.
  2. Upon registration, you’ll receive unique login credentials from FBR. Log in to fbr.gov.pk to access your business profile and previously submitted returns.
  3. Select the desired tax year and month for filing the return, then click on “declaration.”
  4. Enter monthly sales details in the “Annexure C” window by adding sale invoices. Review the draft return once all invoices are entered.
  5. If applicable, enter monthly purchase details in “Annexure A.” Ensure to select all relevant purchase data.
  6. Submit all annexures and generate Payment Slip Identification (PSID) for the due tax payable. Pay online or at the nearest NBP branch and obtain a Confirmation Payment Receipt (CPR).
  7. Return to the draft and attach the CPR using the “feed CPR” button.
  8. Finally, click “process & submit” for verification and successful submission of your Sales Tax returns.

IMPORTANT REMINDERS:

  • Ensure all relevant annexures are submitted before the 10th of each month.
  • PSIDs must be submitted by the 15th of each month.
  • File your return by the 18th of every month.

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