YOUR VIRTUAL TAX CONSULTANT
Sales tax is a vital part of Pakistan’s tax system, as it applies to goods and services from a variety of industries. As a business owner, you’re probably aware of the need to follow sales tax requirements.
However, understanding the complexities of tax law can be difficult. This is when expert help comes in. Icon Tax Consultant is ready to assist you with easy sales tax registration, filing, and compliance, sparing you from potential traps and penalties.
GST / SALES TAX Registration
Documents Requirements For Registration:
CNIC Front Back Picture
Email ID
Active Contact Number
Electricity Bill
Electricity Meter Picture
Business account maintenance certificate
Rent agreement
Balance Sheet (Optional)
What is Sales Tax in Pakistan?
Sales tax is a consumption-based tax paid on the sale of products and services at different stages of production and distribution.
In Pakistan, the Federal Board of Revenue (FBR) regulates and collects sales tax, which is principally governed by the Sales Tax Act of 1990.The general rate of Sindh sales tax on services is 15%, with the exception of telecommunications, which are taxed at 19.5%. In some circumstances, taxes are levied at a lower or concessionary rate.
Who is Eligible for Sales Tax Registration in Pakistan?
In Pakistan, certain types of enterprises are required to register for sales tax. The following are the important groups that must register to ensure compliance with tax regulations and avoid penalties.
1. Importers, Wholesalers, and Distributors
All businesses involved in importing, wholesale, or distribution activities.
2. Manufacturers (Excluding Cottage Industry)
Manufacturers with taxable supplies exceeding PKR 10 million annually or utility bills over PKR 800,000 in the past year.
3. Tier-1 Retailers
Retailers operating national/international chains, stores in air-conditioned malls, those with electricity bills over PKR 1.2 million, or shops larger than 1,000 square feet.
4. Businesses Registered for Provincial or Federal Taxes
Service providers like hotels, clubs, courier services, and others registered for other taxes.
5. Zero-Rated Suppliers
Businesses involved in zero-rated supplies seeking tax refunds.
6. Retailers Accepting Digital Payments
Retailers using debit or credit card payments.
7. Businesses Exceeding Withholding Tax Thresholds
Retailers whose withholding tax under sections 236G or 236H exceeds FBR’s specified limit.
8. Jewelry Suppliers
Businesses selling jewelry unless their shop is under 300 square feet.
Procedure of Sales Tax Registration
Using IRIS Portal select Form 14(1), when you will select this Form system will ask you about the following information
Tax Period
Individual Type either Manufacturer or Non Manufacturer
In the case of AOP and Company detail of Principle Officer/ Authorised Representative
Bank Account Maintenance Certificate with IBAN Number
Business Details which includes Business Name, Activities, Address, etc
GPS-tagged Photographs of Business Premises
Consumer Number of Gas and Electricity Bill Supplier along with a picture of Utility Bill
Submission of Application Form 14(1)
Issuance of Sales Tax Registration Number
Bio Metric Verification
After getting the registration Number, the Applicant has to visit the E-Sahulat Centre of NADRA within 30 days for biometric verification. In case of verification failure, the registered person’s name withdrawn from the Active Taxpayer list of Sales Tax.
Following is the list of NADRA e-Sahulat Centers to facilitate the registered persons for biometric verification.
Post Verification – Manufacturer
The Board may require post verification for manufacturer through field offices, or a third party authorized by the Board. In case the Application providing document is non-genuine / fake/wrong, it may request through the system, to give the short particulrs, in fifteen days. Persons who fail to deliver the same are strike off from the Active Taxpayer List of Sales Tax.
Change in particulars of Registration
TIn case there is a change require in FBR Profile or other details as stated in the registration certificate, the registered person shall notify the amendment or modification in the prescribed form to the RTO within fourteen days of such change.
Transfer of Registration
In case of a registered person shifts his business activity from one Jurisdiction to another Jurisdiction, he needs to provide a valid reason for such a change of Jurisdiction, which may file though written Application to Commissioner Inland Revenue of RTO where his Case presides.
Benefits of Filing Sales Tax
Filing sales tax comes with several important benefits for businesses in Pakistan. Ensuring accurate and timely tax filing not only keeps you compliant with the law but also offers multiple advantages.
Here are the key benefits:
1. Legal Compliance
Filing sales tax ensures that your company complies with Federal Board of Revenue (FBR) requirements, allowing you to avoid costly penalties, fines, and even legal issues. Staying on the right side of the law builds credibility and confidence with your clients and business partners.
2. Claim Input Tax Credits
One of the primary advantages of reporting sales taxes is the possibility to claim input tax credits. You can use the tax paid on purchases to offset the sales tax you collect on your goods or services, lowering your overall tax bill and increasing your financial efficiency.
3. Improved Business Credibility
Registering and filing sales tax increases your company’s credibility because it demonstrates that it follows tax regulations. This can help you build stronger relationships with suppliers, clients, and investors, as many organizations prefer to work with tax-compliant partners.
4. Access to Government Contracts
Many government tenders and contracts are only open to tax-compliant companies. By reporting sales tax, your company can qualify for these options, thereby extending its revenue streams and market presence.
5. Facilitates Business Growth
By filing sales tax, your company joins the official economy, allowing for more efficient operations such as better access to financing, loans, and financial services. This can assist in fueling your business growth by allowing you to invest in fresh opportunities without dealing with administrative impediments.
6. Sales Tax Refunds on Zero-Rated Supplies
Businesses that use zero-rated supplies, such as exporters, can apply for sales tax rebates. This improves cash flow and decreases financial burdens, making it advantageous for businesses operating in international markets.
7. Avoidance of Audits and Investigations
Filing proper sales tax returns reduces the likelihood of an audit or investigation by tax authorities. Ensuring compliance saves time and resources that would otherwise be spent on legal or tax issues.
Our Sale Tax Registration and Filing Services
2. SST Sales Tax (Sindh Sales Tax)
It is a value-added tax applied on the supply of goods and services in Pakistan. It’s collected at various stages of the supply chain and businesses need to register for GST compliance to avoid penalties.
1. GST Sales Tax (Goods and Services Tax)
This tax is specific to services rendered in the Sindh province. Companies providing services such as IT, construction, or hospitality in Sindh must comply with SST regulations.
3. CST Sales Tax (Capital Territory Sales Tax)
Applicable within the Islamabad Capital Territory, CST covers businesses operating in services such as telecommunication, hotels, and restaurants. Ensuring compliance helps avoid legal hurdles.
4. PST Sales Tax (Punjab Sales Tax)
PST is levied on services provided within Punjab province. Businesses offering consultancy, transportation, and other professional services must register and file PST returns regularly.
5. KST Sales Tax (Khyber Pakhtunkhwa Sales Tax)
For businesses operating in Khyber Pakhtunkhwa, KST applies to services such as healthcare, construction, and IT. Compliance ensures smooth business operations within the province.
6. BST Sales Tax (Balochistan Sales Tax)
BST applies to services provided within Balochistan. Businesses in sectors such as transportation and hospitality must comply with BST to maintain lawful operations.
If you’re seeking expert advice on managing these taxes in Pakistan, look no further! As professional tax consultants, we offer comprehensive services to ensure your business is fully compliant with provincial and federal tax laws.
With in-depth knowledge of the complex tax structures in Pakistan, we streamline your tax filings, reduce penalties, and optimize your financial strategies. Trust our experience to keep your business running smoothly, so you can focus on growth while we handle your tax needs efficiently!
What is a Sales Tax Invoice?
It is a document delivered by a seller to a buyer that describes the transaction of goods or services, including the amount of sales tax collected. It serves as an official record of the transaction and is required by both the seller and buyer to keep appropriate tax records
A typical sales tax invoice includes the following:
Seller’s Information – Name, address, and Sales Tax Registration Number (STRN).
Buyer’s Information – Name, address, and STRN (if applicable).
Invoice Number – A unique id for the invoice.
Date of Issue – The date the invoice was created.
Description of Goods/Services – Details of what was sold, including quantity and price.
Taxable Amount – The value of the goods or services before tax.
Sales Tax Amount – The amount of tax charged.
Total Amount – The total cost including sales tax.
A sales tax invoice is critical for maintaining compliance with tax regulations and can be used for claiming input tax credits. For help with generating compliant invoices, Icon Tax can assist your business in managing sales tax documentation effectively.
List of Goods Exempted From Sales Tax in Pakistan
In Pakistan, certain goods are exempted from tax under the Sales Tax Act of 1990. The exemptions aim to support essential sectors and basic necessities. Here’s a general list of goods commonly exempted from sales tax in Pakistan:
Unprocessed Agricultural Products – Including fruits, vegetables, grains, pulses, and seeds.
Live Animals and Animal Products – Such as livestock, poultry, eggs, and milk.
Books, Newspapers, and Journals – Educational materials and printed media.
Medicines and Medical Equipment – Life-saving drugs, medical devices, and certain essential health products.
Edible Oils and Ghee – Certain edible oils and vegetable ghee used for cooking.
Basic Food Items – Wheat, flour, sugar, and rice.
Educational and Scientific Equipment – Items used by educational institutions and for research.
Exports – Goods that are exported outside Pakistan.
Fertilizers and Pesticides – To support the agriculture sector.
Electricity for Domestic Users – Below a certain usage threshold.
Charitable Supplies – Goods sold by charitable institutions.
This list is subject to change with updates in tax laws and can vary depending on specific governmental policies or exemptions at the provincial level. For businesses, it’s crucial to stay updated with the latest regulations to ensure compliance.
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