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Frequently Asked Questions
1-Am I eligible for Sales Tax Registration for the purpose of supplying goods?
Sales tax registration is compulsory for the underneath persons engaged in making taxable supplies:
- A manufacturer who is not running a cottage industry
- A tier-1 retailer excluding such retailer required to pay sales tax through his electricity bill
- An Importer
- An Exporter who intends to obtain sales tax refund against his zero-rated supplies
- A wholesaler, dealer or distributor
- A person who is required, under any other Federal law or Provincial law, to be registered for the purpose of any duty or tax collected or paid as if it were a levy of sales tax to be collected under the Act
2-Who could be categorized as Tier-1 Retailer?
The Retailer who would be categorized in any of the following condition would be known as Tier-1 Retailer in terms of Section 2(43A) of the Sales Tax Act, 1990.
- A retailer operating as a unit of a national or international chain of stores;
- A retailer operating in an air-conditioned shopping mall, plaza or centre, excluding kiosks;
- A retailer whose cumulative electricity bill during the immediately preceding twelve consecutive months exceeds rupees twelve hundred thousand;
- A wholesaler-cum-retailer, engaged in bulk import and supply of consumer goods on wholesale basis to the retailers as well as on retail basis to the general body of the consumers”;
- A retailer, whose shop measures one thousand square feet in area or more [or two thousand square feet in area or more in the case of retailer of furniture];
- A retailer who has acquired point of sale for accepting payment through debit or credit cards from banking companies or any other digital payment service provider authorized by state bank of Pakistan;
- A retailer whose deductible withholding tax under sections 236g or 236h of the income tax ordinance, 2001(xlix of 2001) during the immediately preceding twelve consecutive months has exceeded the threshold as may be specified by the board through notification in the official gazette;
- A person engaged in supply of articles of jewelry, or parts thereof, of precious metal or of metal clad with precious metal excluding a person whose shop measures three hundred square feet in area or less;
- Any other person or class of persons as prescribed by the board.
3-What are the documents usually required for Sales Tax Registration?
The documents required for sales tax registration are as follows;
- FBR Credentials (Login ID & Password)
- Color copy of CNIC of Owner / Directors / Partners
- Business Letterhead
- Business activity and starting date
- Rent agreement/ownership docs of Office premises
- Latest Paid Electricity Bill of Office premises
- Bank Maintenance Certificate of Business Bank Account
- GPS tagged photos of Electricity Meter & Office premises (For GST registration only with FBR)
Moreover, some additional documents are required for Sales registration of Company and AOP
- Incorporation / Registration Certificate
- Memorandum of Association
- Article of Association
- Authorization of Principal Officer
4-What are the necessary obligation and compliances after Sales Tax Registration?
Every person registered for Sales Tax must follow these rules and obligations imposed by Tax Authorities and make compliances accordingly,
- Responsible to Charge, collect and deposit sales tax against every invoice raised
- Filing of monthly Sales Tax Return
- Recording and Maintaining Sales of Records for the periods defined under the Respective Tax Laws.
5-What would be the ingredients to be mentioned while issuing sales tax invoices to the customers?
A registered person is required to issue tax invoice at the time of selling goods and rendering of services. The Invoices should include the following particulars:
- Name, address of the supplier
- Tax number of the supplier
- Name, address of the customer
- Date of issue of invoice
- Unique invoice number
- Description of the goods or services provided
- Value of goods and services exclusive of tax
- Amount of sales tax
- value inclusive of tax
6-How often do returns have to be submitted? And are there any important dates to consider while filing Sales tax returns?
Sales tax returns are normally required to be submitted on monthly basis and there are mainly three dates that need to be kept in consideration while filing sales tax returns.
- Annexure C must be submitted before the 10th of every month.
- Sales Tax Challan must be submitted not 15th of every month
- Sales Tax Return should be submitted not later than 18th of every month
7-What would be the penalty in case where a registered person fails to furnish its sales tax return within due date?
The registered person would be liable to pay a penalty of ten thousand rupees. However, the penalty of two hundred rupees would be paid if the person has filed the return within ten days of the due date.
8-What would be the penalty in case the required amount of sales tax payable is not deposited in the manner or time as prescribed under Sales Tax Act, 1990?
Such registered person would be liable to pay a penalty of ten thousand or five percent of the amount of tax involved (whichever is higher). If the amount of tax is paid within ten days from the due date, the registered person would be liable to pay a penalty of five hundred rupees for each day of default.
9-What are the documents required for filing monthly sales tax returns?
Typically, following documents are required for the filing of sales tax return.
- Copies of Sales Invoices
- Copies of purchases Invoices
- Withholding of sales tax made by the withholding agent
- GDs and Debit & Credit Notes in case of Exporter/Importer
- Total Export Receipt in case of Freelancers
- Other information as required by the designated consultant
10-Do registered person need to file Sales Tax Return for a period in which they had no business activity?
Yes, a tax return must be filed for each reporting period even though no taxable activity is performed in that tax period is due. The registered person would be required to file “Nil” return for such tax period.
11-How sales return would be handled / declared in Sales Tax?
In case of sales return, the registered person is liable to issue credit note and declare the same in relevant annexure of respective sales tax return portal.
12-What could be the possible repercussion in case where a business fails to furnish its sales tax return?
Where a business fails to furnish a return within the due date then such would be required to pay the penalty as determined by the law and the further non compliance could result in to the suspension and blacklisting of the business.