What is Sales Tax (GST)?
Sales tax, often called GST in Pakistan, is a tax on the supply of goods charged under the federal Sales Tax Act, 1990, with services taxed separately by the provinces.
Updated
Meaning
English
Sales tax, often called GST in Pakistan, is a tax on the supply of goods charged under the federal Sales Tax Act, 1990, with services taxed separately by the provinces.
Roman Urdu
Sales tax, jise Pakistan me aam taur par GST kehte hain, saman ki supply par federal Sales Tax Act, 1990 ke tehat lagta hai; services par sooba alag tax lagata hai.
Also called GST, general sales tax, sales tax on goods, VAT.
Example
A registered manufacturer sells goods to a distributor and charges sales tax on the invoice. The distributor charges sales tax again when it sells on, but deducts the tax it paid on its purchase, so tax is effectively paid on the value added at each step.
How it works
Sales tax on goods is collected by FBR. Registered businesses charge output tax on their sales, deduct input tax paid on their purchases, and pay the difference with a monthly return. The standard rate is set in section 3 of the Sales Tax Act, 1990, with reduced rates, exemptions and special regimes in its schedules; goods in the Third Schedule are taxed on their printed retail price.
Since the 18th Amendment, sales tax on services is a provincial subject: PRA, SRB, KPRA and BRA collect it under their own laws, at their own rates. That is why a restaurant in Lahore deals with PRA while a wholesaler of goods deals with FBR.
In Nafaa
Nafaa's tax module covers FBR POS, PRA, SRB and KPRA in one place: taxable sales and tax per authority, each invoice sent, and monthly sales tax return figures by rate, branch and day. Integration with an authority is optional.
Official source
FBR: Sales Tax Basics and the Sales Tax Act, 1990 on FBR: Acts, Rules and Ordinances. Rates, thresholds and dates change with Finance Acts and S.R.O.s; check the current position with the authority or a tax adviser.
Related terms
- Input Tax and Output Tax
Input tax is the sales tax a registered business pays on its purchases; output tax is the sales tax it charges on its sales. The business pays the difference.
- Sales Tax Invoice
A sales tax invoice is the invoice a sales tax registered person must issue for a taxable supply, showing the details the Sales Tax Act, 1990 requires, including both parties' registration numbers and the tax charged.
- Sales Tax on Services
Sales tax on services is the tax provinces charge on services such as restaurants, salons, gyms and courier work, collected by PRA, SRB, KPRA and BRA under provincial laws.
- STRN (Sales Tax Registration Number)
The Sales Tax Registration Number identifies a business registered with FBR for sales tax.
