The document discusses key aspects of Pakistan's Sales Tax Act of 1990. It defines important terms like input tax, output tax, taxable supply, zero-rated supply, and exempt supply. It also explains the differences between zero-rated and exempt supplies. Furthermore, it provides an example to illustrate how sales tax is calculated at different stages of the supply chain from manufacturer to retailer to customer.

1. SALE TAX ACT ,1990

2. FATIMA FARHEEN
ROLL NO :036

3. INTRODUCTION TO SALE TAX
The Sales Tax was imposed as a federal Tax
in 1948 through the general Sales Tax Act
,1948
Previously it was a provincial Tax and
provinces of Punjab and Sindh were charging
it.

4. INTRODUCTION TO SALE TAX
The Sale Tax Act ,1951
The Sales Tax ,1951 introduced a system of
licensed manufacturers and wholesalers.
Under this Act the Sale Tax was imposed on
the sale of locally produced goods and on the
import of imported goods.
However, the licensed persons were allowed to
sell the goods to each other without the
payment of sales tax.

5. INTRODUCTION TO SALE TAX
The Sales Tax Act ,1951
Under this Act Sale Tax was administered by
the Central Excises Department
Till 1981 Sale Tax was levied on excisable
goods ,however in April 1981 it was also
extended to non-excisable goods.

6. INTRODUCTION TO SALE TAX
SALES TAX ACT,1990
The finance Act ,1990 introduced major changes in
the law of sales tax
It substituted the whole of the provisions of sales tax
act ,1951 and renamed the same as The Sales Tax
Act ,1990.
The Sales Tax Act 1990,is effective since 01-11-
1990.
The Sales Tax Act,1990 empowers the Federal
Government to levy the sales tax on the sales
,importation ,exportation ,production, manufacture or
consumption of goods.

7. THE SALES TAX ACT,1990
Currently the Sales Tax Act consists upon the
following chapters
CHAPTER NO. SECTIONS CHAPTER TITLE
I 1 to 2 Preliminary
II 3 to 13 Scope and Payment of Tax
III 14 to 21 Registration
IV 22 to 25 Book Keeping and Invoicing
Requirement
V 26 to 29 Returns
VI 30 to 32A Appointment of Officers of Sales
Tax and their Powers
VII 33 to 40B Offences And Penalties
VIII 45 to 47A Appeals
XI 48 Recovery Of Arrears of Tax
X 49 to 75 Miscellaneous

8. THE SALES TAX ACT,1990
Besides the above- referred chapters, the Sales Tax
Act ,1990 originally contained seven(7) schedules..
Currently ,the following schedules are Active and
enforceable:
THIRD SCHEDULE: which specifies the goods in
respect of which the tax is levied on the retail price
fixed by the manufacturer.
FIFTH SCHEDULE: which specifies the goods which
are taxable at the rate of zero percent
SIXTH SCHEDULE: which contains the list of such
goods that are exempt from the Sales Tax.

10. BOARD [2(4)]
Board means the Federal Board of Revenue (FBR)
established under section 3 of the Federal Board of
Revenue Act,2007.It is the highest tax collecting
authority in Pakistan. It regulates all Federal Taxes
such as direct taxes (e.g. income tax) and indirect
taxes (e.g. sales tax, customs duty).Board is
appointed by the Federal Government.

11. COMPANY [2(5A)]Company means an organization which falls under any of the
following categories:
 A Company as defined by the Company Ordinance ,1984;
 A Body corporate formed by or under any law in force in
Pakistan;
 A modaraba;
 A Body incorporated by or under the law of country outside
Pakistan relating to incorporation of companies in that
country;
 A Trust
 A registered co-operative society, a finance society or any
other society ;
 A foreign association ,whether incorporated or not ,which
the Board has declared as company for Income Tax
Ordinance ,2001

12. DUE DATE[2(9)]
In relation to the furnishing of sales tax return (due
date) means the 15th day of the month next following
the end of the ‘tax period'. The Board may specify
any other date as due date.

13. TAX PERIOD
Is a period of one month. The Federal Government
may notify some other period as tax period.

14. EXEMPT SUPPLY
It means a supply ,which is exempted from the levy of
Sales Tax by the Federal Government by giving a
notification in the Official Gazette. Section 13 of the
Sales Tax ACT ,1990 authorizes the Federal
Government to do so.

15. GOODS
‘Goods’ means every kind of movable property
excluding the following:
 Actionable claims;
 Money;
 Stocks;
 Shares;
 Securities;

16. IMPORTER[2(13)]
Any person who imports any goods into Pakistan is
termed as ‘importer’.

17. INPUT TAX[2(14)]
In relation to a registered person, the ‘input tax’
means;
 The tax levied under Sales Tax Act ,1990 on the
supply of goods to the person;
 The tax levied under Sales Act,1990 on import of
goods by the person;
 In relation to goods or services acquired by the
person ,excise duty levied under Federal Excise
Act,2005 in sale tax mode on the manufacture or
production of goods, or rendering or providing of
services;

18. INPUT TAX[2(14)]
 The Provincial Sales Tax levied on services
rendered or provided to the person;
 The tax levied under Sales tax Act,1990 of Pkistan
as adapted in the State of Azad Jammu and
Kashmir on the supply of goods received by that
person.

19. RIDA ASHRAF
ROLL NO : 01 (M)

20. OUTPUT TAX
In relation to a registered person output tax means the
following taxes and duties payable by that person:
 Tax levied under the Sales Tax Act on supply of
goods made by that person.
 Excise duty levied under the Federal Excise Act,
2005 in sales tax mode on manufacture or production
of goods or the rendering or providing of the services
by the persons.
 The Provincial Sales Tax levied on services rendered
or provided by the person.

22. SALES TAX
Sales Tax means:
A tax imposed by the government at the
point of sale on retail goods and services.
The tax, additional tax or default
surcharge levied under the Sales Tax Act,
1990.
 A fine, penalty or fee imposed or charged
under the Sales Tax Act., 1990.
 Any other sum payable under the
provisions of Sales Tax Act, 1990.

23. PROVINCIAL SALES TAX
Provincial sales tax means the tax levied
under the provincial laws or laws relating to
Islamabad Capital Territory, which are
declared by the Federal Government to be
provincial sales tax for the purpose of input
tax.

24. RETAILER
Retailer means a person supplying goods to general
public for the purpose of consumption. Any person who
combines the business of import, manufacturing or
production with retail shall have to observe the
following conditions:
I. He shall notify and advertise wholesale prices and
retail prices separately.
II. He shall declare the addressess of his retail
outlets.

25. RETAIL PRICE
It means a price fixed by the manufacturer, inclusive
of all duties, charges and taxes at which any
particular brand or variety of any article should be
sold to the general consumer.
 When more than one such price is fixed for the
same brand, the highest of such prices shall be
taken as retail price.
The law requires that the retail price and the
amount of sales tax shall be printed on each article
of the goods.

26. RETURN
Return means any return required to be furnished
under Chapter-V of the Sales Tax Act. The sales
tax department may require the filing of following
different types of returns:
i. Sales tax return (u/s 26)
ii. Returns under Sales Tax Special Procedures
Rules.
iii. Special return (u/s 27)
iv. Final return (u/s 28)

27. SPECIAL RETURN
• The collector may require any person whether,
registered or not, to furnish a return (whether
on his own behalf or as an agent or trustee) in a
prescribed form and such person shall furnish
the return not later than the date specified in
this regard.

28. FINAL RETURN
If a person applies for de-registration in
terms of section 28, he shall before such
de-registration, furnish a final return to the
Collector in the specified form in such
manner and at such time as directed by the
Collector].

29. TAX FRAUD
It means knowingly, dishonestly or fraudulently
doing or omitting any act in contravention of any
provision of the Sales Tax Act, with the intention
of:
o Understanding the tax liability.
o Underpaying the tax liability for two consecutive
tax periods.
o Overstating the entitlement of tax credit or tax
refund to cause loss of tax.
o Falsifying or causing falsification the sales tax
invoices.

31. Tax fraud[2(37)]
It means knowingly, dishonestly or fraudulently doing
or omitting any act in contravention of any provision
of the sales tax act with the intention of :
1. Understanding the tax liability
2. Underpaying the tax liability for two consecutive
tax periods
3. Overstating the entitlement of tax credit or tax
refund to cause loss of tax
4. Falsifying or causing falsification the sales tax
invoices

32. Taxable goods[2(39)]
• It means all goods other than those,
which have been exempted by the
federal government under section 13 of
the sales tax act 1990

33. Tax invoice [2(40)]
• It means a document required to be
issued under section 23 of the sales tax
act ,1990. section 23 requires that every
registered person while making a taxable
supply ,shall issue tax invoice the invoice
shall contain a following particulars

34. • Serial number
• Name address and registration number of the
supplier
• Name address and registration number of the
recipient
• Date of issue of the invoice
• Description and quantity of goods
• Value before sales tax
• Amount of sales tax
• Value inclusive of sales tax

36. Only one tax invoice shall be issued for a
taxable supply upon loss of original tax
invoice a copy clearly marked as “copy
only ” can be issued

37. Taxable supply
• It means supply of taxable goods other
than those which have been exempted
by the federal government under section
13 of the sales tax act , 1990. it also
includes a supply of goods chargeable to
tax at the rate of zero percent under
section 4 of the sales tax , 1990.

38. A supply may be made by any of the following
persons:
• Importer
• Wholesaler
(including
dealer)
• manufacturer
• Retailer
Distributor

39. Tax period [2(43)]
• It is period of one month. The federal
government may notify some other
period as tax period.

40. Time of supply
‘Time of supply’ is defined separately
supply of goods
rendering of
services

41. • Supply of goods
‘time of supply’ in relation to a supply of
goods (other than under hire purchase
agreement) means the time which is
earlier of the following
1. The time at which the goods are
delivered or made available to recipient
of the supply ; or
2. The time when any payment is received
by the supplier in respect of that supply.

42. • Supply under hire purchase agreement
where goods are supplied under hire
purchase agreement , time of supply
means the time at which agreement is
entered into .
• Rendering of services
‘time of supply’ in relation to services
means the time at which the services are
rendered or provided

43. Zero rated supply
• It means a supply, which is charged to
tax at the rate of zero percent under
section 4 of the sales tax, act 1990.
• According to section 4, the following
goods charged to tax at the rate of zero
percent :

44. • Goods exported out of Pakistan
• Goods specified in the fifth schedule
• Supply of stores and provisions for
consumption aboard a conveyance
proceeding to a destination outside
Pakistan
• Such other goods of the federal
government may notify and

45. • Such other goods as may be specified
by the board through a general order as
are supplied to registered persons
engaged in manufacture and supply of
zero rated goods

47. Difference Between ‘Exempt
Supply’ And ‘Zero-Rated Supply
Sr.
No Point of Distinction Exempt Supply Zero-Rated Supply
1 Taxability Not Taxable Taxable
2 Registration under Sales Tax Not Required Required
3 Credit of Input Tax Not Allowed Allowed
4
Maintenance of Records under
Sales Tax Act Not Required Compulsory
5
Filing of Returns under the Sales
Tax Act Not Required Required
6 Examples
Items of daily use e.g.
pulses etc Export items

48. Summary of Important Points
Sales tax is a multi-stage tax
The rate of tax is 17%
It is also known as Value Added Tax
(VAT)
Value addition can be in:
a) Physical manner + Expenses
b) Expenses
The Ultimate burden will be on the
end user

49. Input Tax Output Tax Net Tax
Manufacturer:
Purchases of Material 2000 ---------
+ Labor Cost 500
OH cost 500 1000
Total Cost 3000
Margin of Profit 1000
Price 4000 680 680

50. Input Tax Output Tax Net Tax
Wholesaler:
Purchases 4000 680
OH cost 1000
Total Cost 5000
Margin of Profit 2000
Price 7000 1190 510

51. Input Tax Output Tax Net Tax
Retailer:
Purchases 7000 1190
OH cost 1500
Total Cost 8500
Margin of Profit 1500
Price 10,000 1700 510

52. Input Tax Output Tax Net Tax
Customer:
10,000 1700
Sales Tax 1700
Total Price Paid 11,700 ---------- 1700