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Sales Tax Instructions

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<strong>Sales</strong> <strong>Tax</strong> <strong>Instructions</strong>, 2009<br />

(i)<br />

(ii)<br />

Under section 3 of the <strong>Sales</strong> <strong>Tax</strong> Act, 1990, sales tax is charged, levied and paid on<br />

(a) taxable supplies made in Pakistan, and (b) goods imported into Pakistan. The<br />

concept of ―time of supply‖ as defined in Section 2(44) of the <strong>Sales</strong> tax Act, 1990 is<br />

applicable to the first category, i.e. supplies made in Pakistan. On the other hand,<br />

the case of imported goods is covered under section 6 of the <strong>Sales</strong> tax Act, 1990,<br />

which states that the tax shall be charged and paid in the same manner and at the<br />

same time as if it were a duty of customs payable under the Customs Act, 1969.<br />

Under section 7 of the <strong>Sales</strong> <strong>Tax</strong> Act, 1990, a registered person is entitled to deduct<br />

(adjust) input tax paid during a tax period form the output tax that is due from him in<br />

respect of that tax period. Thus, in case of imported goods, the input tax can be<br />

adjusted in the tax period in which the sales tax was paid (date of payment of duty<br />

and taxes on the bill of entry). In case of locally purchased goods, the concept of<br />

―time of supply‖ as defined in section 2(44) of the <strong>Sales</strong> <strong>Tax</strong> Act, 1990 will apply,<br />

and sales tax has to be paid adjusted in the tax period in which either delivery of the<br />

goods or payment is made (whichever is earlier).<br />

(DR. ASHFAQ AHMED TUNIO)<br />

Deputy Collector, <strong>Sales</strong> <strong>Tax</strong> (West), Karachi<br />

********<br />

Copy of letter dated 9-10-1998 is reproduced below:-<br />

The Collector of <strong>Sales</strong> <strong>Tax</strong>,(West)<br />

University Road,Karachi.<br />

SUBJECT: CLARIFICATION REGARDING TIME OF SUPPLY.<br />

For maintaining the <strong>Sales</strong> <strong>Tax</strong> Record, our member need following clarification regarding<br />

Time of Supply. We shall be highly grateful if the same is provided to us.<br />

Situation No.1:<br />

If the duty & the <strong>Sales</strong> <strong>Tax</strong> etc. is paid at custom stage on 29 th or 30 th of a month and the<br />

Goods arrived/cleared by the custom on 1 st or 2 nd of the following month.<br />

(a)<br />

(b)<br />

can the importers take the input on the day of the payment of duty?<br />

can the importer take input on the day of the arrival of the goods at his Godown?<br />

It should be noted that according to sales tax law the bill of entry cleared u/s. 79 or<br />

Section 105 will be document, for input tax claim. The entry is out of charge by the Custom<br />

Authority after Examination of goods, which usually takes 1 to 3 days. Further the payment of<br />

duty is subject to the examination of cargo.<br />

Situation No.2:<br />

If a dealer pays in advance the value of goods including sales tax on 29 th or 30 th of a month<br />

to the manufacturer and the goods are delivered by the said manufacturer on 1 st or 2 nd of<br />

the following months.<br />

(a)<br />

Can the dealer take input on the date of advance payment?<br />

(b) Can the dealer take input on the date of actual supply?<br />

An early reply will be highly appreciable.<br />

Truly Yours,

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