Sales Tax Instructions

Sales Tax Instructions, 2009
Act, 1990 added by the Finance Ordinance, 2001 a registered person who makes taxable
supplies for a sum exceeding fifty thousand rupees to an unregistered person, charging
further tax thereon, but not receiving payment through banking channels, would be
deprived from adjustment or refund of input tax adjustment.
2. It is clarified that the amendment through a proviso in section 73 vide
Finance Ordinance 2001 is to be read in the context of the original provisions of section
73. Vide section 73 introduced in the Sales Tax Act in December 1999, the admissibility
for input credit on purchases above Rs.50,000 was restricted to registered buyers who
make payments through banking instruments. Now under the proviso added vide Finance
Ordinance 2001, the transactions of such registered buyers have been linked with the
supplies made by registered sellers. Therefore, the entire scheme of making payment for
amounts in excess of Rs.50,000 through banking instruments and of taking input
adjustment under section 73 is to be seen in the context of registered sellers and
registered buyers. Where either of the parties is an unregistered buyer or seller and
further tax is charged, levied and paid as per law, the provisions of section 73 are not
attracted.
3. Therefore, registered suppliers will remain un-affected even if they
receive payment through other than banking channels when they make taxable supplies to
unregistered persons provided further tax is charged, levied and paid on such supplies.
[Issued by the CBR, Islamabad under the signature of Dr. Ashfaq Ahmed Tunio,
Secretary (ST L&P) addressed to all the Collectors of Sales Tax.]
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