Sales Tax Instructions

Sales Tax Instructions, 2009
4. All industrial units (including processing units) with annual turnover
below Rs.0.5 million are exempt from sales tax. The industrial units having annual
turnover between Rs.0.5 million to Rs.2.5 million may pay turnover tax of 2% (plus 1%
income tax) under section 3A of the Sales Tax Act, 1990, read with Turnover Tax Rules,
1999 without any input tax credit/adjustment in terms of sub-section (4) of the Sales Tax
Act, 1990. Industrial units which annual turnover exceeding Rs.2.5 million have to pay
sales tax in an invoice-based VAT mode as prescribed in the Sales Tax Act, 1990, with
entitlement of input tax credit/adjustment. Industrial units are not governed by the
Development Tax Scheme, if any.
5. As regards supplies to persons other than a registered person, further tax
is payable under section 3(1A) of the Sales Tax Act, 1990. Notwithstanding the fact that
the Federal Government/CBR does not have powers to grant exemptions under the Sales
Tax Act, 1990, various High Courts have held that the further tax @ 3% levied under
section 3(1A) of the Sales Tax Act, 1990, on supplies to un-registered persons, is lawful.
Your request for exemption of the said further tax cannot be acceded to.
6. As regards assessment on vendor‘s charges in terms of STGO No.1/98,
dated 17.06.1998, your members may avail of that provided that they comply with clause
(v) thereof. Assessment on the basis of vendor‘s charges can be made only in respect of
processing of goods which have paid sales tax against the prescribed tax invoices at the
previous stage of taxable activity (i.e. un-processed or partialy-processed fabrics stage)
failing which provisions of section 2(46)(f) of the Sales Tax Act, 1990, read with clause
(v) of STGO No.1/98 shall apply. However, the CBR may consider a proposal to allow
processing mills to levy sales tax on vending charges of goods not supported by a
prescribed tax invoice subject to the condition that for each such transaction, the
processing mills makes a complete and true declaration about:-
1) the name, NIC No., address of the person who supplied the goods for
processing and who took its delivery after processing;
2) the vehicle No. (bringing in and taking out such goods) with its full
particulars about make, model, dates and timings (of receipt and
delivery) and drivers‘ name and licence number.
7. If your Association is willing to accept the aforesaid mechanism coupled
with transactions against crossed cheque/bank draft/pay order, please intimate the CBR
accordingly so that a procedure could be drafted.
8. As regards audit and valuation, your attention is invited to STGO
No.9/99 dated 22.9.1999 which states that audit of a registered unit in routine shall be
conducted only once in a financial year. As regards ―value‖ it has to conform to the
definition given in section 2(46) of the Sales Tax Act, 1990.
9. As regards utility bills, WAPDA, KESC, SNGPL and SSGC and the
concerned Ministries have already been requested to allow change of consumers‘ name
through a simplified and lenient scheme. You may also approach the said organizations.