Business Tax Obligations

The Sales Tax Act, 1990

The Sales Tax Act, 1990

The Sales Tax Act, 1990   The Sales Tax Act, 1990, is a significant piece of legislation in Pakistan that governs the imposition, collection, and administration of sales tax on the supply of goods and services. This act is designed to regulate and generate revenue from the sales tax, which is a crucial component of Pakistan’s taxation system. An Act to consolidate and amend  the law relating to the levy of a tax on the sale, importation, exportation, production, manufacture or consumption of goods. WHEREAS it is expedient to consolidate and amend the law relating to the levy of a tax on the sale, importation, exportation, production, manufacture or consumption of goods; It is hereby enacted as follows:– Chapter – I Preliminary   Short title, extent and commencement. (1) This Act may be called the Sales Tax Act, 1990. (2) It extends to the whole of Pakistan. (3) It shall come into force on such date as the Federal Government may, by notification in the official Gazette, appoint.   Definitions. – In this Act, unless there is anything repugnant in the subject or context,– (1) “Appellate Tribunal” means the Customs, Excise and Sales Tax Appellate Tribunal constituted under section 194 of the Customs Act; (2) “appropriate officer” means an officer of Sales Tax authorised by the Board by notification in the official Gazette to perform certain functions under this Act; (2A) “arrears” includes the un-paid amounts of tax, default surcharge additional tax, further tax, extra amount of tax, fines, penalties, fees or any other sums, however described, as have been assessed, adjudged or demanded under this Act, (3) “associated persons” means any two or more persons who are close relatives to each other or who are interconnected with each other in the following way, namely:– (i) if the persons, being companies or undertakings, are under common management or control or one is the subsidiary of the other; (ii) if a person who is the owner or partner or director of a company or undertaking, or who, directly or indirectly, holds or controls twenty per cent shares in such company or undertaking, is also the owner, partner or director of another company or undertaking, or, directly or indirectly, holds or controls twenty per cent shares in that company or undertaking; Explanation. : —  For the purpose of this clause, the expression It close relatives” mean the family, parents, brothers, sisters and dependents of registered person; (4) “Board” means the Central Board of Revenue constituted under the Central Board of Revenue Act, 1924 (IV of 1924); (5) “Collector” means the Collector of Sales Tax appointed under section 30; (5A) “common taxpayer identifier” means the identification number allocated under section 20 of the Finance Act, 1999 (IV of 1999) (6) “Customs Act” means the Customs Act 1969 (IV of 1969), and where appropriate all rules and notifications made under that Act; (6A) “defaulter” means a person and, in the case of company or firm, every director, or partner of the company, or as the case may be, of the firm, of which he is a director or a partner or a proprietor and includes guarantors or successors, who fail to pay the arrears; (6B)      “Default Surcharge” means the surcharge payable by a defaulter at the rate specified in section 34 of this Act; (7) “distributor” means a person appointed by a manufacturer, importer or any other person for a specified area to purchase goods from him for further supply and includes a person who in addition to being a distributor is also engaged in supply of goods as a wholesaler or a retailer; (8) “document” includes any electronic data, computer programmes, computer tapes, computer disks, micro-films or any other medium for the storage of such data; (9) “due date”, in relation to the furnishing of a return under section 26 means the 15th day of the month following the end of the tax period, or such other date as the Federal Government may, by notification in the official Gazette, specify; (10) “establishment” means an undertaking, firm or company, whether incorporated or not, an association of persons or an individual; (11) exempt supply” means a supply which is exempt from tax under section 13; (12) “goods” include every kind of movable property other than actionable claims, money, stocks, shares and securities; (13) “importer” means any person who lawfully imports any goods into Pakistan; (14) “input tax”, in relation to a registered person, means the tax – (a) levied under this Act on the supply of goods received by that person; (b) levied under this Act on goods imported, entered and cleared under section 79 or section 104 of the Customs Act, by that person; (c) levied under the Sales Tax Act, 1990 of Pakistan as adapted in the State of Azad Jammu and Kashmir, on the supply of goods received by that person. (15) “Local Sales Tax Office” means the office of Superintendent of Sales Tax, or such other office as the Board may, by notification in the official Gazette, specify; (16) “manufacture” or “produce” includes – (a) any process in which an article singly or in combination with other articles, materials, components, is either converted into another distinct article or product or is so changed, transformed or reshaped that it becomes capable of being put to use differently or distinctly and includes any process incidental or ancillary to the completion of a manufactured product; (b) process of printing, publishing, lithography and engraving; and (c) process and operations of assembling, mixing, cutting, diluting, bottling, packaging, repacking or preparation of goods in any other manner; (17) “manufacturer” or “producer” means a person who engages, whether exclusively or not, in the production or manufacture of goods whether or not the raw material of which the goods are produced or manufactured are owned by him; and shall include – (a) a person who by any process or operation assembles, mixes, cuts, dilutes, bottles, packages, repackages or prepares goods by any other manner; (b) an assignee or trustee

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Islamabad Capital Territory (Tax on Services) Ordinance, 2001

Islamabad Capital Territory (Tax on Services) Ordinance, 2001

Islamabad Capital Territory (Tax on Services) Ordinance, 2001   The Islamabad Capital Territory (Tax on Services) Ordinance, 2001, is a piece of legislation in Pakistan that governs the taxation of services provided within the Islamabad Capital Territory (ICT). This ordinance provides the legal framework for the imposition, collection, and regulation of taxes on various services offered by service providers within the ICT   (TAX ON SERVICES) ORDINANCE, 2001 (ORDINANCE NO. XLII OF 2001) Updated vide Finance Act, 2022 By a team of Provincial Taxes Wing, Federal Board Revenue, Islamabad. (Any inadvertent error may kindly be reported for necessary correction to any of above mentioned officers at following phone numbers): Ph: 051-9204520 (Amendments by the Finance Act, 2022 have been shown in RED) Islamabad Capital Territory (Tax on Services) Ordinance, 2001 2 Table of Contents ISLAMABAD CAPITAL TERRITORY (TAX ON SERVICES) ORDINANCE, 2001 ………….. 3 Short title, extent and commencement……………………………………………………………………… 3 Interpretation………………………………………………………………………………………………………… 4 Scope of tax………………………………………………………………………………………………………….. 4 THE SCHEDULE (Table-1)…………………………………………………………………………………………. 6 (Table-2) …………………………………………………………………………………………………….12 Islamabad Capital Territory (Tax on Services) Ordinance, 2001 3 The ISLAMABAD CAPITAL TERRITORY (TAX ON SERVICES) ORDINANCE, 2001 1 [Notification No. F. 2(1)/2001-Punj., dated 18th August, 2001.—The following Ordinance promulgated by the President is hereby published for general information:– ORDINANCE NO. XLII OF 2001 AN ORDINANCE to provide for levy of sales tax on services rendered or provided in the Islamabad Capital Territory WHEREAS it is expedient to provide for levy of sales tax on the services rendered or provided in the Islamabad Capital Territory and for matters ancillary thereto or connected therewith; AND WHEREAS the President is satisfied that circumstances exist which render it necessary to take immediate action; NOW, THEREFORE, in pursuance of proclamation of Emergency of the fourteenth day of October, 1999, and the Provisional Constitution Order No. 1 of 1999, read with the Provisional Constitution (Amendment) Order No. 9 of 1999, and in exercise of all powers enabling him in that behalf, the President of the Islamic Republic of Pakistan is pleased to make and promulgate the following Ordinance;- Short title, extent and commencement.–(1) This Ordinance may be called the Islamabad Capital Territory (Tax on Services) Ordinance, 2001.   1 Issued by the Ministry of Law and Justice, under the signature of Mr. Justice Faqir Muhammad Khokhar, Secretary, vide Ex. Ord. Gaz.of Pak., 2001, Pt. I, P.923. Islamabad Capital Territory (Tax on Services) Ordinance, 2001 4 (2) It extends to whole of Islamabad Capital Territory. (3) It shall come into force at once. Interpretation.–In this Ordinance, unless there is anything repugnant in the subject or context, the words and expression used but not defined shall have the same meaning as in the Sales Tax Act, 1990. Scope of tax.— 2 [(1) Subject to the provisions of this Ordinance, there shall be charged, levied and paid a tax known as sales tax at rates specified in column (4) of Table-1 of the Schedule to this Ordinance of the value of the taxable services rendered or provided in the Islamabad Capital Territory: Provided that the services specified in Table-2 of the Schedule shall be charged to tax at such rates and subject to such conditions and limitations as specified therein;] 3 [(1A) Notwithstanding the provision of sub-section (1), the export of services shall be charged at the rate of zero per cent.] (2) The tax shall be charged and levied on the services specified in4 [column (2) of] 5 [Table-1 or Table-2 of the Schedule to this Ordinance, as the case may be,] in the same manner and at the same time, as if it were a sales tax leviable under sections 3, 3A or 3AA, as the case may be, of the Sales Tax Act,1990. 6 [(2A) The following provisions of the Sales Tax Act, 1990, shall apply, mutatis mutandis, to the services rendered or provided under this Ordinance, namely:− (a) clause (b) of sub-section (2) and sub-sections (6) and (7) of section 3;   2 Sub-section (1) substituted by Finance (Supplementary) Act, 2022. 3 New sub-section (1A) inserted by the Finance Act, 2021. 4The words brackets and figure “column (2) of” inserted by the Finance Act, 2015 5 Expression substituted by Finance (Supplementary) Act, 2022. 6 New sub-sections (2A) added through Finance Act, 2016. Islamabad Capital Territory (Tax on Services) Ordinance, 2001 5 b) serial number 2, in column (1), and the entries relating thereto of the Fifth Schedule read with section 4; c) sub-sections (2), (3), (6) and (7) of section 13; and (d) serial number 48, in column (1), and entries relating thereto of Table 1 of Sixth Schedule read with section 13.”. 7 [(2B) The tax levied under sub-section (1) shall not be applicable to regulatory and licensing services rendered or provided by an organization established by or under a Federal statute]. (3) All the provisions of the Sales Tax Act, 1990, and rules made and notifications, orders and instructions issued there under shall, mutatis mutandis, apply to the collection and payment of tax under this Ordinance in so far as they relate to – (a) manner, time and mode of payment; (b) registration and de-registration; (c) keeping of records and audit; (d) enforcement and adjudication; (e) penalties and prosecution; and (f) all other allied and ancillary matters. ————————   7 Sub-section (2B) inserted by Finance Act, 2016 Islamabad Capital Territory (Tax on Services) Ordinance, 2001 6 8 [Table-1] [See section 3(2)] S.No. Description PCT Heading, if applicable Rate of Tax (1) (2) (3) (4) 9 [1. Services provided or rendered by hotels, motels, guest houses, farmhouses, restaurants, marriage halls, lawns, clubs and caterers. Services provided are rendered by hotels motels, guest houses and farmhouses. Services provided or rendered by restaurants. Services provided or rendered by marriage halls and lawns. Services provided or rendered by clubs. Services provided or rendered by carters, suppliers of food and drinks. 98.01 10[Fifteen percent Advertisement on television and radio, excluding advertisements– (a) sponsored by an agency of the Federal or Provincial Government for health education; (b) sponsored by the Population Welfare Division relating to

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