Sales tax Terms and Definitions

 Sales tax Basic Terms

 

Sales tax Terms and Definitions

Definitions:

Part-1:

 1.             Tax period: is a period of one month or such other period specified by the federal government..

2.             Due date:  for furnishing of return is the 15th day of the month following the end of the tax period or that date specified by the board and different dates may be specified for furnishing of different parts of annexures of the return

3.             Input tax: in relation to a registered person means;

a) Tax levied on the supply of goods received by the person

b)        Tax charged on the production of goods or    providing of services

4.             Taxable goods means all goods other than exempt under section 13 

5.             Taxable activity means an economic activity carried on by a person and includes;

·      An activity carried on in the form of a business, trade, or manufacturing

·      An activity that involves the supply of goods and providing of services 

6.             Taxable supply means a supply of taxable goods made by an importer, manufacturer, wholesaler, distributor, or retailer other than exempt supply and includes a zero-rated supply

7.             Exempt supply means a supply that is exempt from tax 

8.             Zero-rated supply means a supply that is charged to tax at the rate of 0% under section 4 

Definitions:

part-2:

 Manufacture or produce includes;

Sales tax Terms and Definitions

(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

(b) Process of printing, publishing, lithography, and engraving;  

(c) Process and operations of assembling, mixing, cutting, diluting, bottling, packaging, repacking, or preparation of goods in any other manner

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

·       shall include  

(a)   a person who by any process or operation assembles, mixes,

cuts dilute, bottles, packages, repackages, or prepares goods in any other manner

(b)   Any person who owns or uses any patent or right for manufacturing of goods

Cottage industry:

Means a manufacturer whose

·       Annual turnover from taxable supplies made in any tax period during the last twelve months does not exceed 3 million rupees or

·       Annual utility (electricity, gas, and telephone) bills during the last twelve months do not exceed 4 hundred thousand rupees

Retail price:

This means the 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 public

Retailer:

This means a person supplying goods to the general public for the purpose of consumption

A person, who combines the business of:

·       Import and retail

·       Manufacture or production with retail,

Shall

·       Notify and advertise wholesale prices and retail prices separately,

·       And declare the address of retail outlets 

Open market price:

This means the consideration in money which that supply or a similar supply would generally fetch in an open market

Supply chain:

This means the series of transactions between buyers and sellers from the stage of first purchase or import to the stage of final supply

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 the supply of goods as a wholesaler or a retailer

Wholesaler:

Means any person

·       Buying and selling of goods by wholesale or

·       Supplying goods, directly or indirectly, by wholesale

For cash or deferred payment or for a commission or other valuable consideration 

Active taxpayer: means a registered person who doesn’t fall in any of the following categories;

a)    Who is blacklisted or those whose registration is suspended or blocked

b)    Fails to file the return by the due date for 2 consecutive tax periods

 Normal rates of sales tax:

Sales tax shall be charged at the rate of 17% of the value of;

Ø Taxable supplies made by a registered person during any taxable   activity carried on by him; and

Ø Goods imported into Pakistan 

 Further tax:

Where taxable supplies are made to a person who has not obtained a registration number, a further tax shall be charged at the rate of the value in addition to 17%

 Capacity tax:

The board may charge tax;

o   On the production capacity of the plant

o   On a fixed basis from a person 

Time and manner of payment:

            I.            Time of payment of tax on imported goods:

The tax on goods imported into Pakistan shall be paid at the same time at which customs duty is payable.

         II.            Time of payment of tax on taxable supplies:

The tax shall be paid by the registered person at the time of filing the return

      III.            Mode or mode of tax payment:

The tax on goods imported shall be paid in the same manner as if it is a customs duty payable

The tax due on taxable supplies shall be paid by any of the following modes;

a)     Through deposit in a bank designated by the board; and

b)    Through such other mode and manner specified by the board.