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Sale Tax

History of Sales Tax in Pakistan

The sales tax system in Pakistan has evolved over time, influenced by economic needs, international practices, and fiscal policies. Below is an overview of its historical development:

  • Pre-Independence Era (Before 1947)
  • The concept of sales tax was introduced in British India in 1938.
  • It was levied under the Government of India Act, 1935, primarily at the provincial level.
  • Post-Independence & Early Implementation (1947-1990s)
  • After independence in 1947, Pakistan inherited the sales tax system from British India.
  • Initially, sales tax was imposed under the Sales Tax Act of 1951 as a federal levy.
  • Over time, the system underwent modifications to align with changing economic conditions.
  • Sales tax remained largely confined to goods and was collected at the manufacturing and import stages.
  • Major Reforms in the 1990s
  • The 1990s saw a shift from a cascading sales tax to a Value-Added Tax (VAT)-modeled General Sales Tax (GST) system.
  • The General Sales Tax (GST) Act, 1990 was introduced, replacing earlier sales tax laws.
  • GST was applied at multiple stages, including manufacturing, imports, and services.
  • The Federal Board of Revenue (FBR) took charge of its administration.
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  • Pre-Independence Era (Before 1947)
  • The scope of GST was expanded to more goods and services over the years.
  • The Tax Reforms Strategy (2001-2002) modernized sales tax administration, promoting electronic filing and stricter enforcement.
  • GST rates fluctuated between 15% and 17%, with exemptions granted to specific sectors.
  • Provinces gained control over services taxation after the 18th Constitutional Amendment (2010), leading to the creation of provincial revenue authorities.
  • Recent Developments (2020s-Present)
  • GST remains a major revenue source for the government.
  • Pakistan has taken steps to digitize tax collection and broaden the tax base.
  • The standard GST rate is 17%, but some sectors (such as essential goods) are taxed at reduced rates.
  • The government has introduced reforms to curb tax evasion and improve compliance.
  • International Monetary Fund (IMF) programs have influenced sales tax policies, particularly regarding taxation of the retail and service sectors.
  • Current Sales Tax Framework in Pakistan
  • Administered by: Federal Board of Revenue (FBR) for goods; Provincial Revenue Authorities for services.
  • Standard Rate: 17% (with sector-specific variations).
  • Collection Points: Manufacturing, import, wholesale, and retail levels.
  • Key Provincial Authorities:
    • Punjab Revenue Authority (PRA)
    • Sindh Revenue Board (SRB)
    • Khyber Pakhtunkhwa Revenue Authority (KPRA)
    • Balochistan Revenue Authority (BRA)

Sales Tax (GST & PST) Services

Sales Tax is a mandatory tax on the supply of goods and services in Pakistan. Businesses must register for General Sales Tax (GST) with the Federal Board of Revenue (FBR) and Provincial Sales Tax (PST) with respective provincial authorities. Timely registration and tax filing ensure compliance and avoid penalties.

Our Services Include:

  • 1. Sales Tax - GST Registration

We assist businesses in registering for Federal Sales Tax (GST) with the FBR, enabling them to charge and collect sales tax legally.

✔ Preparation and submission of GST registration application
✔ Guidance on compliance and tax obligations
✔ Issuance of Sales Tax Registration Number (STRN)

Requirements:

  • CNIC of business owner
  • Business NTN and registration details
  • Bank account details and business invoices
  • 2. Sales Tax - GST Monthly Federal Sales Tax Return Filing

  • All GST-registered businesses must file monthly returns with the FBR, declaring taxable sales and input tax. We ensure accurate and timely filing.

    ✔ Preparation and submission of monthly GST returns
    ✔ Calculation of output and input tax adjustments
    ✔ Avoidance of fines and penalties due to late filing

    Requirements:

    • Sales and purchase invoices
    • Previous tax return details (if applicable)
    • STRN and business financials
  • 3. Sales Tax - PST Registration

Businesses offering services must register for Provincial Sales Tax (PST) with the respective tax authorities in Punjab, Sindh, KPK, and Balochistan.

✔ PST registration with provincial revenue authorities
✔ Compliance guidance based on business location
✔ Issuance of Provincial Sales Tax Number (PSTN)

Requirements:

  • Business NTN and registration documents
  • Bank account details
  • Service-related invoices
  • 4. Sales Tax - PST Sales Tax Return Filing

  • Service providers must file monthly PST returns with provincial tax authorities. We manage the filing process and ensure compliance.

    ✔ Preparation and submission of PST returns
    ✔ Input tax adjustment and claim verification
    ✔ Filing before the deadline to prevent penalties

    Requirements:

    • Sales invoices and service contracts
    • Provincial tax details
    • Previous return details (if applicable)

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