There are different types of taxes in Pakistan, but they can be broadly categorized into direct and
indirect taxes. Direct taxes are those which are charged directly from the taxpayer, while indirect
taxes are those where the burden is eventually borne by the end-consumer. Sale tax is an indirect
tax which in Pakistan is levied at multiple points. This means that every time goods or services are
sold commercially, sales tax must be charged.
The 18th Amendment to the Constitution of Pakistan promises financial autonomy to the provinces.
In the same vein, sales tax on services has been given to the provinces, and is not the subject matter
of this article. This article focuses on the procedure for filing a sales tax return with regard to the sale
of goods only. Sales tax on goods is the domain of the federal government and is regulated by the
Federal Board of Revenue in terms of the Sales Tax Act 1990.
The Act 1990 applies to businesses engaged in the import, export, sale, and purchase of goods. If you
are a business owner in Pakistan, you are required to file a Sales Tax Return if your business is
engaged in commercial sale and purchase, import, or export of goods.
All importers, wholesalers, and distributors must be registered with the government, except for
cottage industry manufacturers (defined as having annual turnover below Rs.5 million and annual
utility bill below Rs. 600,000/-). Retailers making over 5 million rupees in any 12-month period must
also be registered. Service providers such as hotels, clubs, caterers, customs agents, ship chandlers,
stevedores, and courier services must also be registered by law.
Persons making zero-rated supplies, including commercial exporters who intend to obtain a sales tax
refund on their zero-rated supplies, can still be compulsorily registered by the FBR after conducting
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