Tax Book 2023

Scope and Payment of Tax Chapter- 05

Provided that from the date to be notified by the Board in this respect, in addition to

above, if the supplier has not declared such supply in his return or he has not paid

amount of tax due as indicated in his return;

(ii) in case of imported goods, he holds bill of entry or goods declaration, duly cleared under

the Customs Act, 1969;

(iii) in case of goods purchased in auction, he holds a treasury challan, registration number,

showing payment of sales tax;

7. Apportionment of input tax (Rule 24 and 25):

Apportionment of input tax shall be used by registered persons who make taxable and exempt

supplies simultaneously.

Input tax on wholly taxable supplies shall be admissible.

Input tax paid wholly to exempt supplies shall not be admissible.

The input tax incurred for making both exempt and taxable supplies shall be apportioned

according to the following formula, namely;

Residual input tax on taxable supplies =

Valueoftaxable exempt plies

Valueoftaxable plies

sup

sup



x Residual input

tax

Monthly adjustment of input tax claimed by a registered person shall be treated as provisional

adjustment and at the end of each financial year, the registered person shall make final

adjustment on the basis of taxable and exempt supplies made during that year.

Any input tax adjustment claimed wrongfully on account of incorrect application of above formula

shall be punishable under the respective provisions of law irrespective of the fact that the claim

was provisional.

8. Tax credit not allowed (U/S 8 & 21):

A registered person shall not be entitled to reclaim or deduct input tax paid on -

(a) the goods or services to be used other than for taxable supplies;

(b) any other goods or services notified by the Board [SRO 578(I)1998 dated June 12,1998]

with the approval of the Minister Incharge of the Federal Government;

The Federal Government vide SRO 488(I)/2003 dated June 12, 2003 has notified the

following goods that a registered person cannot supply to unregistered person under the

Sales Tax Act, 1990:

• Polypropylene granules (type yarn grade falling under PCT Heading 3902-1000);


• Molasses falling under PCT heading 1703.1000;


• Un-manufactured Tobacco;


• Air-conditioning, chilling plants and humidification plants;


• Cranes; and


• Propane storage tank, heat exchanger and gas separator.
  Note: Above restriction shall not apply on the aforesaid last three items if the same are
  supplied to retail sale to ultimate consumer, Government Organization and persons not
  liable to income tax but are liable to deduct tax at source under the Income Tax
  Ordinance, 2001.
  The Federal Government vide SRO 490(I)/2004 dated June 12, 2004 has notified the
  following goods on which a registered person cannot claim input tax:


• Vehicles falling in chapter 87 of the First Schedule to the Customs Act, 1969;


• Food, beverages, garments, Fabrics etc and consumption of entertainments;