SHEKHA & MUFTI

CHARTERED ACCOUNTANTS

SALES TAX & FEDERAL EXCISE DUTY

ICAP Module F Examination
December 2009

ADNAN MUFTI, FCA

An independent member firm of

MOORE STEPHENS
INTERNATIONAL LIMITED

members in principals cities

across the world
SALES TAX - Key Concepts
 Definitions:
Input Tax, Output Tax, Associated Person, Taxable Activity, Supply, Taxable
Supply, Value of Supply, Manufacturer, Retailer
 Scope of Tax
- Normal Regime
- Retail Price Regime
 Buyer’s Liability
- Purchase in Auction (Section 7)
- Input Tax adjustment in case of non payment of output tax by supplier
(Section 8)
- Joint & Several Liability (Section 8A)
- Withholding Tax on Advertisements / Purchases from non LTU taxpayers
- Sale of Taxable Activity (Section 49)
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SALES TAX - Key Concepts
 Zero Rating (5th Schedule, SRO 549(I)/2008 dated 11 June 2008
 Determination of Tax Liability (Section 7, 8B, 9 & 73)
 Inadmissible Input Tax Credit (Section 8, SRO 490(I)/2004 dated 12
June 2004, SRO 488(I)/2004 dated 12 June 2004)
 Refunds
- Export Refunds (Section 10)
- Non Export Refunds (Chapter V of Sales Tax Rules 2006)
- Refund for Large Taxpayers’ Units (Chapter V of Sales Tax Rules
2006)
- Refund (Section 66)
- Inter-tax Refund / Adjustment Procedure (General Order dated 24
April 2007)

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SALES TAX - Key Concepts
 Short Paid Amount Recoverable without Show Cause Notice (Section
11A)
 E-intermediaries (Section 52A read with Chapter XIII of Sales Tax
Rules 2006)
 Representatives (Section 58A & 58B)
 Tax paid on Stock before Registration (Section 59)
 Condonation of Time (Section 73 & SRO 978(I)/2004 dated 10
December 2004)
 Presumptive Tax Regime [Section 11(5) & Para I (21) of Sales Tax
General Order 1 of 2004]
 Black Listing & Suspension of Regulation (Section 21 & Rule 12 of
Sales Tax Rules 2006)

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SALES TAX - Key Concepts
 Special Procedure for Payment of Sales Tax by Importer (2% Value
Addition Tax only for Commercial Imports)
 Special Procedure for Payment of Sales Tax by Retailers (Turnover
Tax)
 Special Procedure for Payment of Sales Tax by Wholesale cum
Retailers
 Special Procedure for Electrical Appliances (0.75% extra tax on TV,
Refrigerator, Freezer, AC, Ovens, Microwave, Washing Machine,
Spin Dyers, CD/DVD)
 Service Taxation (Special Procedure Rules 2007 - Scope, Value of
Supply, Time of Supply, Advertisements, Customs Agents)
 Withholding Sales Tax Rules 2007 (as amended by SRO 603(I)/2009
& SRO 704(I)/2009

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FEDERAL EXCISE DUTY - Key Concepts
 Definitions: Manufacturer, Goods, Dutiable Goods, Non-fund Banking
Services, Supply, Dutiable Supply
 Scope of Duty (Section 3)
 Special Excise Duty (Section 3A read with SRO 655 and Federal
Excise General Orders 3 of 2007 & 1 of 2008
 Adjustment of Duty [Section 6, Rule 13(1) & Rule 13(3)]
 Excisable Goods / Services operate on VAT Mode (Section 7, 2nd
Schedule & SRO 478(I)/2009 dated 13 June 2009
 Value for Duty Purposes (Section 12)
 Exemptions (Section 16)
 Invoices [Section 18, Rule 11(3) & Rule 11(4)]
 Storage of excisable goods (Rule 16)
 Daily Account of Production, etc (Rule 17) 6
FEDERAL EXCISE DUTY - Key Concepts
 Special procedure for insurance companies
 Special procedure for banking / non banking companies
 Special procedure for Domestic & International Air Travel
 Special procedure for telecommunication services
 Special procedure for franchise fee or technical fee or royalty under a
franchise agreement
Not applicable on franchise services payable by vendors of auto parts
industry having technical arrangements with foreign based auto parts
manufacturing companies

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FEDERAL EXCISE DUTY - Key Concepts
 Special procedure for insurance companies
 Special procedure for banking / non banking companies
 Special procedure for Domestic & International Air Travel
 Special procedure for telecommunication services
 Special procedure for franchise fee or technical fee or royalty under a
franchise agreement
Not applicable on franchise services payable by vendors of auto parts
industry having technical arrangements with foreign based auto parts
manufacturing companies

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THANK YOU