Can a shop charge sales tax on top of the printed retail price of packaged goods?

Packaged goods in the Third Schedule are taxed differently from most goods. Instead of taxing each sale on the price actually charged, the Sales Tax Act, 1990 fixes the tax once, on the retail price the manufacturer or importer sets, and requires that price and the tax to be printed on the pack.

What does the law say?

Section 3(2)(a) says taxable supplies and imports of goods specified in the Third Schedule “shall be charged to tax at the rate of eighteen per cent of the retail price”. If the goods are also in the Eighth Schedule, the Eighth Schedule rates apply instead. The retail price “along with the amount of sales tax shall be legibly, prominently and indelibly printed or embossed by the manufacturer”, or by the importer for imported goods, on each article, packet, container, package, cover or label.

Section 2(27) defines “retail price”, with reference to the Third Schedule, as the price fixed by the manufacturer or importer, inclusive of all duties, charges and taxes other than sales tax, at which the brand or variety is sold to the general body of consumers. Where more than one price is fixed for the same brand or variety, the highest applies. Further provisos allow:

• the Board to specify zones or areas for fixing the highest retail price;
• the Board to fix the retail price of Third Schedule goods by notification where it deems it necessary;
• for imported Third Schedule goods, a floor: the retail price cannot be less than 130 percent of the customs value under section 25 of the Customs Act, 1969, including customs duties and federal excise duty.

The first proviso to section 3(2)(a) lets the Federal Government notify a higher rate on the retail price for Third Schedule goods. A note at the end of the Schedule says that where a rate higher than eighteen percent has been notified, it continues after the goods are included in the Schedule.

Which goods are on the list?

The Third Schedule, as amended to 30 June 2026, includes these live serials (several others are marked omitted):

Group	Examples from the Schedule
Drinks	Fruit and vegetable juices, aerated waters, syrups and squashes, powder and milky drinks, mineral or bottled water, fermented beverages in retail packing
Food	Ice cream, tea, branded spices in retail packing, branded biscuits, cooking fats and oils, sugar confectionery, pasta, sauces, jams, milk products and infant preparations, all in retail packing
Personal care	Toilet soap, detergents, shampoo, toothpaste, shaving cream, perfumery and cosmetics, hair and shaving preparations, toilet and tissue paper
Household	Electrical goods such as ACs, fridges, TVs and fans, gas appliances, mattresses, paints, crockery, plastic household articles, utensils, sanitaryware and ceramic products
Vehicles	Lubricants, batteries, tyres and tubes, auto parts and car accessories in retail packing, motorcycles, auto rickshaws
Other	Cigarettes, shoe polish, cement in retail packing, tiles, DAP, bags and cases, footwear, and certain imported pet food, coffee, chocolates and cereal bars

Serials 56 to 75 were added by the Finance Act, 2026. Several entries carry their own limits, such as “sold in retail packing” or “excluding those sold to automotive manufacturers or assemblers”.

What is the footwear exception?

Serial 65 reads “Footwear (all types) except where the manufacturer exclusively sells its products through digitally integrated and POS compliant retail outlets”. A manufacturer that sells only through integrated, POS compliant outlets is outside this entry, so its footwear does not fall under the retail-price rule through serial 65. The general rule in section 3(1) is then the starting point.

Worked example (illustrative figures)

A shampoo bottle bought in Multan has a printed retail price of Rs. 500.

1. Sales tax at eighteen percent of the retail price: 18% x Rs. 500 = Rs. 90.
2. The pack should show the retail price of Rs. 500 along with the sales tax of Rs. 90. Together the two printed figures come to Rs. 590.
3. Suppose the shop’s bill instead adds “sales tax 18%” to Rs. 590: 18% x Rs. 590 = Rs. 106.20, making Rs. 696.20.

That extra Rs. 106.20 is tax charged a second time on an amount that already includes the tax. Section 3(2)(a) charges tax on the retail price once. Section 3B(1) covers any person who collects tax that was not payable, or more than was payable, and passes it on to the consumer: that amount must be paid to the Federal Government.

What if the pack shows no price or tax?

The duty to print falls on the manufacturer, or the importer for imported goods. The Act as read does not set out a separate rule for what a retailer should do with an unmarked Third Schedule item. It does let the Board fix retail prices by notification.

Common mistakes

• Treating the printed retail price as tax-inclusive. Section 2(27) excludes sales tax from the retail price. The tax is a separate printed figure.
• Assuming every packaged item is on the list. Only the goods in the Third Schedule are taxed this way, and the Board can add or remove items by notification under the second proviso to section 3(2)(a).
• Assuming all footwear is covered. Serial 65 has its own exception for integrated, POS compliant outlets.

What to check in the official text

Read sections 2(27), 3(2)(a) and 3B and the Third Schedule in the Sales Tax Act as amended to 30 June 2026. Check any Board notification adding or removing items, fixing retail prices or specifying zones, and any Federal Government notification of a higher rate. Those notifications are not held in this corpus.