Amendments in the Sales Tax Rules, 2006

GOVERNMENT OF PAKISTAN REVENUE DIVISION FEDERAL BOARD OF REVENUE **** Islamabad, the 19th July, 2008 NOTIFICATION (SALES TAX) S.R.O. 761(I)/2008.- In exercise of the powers conferred by sub-section (1) of section 4 and section 40 of the Federal Excise Act, 2005, section 219 of the Customs Act, 1969 (IV of 1969), section 50 of the Sales Tax Act, 1990, read with sub-section (2) of section 8, clause (ii) of sub-section (2) of section 8B, sections 9, 10, 14, 21 and 28, clause (c) of sub-section (1) of section 22, section 26, sub-section (6) of section 47A, sections 48, 50A, 52, 52A and 66 thereof, the Federal Board of Revenue is pleased to direct that the following further amendments shall be made in the Sales Tax Rules, 2006, namely:- In the aforesaid Rules,- (1) in rule 28, in the third proviso, for the word “sixty”, the words “one hundred and twenty” shall be substituted; (2) in form STR-1, in the “Filling Instructions for STR-1”, in the entry against serial No. 11, for the words, letters and figures “u/s 172 of Income Tax Ordinance 2001”, the words and figure “in section 58A of the Act” shall be substituted; (3) in form STR-5, after the entry “Sales Tax Reg. No. 12-34-5678-980-12”, the following new entry shall be inserted, namely:─ “Date of Registration dd/mm/yyyy”; and (4) for form STR-7, the following shall be substituted, namely:-

"STR-7Government of Pakistan Sales Tax & Federal Excise Return-cum-Payment Challan [See rule 14(1)] NTN CNIC (in case of Individual) STRN (Sales Tax Registration No.) - Name Normal Revised Monthly Quarterly Tax Period (MMYY) REGISTRY Description Gross Value Taxable Value Sales Tax 1 Domestic Purchases (excluding fixed assets) Annex-A - - - 2 Imports excluding fixed assets (includes 2% on commercial imports) Annex-B - - - CREDITS 3 Capital/ fixed assets to be credited at 1/12th of accumulated amount - TAX 4 (-) Inadmissible input tax relating to exempt supplies/ non-taxed services etc. - SALES 56 (+)InputPreviousTax for monththe monthcredit(1brought+ 2 + 3 forward- 4) -- 7 Accumulated Credit (5 + 6) - 8 Supplies Made & Services Rendered Annex-C - - - 9 Exports Annex-D - 10 Extra Tax charged under Chapter XIII of ST Sp. Procedure Rules '07 Annex-C - 11 Output Tax (8 + 10) - 12 Retail Turnover - for the Quarter 0 Turnover - - DEBITS 13 Electricity supplied to steel sector KWH - x Rs. 6.00 - TAX 14 Re-rollable scrap sold by ship breakers M Tons - x Rs. 4,848 - 15 Re-meltable scrap sold by ship breakers M Tons - SALES 16 Less: Sales Tax deducted by withholding agent @ 1/5th of tax invoiced - 17 Debit for the month (11 + 12 + 13 + 14 - 16) - 18 Sales Tax withheld by the return filer as withholding agent (STWH) - 19 Sales Tax Arrears including Principal, Def Surch. & penalty - 20 Whether excluded from Section 8B(1), under SRO 647(I)/2007 (Yes / No) 21 Admissible Credit - if 20 = Yes then 7; if 20 = No, then least of 7 or "90% of 11" or 17 - REFUND 22 Payable ST - if 17 > 21 then (17 - 21 + 18 + 19); otherwise 18 + 19 - 23 Excess Unadjusted Credit - if 20 = Yes and if 21 > 17 then (21 - 17); otherwise zero; if 20 = No then (7 - 21) - 24 Refund claim i.e. input consumed in zero-rated or excess of input tax as per rules - PAYABLE/ 25 Balance Credit to be carried forward - if 24 < 23, then (23 - 24); otherwizero zero - 26 Federal Excise Duty (FED) Payable / (FED Drawback) Annex-E - 27 Goods chargeable to Special Excise Duty (SED) Annex-C - 28 (-) SED on inputs used in manufacturing of Goods supplied for domestic consumption 29 (-) SED paid on goods used in manufacturing of Goods exported (drawback) 30 Net SED Payable (27 - 28 - 29) - 31 SED Arrears 32 Net FED Payable If 26 + 30 > 0 then (26 + 30 + 31), else 31 - 33 FED/ SED Drawback if 26 + 30 < 0 then -(26 + 30), else zero - PAYMENTS 34 PDL - Petroleum Development Levy - 35 Total Taxes Payable (22 + 32+ 34) - 36 Tax paid on normal/ original return (applicable in case of revised return) - 37 Balance Tax Payable/ (Refundable) (35 - 36) - 38 Bank Account for payment of refund A/C Bank Branch I,_______________________________________________________________________, holder of CNIC No. _______________________________________ In my capacity as self/member or partner of association of persons/principal/ officer / trustee/ representative of named above, do solemnly declare that to the best of my knowledge and belief the information given in this return is correct and complete in DECLARATION Date_______________Stamp________________________________Signature____________________________ Head of Account Amount CPR No. Amount B02341 - Sales Tax - - B02366 - Sales Tax on services - - Use B02367 - FED in VAT mode - - ACCOUNTS B02485 - Federal Excise Duty - Bank -OF B03041 - PDL - For Total Amount in Figures - HEAD Amount Received in words: TOTAL AMOUNT PAYABLE - Bank Officer's Signatures, Date & Stamp

STR-7 (Contd:) Annex-A SUMMARY OF DOMESTIC PURCHASES NTN 99999999-9 STRN xx-xx-xxxx-xxx-xx Tax Period MM-YY Name of Registered Person S. Particulars of Suppliers No. of Value of Sales Tax 1% SED Extra tax (paid Nr. Invoices/ Purchases under Chapter Debit/ Excluding XIII of ST Sp. Credit S/Tax Procedures Notes Rules, 2007) Name NTN STRN CNIC Total (Net after incorporating the Debit/ Credit - - - - Notes, if any) CATEGORY WISE SUMMARY: Value Sales Tax Taxable Goods @ 16% (excluding fixed assets) - @ 18.5% (excluding fixed assets) - @ 21% (excluding fixed assets) - Fixed Assets Third Schedule Goods - Taxable Services purchased (including provincial tax and FED in Sales Tax mode) @ 16% - @ 21% - Others (Pl. specify) Zero-rated DTRE Other local zero-rated Exempt domestic purchases/services Steel Sector: Tax paid at Rs. 6/KWH on electricity bill KWH CNG Dealers: Natural gas purchased Tax paid at 25% Notes: 1) Supplier-wise summary should be provided for all taxable (excluding zero-rated) purchases made from registered persons. 2) Supplier-wise summary is not required to be submitted by retailers and CNG dealers and in respect of those purchases on which registered persons operating under special procedures are not entitled to claim input tax credit. 3) 'Others' category also covers purchases made from unregistered persons and should also include purchases for which no separate column is provided.

STR-7 (Contd:) Annex-B SUMMARY OF IMPORTS NTN 99999999-9 STRN xx-xx-xxxx-xxx-xx Tax Period MM-YY Name of Registered Person S. Particulars of GD Imports Sales Import Value for Sales Tax 2% Sales 1% SED Nr. (Machine No.) Tax Type Sales Tax paid at Tax on Rate import commer- Type stage cial No. Date imports D D D G G G Collectorate Total - - - - GD Types Collectorates Import Rate/ Type-wise summary Value Sales Tax EB KAPR Types Imports @ 16% (excl. fixed assets) - HC KOIL General Imports @ 18.5% (excl. fixed assets) - ST Rates KAFU Commercial Imports @ 21% (excl. fixed assets) - 0% LDRY Fixed Assets Zero Rated 16% PDRY Edible Oil Imports at other rates - 18.5% MDRY Ship for Fixed Assets - 21% QDRY breaking Exempt Imports Exempt (Also see Ship for breaking LDT instructions) Note: If there are if items of different rates and types are imported on a single GD, separate line for each type/ rate may be entered in GD-wise summary

STR-7 (Contd:) Annex-C SUMMARY OF DOMESTIC SALES NTN 99999999-9 STRN xx-xx-xxxx-xxx-xx Tax Period MM-YY Name of Registered Person S. Particulars of buyers No. of Value of Sales Tax 1% SED Extra tax Nr. Invoices/ Supplies (charged Debit/ Excluding under Chapter Credit S/Tax XIII of ST Sp. Notes Procedures Rules, 2007) Name NTN STRN CNIC All supplies to unregistered persons Total (Net after incorporating the Debit/ Credit - - - - Notes, if any) CATEGORY WISE SUMMARY: Value Sales Tax Taxable Goods & services @ 16% - @ 18.5% - @ 21% - @ 25% (Natural Gas supplied to CNG dealers) - Third Schedule Goods - Taxable Services rendered (including provincial tax and FED in Sales Tax mode) @ 16% - @ 21% - Others (Pl. specify) - Zero-rated DTRE Other local zero-rated Exempt supplies/services Invoices issued under special procedures Tax invoiced Notes: 1) The buyer-wise summary should be provided for all taxable sales (excluding zero-rated) to registered persons. 2) The buyer-wise summary is not required to be submitted by retailers and CNG dealers. 3) 'Others' category covers supplies for which no separate column is provided. 4) 'Invoices issued under special procedures' reflect sales tax for which sales tax liability is discharged under special procedures and tax on invoice does not form part of output tax.

STR-7 (Cond:) Annex-D SUMMARY OF EXPORTS NTN 99999999-9 STRN xx-xx-xxxx-xxx-xx Tax Period MM-YY Name of Registered Person S. Particulars of GD Exports (Machine No.) Value of Exports in Pak Rupees Nr. Collectorate GD Type GD No. GD Date Total - Annex-E FEDERAL EXCISES NTN 99999999-9 STRN 9999999999999999 xxxxxxxxx Name of Taxpayer xxxxxxxxxxx Tax Period MM-YY Value/ Quantity Rate FED 1 Excisable goods supplied/ services provided (a) 2 (b) 3 (c) 4 (d) 5 (e) 6 (f) 7 Excisable goods exported 8 Zero-rated supplies 9 Exempt supplies 10 (-) FED paid on goods used in manufacturing of Goods supplied for domestic consumption 11 Payable FED - Add 1 to 9 minus 10 (ignore negative value) - 12 (-) FED paid on goods used in manufacturing of Goods exported (drawback) 13 Total FED (11 - 12) FED Arrears FED liability due to late filing 14 Principal amount 18 Default surcharge 15 Default surcharge 19 Penalty 16 Penalty 20 Surcharges 17 FED (ARR) (Add 14 to 16) - 21 FED (SUR + PEN) (Add 18 to 21) - 22 Net FED Payable / (Net FED Drawback) (13+ 17 + 21)

STR-7 (Contd:) Annex-F INSTRUCTIONS HOW TO FILL UP THE RETURN 1. These instructions are illustrative only and have no effect upon the provisions of the Sales Tax Act, 1990 or the Federal Excise Act, 2005. 2. This return is required to be filled by all persons registered under the Sales Tax Act, 1990 and the Federal Excise Act, 2005. 3. Instructions relating to different parts of the return are given below, namely:- Registry CNIC. The registered person having the status of ‘individual’ or ‘proprietor’ is required to mention his Computerized National Identity Card number. In all other cases this information can be skipped. Normal/ Revised. Normal return means the first return filed for any specific tax period. A revised return can be filed under sub-sections (3) and (4) of section 26 of the Sales Tax Act, 1990. While filing the revised return, the taxpayer shall check the relevant box and fill in all the relevant data for the month including the columns which were correctly filled in the normal return. Monthly/ Quarterly. All registered persons are required to file return on monthly basis, except retailers, CNG dealers and dealers of specified electric goods operating under special procedures. Tax Period. The tax period has to be mentioned in the format “mm yy”. For example, July 2008 is to be mentioned as “0│7│0│8”. The persons filing the quarterly return shall mention the last month of the quarter. For example, in case of quarter July to September 2008, the month of September 2007 should be mentioned as “0│9│0│8”. Sales Tax Credits Col 1. Domestic Purchases (excluding fixed assets). All purchases should be mentioned here. Gross Value means total value of all purchases including taxable and otherwise. Value of taxable purchases would come under ‘Taxable Value’. In case of electronic filing, these fields would be automatically filled based on summary of purchases in Annex A of the return.

Col 2: Imports (excluding fixed assets). This column would also be filled on the basis of details of imports as provided in Annex B. Col 3. Capital/ fixed assets to be credited at 1/12th of accumulated amount. The ‘accumulated amount’ is the admissible input tax paid on fixed assets during the relevant tax period and previous eleven tax periods. This amount should be divided by 12 to obtain the input tax deductible during the relevant tax period. Col 4. Inadmissible input tax relating to exempt supplies/ non-taxed services etc. The input tax which is attributed to exempt supplies or to non-taxable services is to be mentioned here. Any other input tax which is not admissible as credit is also to be included. If any part of input tax relates to both taxable and exempt supplies or services, inadmissible input tax is to be calculated in accordance with Chapter IV of these rules. Col 6. Previous month credit brought forward. This is the amount of tax which could not be adjusted in previous month and should strictly be the amount mentioned in the column ‘Balance Credit to be carried forward’ in the return for the preceding tax period. It is to be noted that previous month’s refund claim should not be included in this column. Col 7. Accumulated Credit. This is the total input tax available for adjustment against output tax. This is the sum of total admissible Input tax for the month plus credit brought forward from the previous month. Sales Tax Debits Col 8. Supplies Made & Services Rendered. Value of sales and services shall be based on entries made in Annex C. It may be noted that the services chargeable to sales tax under provincial ordinances and the services subject to FED in VAT mode are to be included in the said Annex. For example courier services and domestic air travel services etc. Col 10. Extra Tax. The manufacturers and importers charging extra tax under Chapter XIII of the Sales Tax Special Procedures Rules, 2007, or otherwise, shall mention the same in Annex C and the total figure shall appear against this column. Col 12. Retail Turnover - for the Quarter. The registered persons operating retail outlets are required to pay sales tax on total turnover of such retail outlets. The retailers shall discharge their liability through quarterly return as per formula given in Chapter II of the Sales Tax Special Procedures Rules, 2007. However, for the purpose of exemption the turnover of last twelve months as specified in Sixth Schedule to the Act shall be relevant.

Col 13. Electricity supplied to steel sector. The electricity distribution companies shall mention the units supplied to steel sector as covered under the Sales Tax Special Procedures Rules, 2007, on which sales tax is payable at the rate of Rs. 6.00 per unit. Col 16. Less: Sales Tax deducted by withholding agent @ 1/5th of tax invoiced. This column allows a registered person to subtract the sales tax which has been deducted by a withholding agent from his output tax liability. Only the amount actually deducted needs to be mentioned. Col 18. Sales Tax withheld by the return filer (STWH). If a registered person is also withholding sales tax under the Sales Tax Special Procedure (Withholding) Rules, 2007, he shall mention the tax deducted during the tax period from the amounts payable to suppliers. Col 19. Sales Tax Arrears. Outstanding sales tax arrears can be deposited against this column. Col 20. Whether excluded from Section 8B(1), under SRO 647(I)/2007. The registered person should say yes, if they fall in any of the categories specified in above said notification. The formula given in next column shall determine admissible credit based on the reply in this column. Col 23. Excess Unadjusted Credit. This is the excess of input tax which is available either for carry forward or for claiming refund under rules. This is worked out with the help of formulae provided. Col 24. Refund claim. The persons making zero-rating supplies can claim refund of excess input tax relating to inputs actually consumed in zero-rated supplies. The balance excess can be carried forward. Persons making supplies other than zero-rated can claim refund of excess input tax in the manner as provided in Chapter V of these rules. Col 27. Goods chargeable to Special Excise Duty. Information in respect of SED under S.R.O. 655(I)/2007 is to be provided in Annex C and the same shall also appear in this column. Col 28. SED on inputs used in manufacturing of Goods supplied for domestic consumption. SED on inputs used in goods supplied during the tax period is to be given here. It is to be noted that SED paid on inputs which are still in inventory, as raw materials or as finished goods, cannot be adjusted here. Such SED amounts can be carried forward in the accounts of the registered person and adjusted when relevant goods are supplied. Col 36. Tax paid on normal/ original return.

In case the return is being revised, the credit of the amount paid on the normal/ original return can be availed by mentioning the said amount. Col 37. Balance Tax Payable / Refundable. Balance payable is the amount to be deposited on the return. Declaration. Declaration can be filled in by any person duly authorized to file the return. CNIC mentioned here should belong to the person making the declaration. Head of Accounts. The break-up of tax being payable on the return is to be provided. If the taxpayer is dealing in more than one type of taxes he should provide the head-wise break up of the total amount payable for the month i.e. the amount mentioned in the column “Total Taxes Payable (Net ST Payable + Net FED Payable + PDL)”. The amount falling in FED and PDL can easily be determined. However, the problem may arise while providing break-up of sales tax, provincial sales tax and FED payable in VAT mode because of common inputs involved. In case the registered person is not conveniently able to determine such break-up, then the total payable amount for such heads can be apportioned on the basis of value of supplies/ services relating to a particular head of account. Annex-A and Annex C:- Purchase and Sale Summaries. The supplier/ buyer wise summaries are required in respect of all taxable items other than zero-rated, in relation to transactions with registered persons. In case of sales, sales to unregistered persons, the totals may be mentioned in the last row. Previous exceptions provided under S.R.O. 559(I)/2006 or any other circular or letter are not valid for these summaries. Annex-B and Annex D:- Import and Export Summaries. The Collectorate codes for various customs stations are given below: Sr. Customs Station Import Export No. Code Code 1 Appraisement Collectorate, Karachi KAPR ─ 2 Lahore Dry Port LDRY LEXP 3 Lahore Air Freight Unit LAFU LAFE 4 Karachi Air Freight Unit KAFU KAFE 5 Karachi Oil Section KOIL ─ 6 Sialkot Dryport SDRY SEXP 7 Faisalabad Dry Port FDRY FEXP 8 Rawalpindi Dry Port RDRY ─ 9 Hyderabad Dry Port HDRY HEXP

10 Peshawer Dry Port PDRY PEXP 11 Multan Collectorate/ Dry Port MDRY MEXP 12 Gujranwala Dry Port GDRY ─ 13 Port Qasim Karachi KPQI KPQE 14 Quetta Dry Port QDRY QEXP 15 Karachi Export Processing Zone KEPZ ─ 16 Railways (Karachi) KRLY ─ 17 Lahore Thoker Niaz Baig LTNB LTEX 18 Islamabad Airport Freight Unit IAFU ─ 19 Peshawar Airport PAFU PAFE 20 Peshawar Torkham PTOR PTRE 21 Rawalpindin Air Freight Unit RAFU RAFE 22 Sust Dry Port SUST SUSE 23 Chaman Dry Port QCHM QCHE 24 Karachi Air Frieght Unit (ICG) KAFI ─ 25 Export Processing Zone Karachi KEPI ─ 26 Islamabad Dry Port Import IDRY IDRE 27 Faisalabad Air Freight Unit FAFU FAFE 28 Lahore Air Freight Sialkot LAFS ─ 29 Sialkot EPZ Imports SIPZ SEPZ 30 Multan Air Freight Unit MAFU MAFE 31 Quetta Railway Station QRLY QRLE 32 Quetta Air Port Unit QAFU QAFE 33 Model Custom Collectorate Karachi KMCC ─ 34 Sialkot Air Freight Unit SAFU ─ 35 Karachi Export Collectorate ─ KEXP Annex E Federal Excise Duty. Col 1 to 6. Excisable goods supplied/ services provided. Space has been provided for six excisable goods/ services to cater to situations where a person is supplying or providing more than one good or service. Following nomenclature should be adhered to while specifying the goods, namely:- 1 Concentrates for aerated beverages 2 Aerated waters 3 Aerated waters with sweetener etc. 4 Aerated waters made from pulp/juice etc. 5 Unmanufactured tobacco. 6 Cigars, cheroots, cigarillos and cigarettes 7 Cement 8 Clinker 9 Solvent oil (non-composite) 10 Other petroleum oils 11 Other fuel oils 12 Lubricating oils 13 Lubricating oil in bulk

14 Lubricating oil if manufactured from reclaimed oils 15 Mineral greases 16 Base lube oil 17 Transformer oil 18 Other mineral oils 19 Waste oil 20 Petroleum gases in liquefied state 21 Natural gas in gaseous state and other petroleum gases 22 Carbon black oil etc 23 Methyl tertiary butyl ether (MBTE) 24 Flavours and concentrates 25 Perfumes and toilet waters: 26 Beauty or make-up preparations etc. 27 Preparations for hair 28 Pre-shave, shaving or after-shave preparations etc. 29 Greases 30 Organic composite solvents and thinners 31 Other solvents excluding thinners 32 Motor cars and other motor vehicles 33 Facilities for International air travel 34 Insurance Services 35 Non-fund banking services 36 Franchise services 37 Services of development of land into plots 38 Services of construction of residential or commercial units Col 9. Exempt supplies. All supplies of exempt excisable goods as in the Third Schedule to the Federal Excise Act, 2005, or under any notification issued thereunder should be mentioned here. Col 10. FED paid on goods used in manufacturing of Goods supplied for domestic consumption. FED on inputs used in goods supplied during the tax period is to be given here. It is to be noted that FED paid on inputs which are still in inventory, as raw materials or as finished goods, cannot be adjusted here. Such FED amounts can be carried forward in the accounts of the registered person and adjusted when relevant goods are supplied. The FED amount mentioned in this column has to be less than excise duty payable on finished goods supplied. It would be greater only in case where the rate of excise duty on inputs is higher. In such cases no refund of higher duty on inputs is admissible.”. [C. No. 3(7)ST-L&P/08] Abdul Hameed Memon Secretary (ST-L&P)