Sales Tax Query by a Commercial Importer

[Omeir]

Can any one help me in the following scenario

Suppose i am a commercial importer. I pay the sales tax at the time of import and the difference which arises because of sale i pay upon receiving the payment. No income tax is deducted at source since my income tax is deducted at the time of import.

Now using the same company i wish to trade locally. I wish to buy goods along with sales tax invoice and sell charging sales tax. I believe that 3.5% on supplies will be deducted as income tax since i am not an importer.

Can anyone guide me whether i will have any problems in the above scenario?

Should i use separate companies for the above businesses?
What should i do before starting any of the above ventures.

Thanks in advance

[LapTop]

No Need to use separate company for these Business,
Import is in FTR & Supplies of Goods are also FTR,
Keep in Mind Separate Block of Income Separate block or Tax.
2% Advance Tax u pay at time of import that’s discharge your Tax liability for Income from Imports. & 3,5% W.H.T deduction at source will discharge your tax liability for supplies Income.
These Incomes are in FTR so tax credit and adjustments are not allowed.

[Omeir]

thanks for the reply. Just clear one more thing. What is FTR?
Also please elaborate on the following "Keep in Mind Separate Block of Income Separate block or Tax."

Thanks once again

[Hasaan]

FTR means "final tax regime"

actually under law regarding calculation of income tax our income is taxed under one of the following three categories

Normal tax regime (NTR)
Final Tax regime (FTR)
Seperate block of income

if ur income is chargeable to tax under NTR than u have to compute "taxable income" and than pay tax on this taxable income. tax rates applicable to incomes taxable under NTR are given under Part-1 of First schedule to Income Tax Ordinance 2001.

where as if ur income is taxable under FTR than any amount deducted at source shall be treated as full and final discharge of your tax liability towards the same income. and u dont have to pay any other tax in respect of such incomes.

if ur income is taxable as "seperate block of income" than such income will not be added in taxable income while computing taxable under NTR rather for such incomes law has prescribed special rates. and only those rates shall be applied.

cares
Hasaan Fazal

[Omeir]

Can any one explain this, can a person registered as a commercial import in sales tax also do trading with sales tax? Is it illegal or will the person have to also be registered as a retailer?

Kindly help

[LapTop]

If you are register as Commercial Importer & you would like to enhance your business as Supplier , retailer, etc , u should intimate sales tax Department by submitting STR-2 for alteration of sales tax certificate, & addition of Taxable activities.

[Anfal Shabbir]

dont combine the business of import and retail in a single company, a pricing issue will arise here, proviso to difinition of retailer will clarify you the above point

(28) ‘retailer’ means a person, supplying goods to general public for the purpose of consumption
Provided that any person, who combines the business of import and retail or manufacture or production with retail, shall notify and advertise wholesale prices and retail prices separately, and declare the address of retail outlets, and his total turnover per annum shall be taken into account for the purposes of registration under section 14.

[LapTop]

Any company can derive income from any business, but company should adopt right procedure for Activity or business.
Sales Tax Law provides many Special procedures for many Activities. U should follow these procedures.

[IceCold]

I have a question related to the above if some one can perhaps help. i work at a foreign construction company in Pakistan which is involved in both housing as well as mega construction projects such as roads, dams etc. What i want to know perhaps in a bit of detail is which category is best suited for us, FTR, NTR or PTR. In FTR tax deduction is considered final where as in PTR we can claim our tax deduction in case of loss. But how exactly will PTR effect us in profit and which system would best suit us in both accumulated profit and loss?