What sales tax and advance income tax apply when a software house imports laptops and computers?

A software house buying laptops for its developers can import them or buy units assembled in Pakistan. Two federal laws reach the purchase. The Sales Tax Act, 1990 decides the sales tax on the import or supply, and the Income Tax Ordinance, 2001 collects advance income tax when goods clear customs. Customs duty itself comes from the customs tariff, which is not in this corpus.

What sales tax applies to imported laptops?

Section 3(1) of the Sales Tax Act charges sales tax at eighteen per cent of the value of goods imported into Pakistan. Section 3(2)(aa) overrides that for goods in the Eighth Schedule, which “shall be charged to tax at such rates and subject to such conditions and limitations as specified therein”.

Serial 77 of Table-1 of the Eighth Schedule covers “Imported personal computers and Laptop computers, notebooks whether or not incorporating multimedia kit” under headings 8471.3020 and 8471.3010. The rate is 10%. The conditions column for serial 77 is blank in the text as extracted. A footnote records that serial 77 was substituted by the Finance Act, 2024.

For imported goods, the value for sales tax under section 2 of the Act is the value determined under the Customs Act, including customs duties and federal excise duty levied on the goods. So the 10% is charged on the customs value plus customs duty and federal excise duty.

What about laptops made in Pakistan?

Section 13(1) exempts supplies or imports of goods specified in the Sixth Schedule, subject to conditions the Federal Government may specify. Table-2 of the Sixth Schedule is headed “Local Supplies only”. Its serial 50 lists “Locally manufactured laptops, computers, notebooks whether or not incorporating multimedia kit and personal computers” under headings 8471.3010 and 8471.3020.

A supply of such a locally manufactured laptop is therefore exempt from sales tax. Because Table-2 covers local supplies only, it does not exempt an import.

How does advance income tax at import work?

Section 148(1) of the Income Tax Ordinance requires the Collector of Customs to collect advance tax from every importer on the value of the goods, at the rate in Part II of the First Schedule, for goods classified in Parts I to III of the Twelfth Schedule. Section 148(5) says it is collected in the same manner and at the same time as customs duty.

Part II sets three rates on the import value as increased by customs duty, sales tax and federal excise duty:

Goods	Rate
Part I of the Twelfth Schedule	1%
Part II of the Twelfth Schedule	2%, or 3.5% for a commercial importer
Part III of the Twelfth Schedule	5.5%, or 6% for a commercial importer

Part III of the Twelfth Schedule covers “Goods not specifically mentioned in Part I or II”. Heading 84.71, which contains laptops, did not appear in Part I or Part II of the Twelfth Schedule in the text we read. On that reading laptops fall in Part III. The Ordinance does not define “commercial importer” in the provisions read for this page.

Is it final or adjustable? Section 148(7) makes the tax a minimum tax on the importer’s income arising from the imports, and excludes goods imported by an industrial undertaking for its own use. The Ordinance does not say in terms how that applies to a service business importing equipment for its own use rather than for sale. This page does not resolve that.

Worked example (illustrative figures)

Margalla Apps (Pvt) Ltd in Islamabad imports 20 laptops under heading 8471.3010. Assume the customs value plus customs duty and federal excise duty comes to Rs. 6,000,000. The company is not treated as a commercial importer.

1. Sales tax at 10% under serial 77: Rs. 6,000,000 x 10% = Rs. 600,000.
2. Value for advance income tax, increased by sales tax: Rs. 6,000,000 + Rs. 600,000 = Rs. 6,600,000.
3. Advance income tax at the Part III rate of 5.5%: Rs. 6,600,000 x 5.5% = Rs. 363,000.
4. Sales tax and advance income tax together: Rs. 600,000 + Rs. 363,000 = Rs. 963,000.

If the company instead buys 20 locally manufactured laptops from a Lahore assembler, serial 50 of Table-2 of the Sixth Schedule makes the supply exempt, so no sales tax is charged on it.

What if the laptops are resold or leased to clients?

Serial 77 and serial 50 describe goods and do not limit the rate by the buyer’s trade. A software house that resells equipment raises separate questions about registration, output tax and the commercial importer rate that this page does not cover. Whether sales tax paid at import can be claimed as input tax depends on the Act’s input tax rules, which are also outside this page.

Common mistakes

• Applying 18% to imported laptops. Serial 77 of the Eighth Schedule sets 10%.
• Assuming the Sixth Schedule exempts imports too. Table-2 is for local supplies only.
• Computing advance tax on the customs value alone. Part II uses the import value as increased by customs duty, sales tax and federal excise duty.
• Treating accessories as laptops. Serial 77 and serial 50 list only headings 8471.3010 and 8471.3020.

What to check in the official text

Read sections 2, 3(1) and 3(2)(aa) and 13(1) of the Sales Tax Act, serial 77 of Table-1 of the Eighth Schedule and serial 50 of Table-2 of the Sixth Schedule. In the Income Tax Ordinance, read section 148, Part II of the First Schedule and all three Parts of the Twelfth Schedule. Confirm the tariff heading of each model, and check any SRO or notification issued under section 148 or section 13, which this corpus does not hold. Customs duty rates are outside this corpus.