Sale Tax Registration and Return

How to Apply for Sales Tax Registration and Filing Sales Tax Return In Pakistan?

In Pakistan, obtaining Sales Tax Registration is a crucial initial requirement for any business endeavor, as it enables the Federal Board of Revenue to oversee all transactions. 


Once registered, businesses gain the privilege of importing and exporting goods or providing services and can collaborate with reputable companies and government organizations within the country. However, without Sales Tax Registration, businesses are ineligible to participate in tenders.

Sales Tax Registration basics

Prior to filing the Sales Tax Return, it is obligatory to complete the registration process with the Federal Board of Revenue (FBR). Once registered, you will receive a Sales Tax Registration Number (STRN) along with a User ID and Password. These credentials grant access to the e-file portal, where taxpayers can submit their Sales Tax Returns exclusively online.

Mandatory Documents for Sales Tax Registration in Pakistan;
  1. Bank Account Maintenance Certificate, indicating the IBAN Number.
  2. Photograph of the Business Premises.
  3. Electricity Bill for the Business Premises
The procedure of Sales Tax Registration in Lahore
Using IRIS Portal select Form 14(1), when you will select this Form system will ask you about the following information;
  1. Tax Period
  2. Individual Type either Manufacturer or Non Manufacturer
  3. In the case of AOP and Company detail of Principle Officer/ Authorised Representative
  4. Bank Account Maintenance Certificate with IBAN Number 
  5. Business Details which includes Business Name, Activities, Address, etc
  6. GPS-tagged Photographs of Business Premises
  7. Consumer Number of Gas and Electricity Bill Supplier along with a picture of Utiliy Bill.
  8. Submission of Application Form 14(1)
  9. Issuance of Sales Tax Registration Number
Bio Metric Verification

Upon receiving the registration number, the applicant must visit the NADRA E-Sahulat Centre for biometric verification within 30 days. If the verification process is unsuccessful, the registered person's name will be removed from the Active Taxpayer list of Sales Tax.
 

To facilitate the biometric verification, a list of NADRA E-Sahulat Centers is provided for the convenience of registered individuals.

Post Verification – Manufacturer

Following the initial verification, the Board reserves the right to conduct further post verification for manufacturers through its field offices or an authorized third party. If the documents provided during the application process are found to be non-genuine, fake, or incorrect, the Board may request the individual to provide the correct information within fifteen days through the system. Failure to comply with this request will result in the removal of the individual from the Active Taxpayer List of Sales Tax.

Change in particulars of Registration

If any changes are needed in the FBR profile or other details mentioned in the registration certificate, the registered individual must inform the RTO by submitting the necessary amendment or modification in the prescribed form within fourteen days of the said change.

Transfer of Registration

If a registered person decides to relocate their business activity from one Jurisdiction to another, they are required to provide a valid reason for the jurisdiction change. This can be done by submitting a written application to the Commissioner Inland Revenue of the Regional Tax Office (RTO) where their case is being handled.

Benefits of Sales Tax Registration in Pakistan
  1. SINGLE INDIRECT TAX
  2. MORE SAVINGS
  3. EASE OF DOING BUSINESS
  4. EMPLOYMENT GROWTH
  5. GDP GROWTH
  6. DROP IN TAX EVASION
  7. REVENUE INCREMENT
  8. TRADE AND INDUSTRY GROWTH
De Registration of Sales Tax

For De registration, an Application will be submitted to Commissioner Inland Revenue, having Jurisdiction to deal with the case.

De-registration can make of the following Persons
  1. If the person discontinues their business.
  2. If the supplies made by the registered person become exempt from Sales Tax.
  3. If the turnover of the registered person falls below the minimum threshold level.
Filing Sales Tax Return in Pakistan

Every individual registered under the Sales Tax Act, 1990, or the Federal Excise Act, 2005, is obligated to file a Sales Tax Return on a monthly basis.
 

The Sales Tax Return serves as a declaration in which the taxpayer provides detailed information about their transactions during a specific tax period and settles their Sales Tax liability by making the necessary payments.
 

When preparing the return form, the taxpayer declares their input tax and output tax details at the applicable Sales Tax rate used for their transactions. If the input tax exceeds the output tax, the system reflects a refund claim, while if the output tax surpasses the input tax, the taxpayer must remit the additional Sales Tax along with their sales tax return.
 

In situations where the Sales Tax Return remains unfiled for more than six months, special approval from the Commissioner Inland Revenue is required for its submission, subject to valid reasons presented by the taxpayer.

Electronic Filing of Sales Tax Return

All Registered Persons can make through the Electronic filing portal of the Federal Board of Revenue.

Revised Sales Tax Return

A registered individual has the option to file an amended or revised Sales Tax Return within 120 days of initially submitting their return. This provision allows them to correct any mistakes or incorrect declarations made in the original return, provided that the Commissioner Inland Revenue grants approval for the amendment.

Active Taxpayer List (ST)

The Active Taxpayer List (ST) is a central record where we can check out the status of Active Taxpayer filers of Sales Tax.

Sales Tax Refund

If the input tax paid on taxable purchases during the tax period exceeds the output tax on exports or zero-rated local supplies, the surplus amount of input tax will be eligible for a refund to the registered person. The refund process should be completed within a maximum of forty-five days from the filing of the refund claim, subject to the conditions set forth by the board.

Sales Tax Refund Processing through the FASTER System

Guidelines for filing Annex H have to follow to claim Sales Tax Refund through the FASTER System
Guidelines for filing Annex H have to follow to claim Sales Tax Refund through the FASTER System

 

Sales Tax due dates

Registered individuals, based on their principal activity or category, are required to file their sales tax returns on a monthly, quarterly, or annual basis. As per the standard procedure, those obligated to file a monthly return, known as Annex-C, must do so by the 10th of the month, make the payment by the 15th, and e-file the return by the 18th day of the same month.

Sales Tax Records

Sales Tax Record maintained is compulsory for every registered person to continue at the business premises.

Record of Sales

The Sales Record should specify the following details of goods supplied or services rendered, ie.

  1. Description,
  2. Quantity, 
  3. Value, 
  4. Name and address of the customer and the amount of tax charged.
Record of Purchases and Imports

All files of purchases and imports have to maintained by registered Person which indicate the following details;

  • Description;
  • Quantity;
  • Value;
  • Name, Business address and Sales Tax registration number of the supplier, 
  • Amount of tax paid on purchases.
Record of Payments Receipts

To ensure compliance with the Sales Tax Act 1990 and to avoid any potential notice or audit complications, all payment receipts for sales tax on purchases or supplies above Rs. 50,000 (excluding utility bills) must be made through banking instruments. These instruments should indicate the specified bank accounts of both the sellers and purchasers involved in the transaction.
 

Additionally, it is important to keep photocopies of all bank cheques and pay orders used for making Sales Tax Payments and receipts securely. Bank statements should also be maintained, as they may be required for the proper implementation of Section 73 of the Sales Tax Act 1990. Adhering to these practices will help ensure smooth and compliant business operations.

Other Records
  1. A registered person should also keep a record of:
  2. Zero-rated and exempted supplies during the period,
  3. invoices, debit and credit notes, banking instruments and statements, stock inventory
  4. Salary and labor expenses, Utility charges, rent or lease agreement, Sale and Purchase agreements, etc. 
Retention of records and documents

A registered person is bound by law to maintain all records and documents of Business for six years after the end of the tax period.

POS Retailers – Procedure for FBR Integration

Detailed procedure is available for Registered Persons relating Tier 1 Retail category for POS Retailer integration with FBR provided below:

For Sales Tax Registration and Sales Tax Return Filing in Pakistan