Karachi, December 10, 2023 – Rules have been notified for acquiring temporary sales tax registration in Pakistan during tax year 2024.
As Pakistan steps into Tax Year 2024, businesses planning to acquire temporary sales tax registration have clarity on the newly-notified rules.
The Federal Board of Revenue (FBR) has recently updated the Sales Tax Rules, 2006, outlining the procedures and requirements for obtaining temporary sales tax registration during the upcoming tax year.
Rule 5A of the Sales Tax Rules takes center stage, defining the meticulous process for temporary registration:
Temporary Registration Procedures: Rule 5A
Application for Manufacturer Registration: Individuals filing applications for sales tax registration as manufacturers, without having installed machinery, can now obtain temporary registration. This is particularly applicable for those in the process of importing machinery to be installed in the future. Temporary registration is granted for a duration of sixty days, contingent upon the submission of a comprehensive list of machinery to be imported. This list should be accompanied by the Bill of Lading (BL) or Goods Declaration (GDs).
Swift Processing: The computerized system is designed to issue temporary registration within seventy-two hours of filing a complete application. This quick turnaround aims to facilitate the import process for manufacturers awaiting formal registration.
Import Permissions: Once temporary registration is received, the registered entity is permitted to import plant, machinery, raw materials, and other relevant items as a manufacturer. To ensure compliance, the person must submit a post-dated cheque to customs authorities, equivalent to the variance in duties and taxes intended to be availed as a manufacturer.
Lapse of Temporary Registration: If the stipulated requirements outlined in omitted sub-rule (2) of rule 5 are not met within sixty days of temporary registration issuance, the temporary registration will be disabled. Additionally, any post-dated cheques submitted will be cashed.
Monthly Returns: Entities holding temporary registration are required to file monthly returns using form STR-7. However, it’s essential to note that they are not authorized to issue sales tax invoices during this period. If an invoice is issued, no input tax credit will be admissible against it.
Refund and Carry-Forward: During the temporary registration period, no sales tax refund will be processed. However, any accumulated input tax may be carried forward to subsequent tax periods as per the filing entity’s returns.
These procedures signify a structured approach to temporary sales tax registration, offering clarity and guidance for businesses navigating the regulatory landscape in Tax Year 2024. As entities engage with these rules, compliance is paramount to ensure a seamless and lawful transition during the temporary registration phase. The FBR’s commitment to streamlining processes reflects its dedication to fostering a business-friendly environment while maintaining a robust tax framework.
