Karachi, January 24, 2025 – The Federal Board of Revenue (FBR) has issued a detailed explanation of the temporary sales tax registration process, which is already defined under Rule 5A of the Sales Tax Rules, 2006.
This clarification aims to help businesses, particularly manufacturers, better understand the procedure and requirements associated with temporary registration.
The FBR stated that temporary sales tax registration is designed to facilitate manufacturers who need to import machinery before fully establishing their operations. As per Rule 5A, temporary registration can be granted for a period of 60 days, provided the applicant submits a complete list of machinery to be imported, along with relevant documentation such as the Bill of Lading (BL) or Goods Declaration (GD).
The process is streamlined through FBR’s computerized system, which issues temporary registration within 72 hours of receiving a complete application. Once registered temporarily, the applicant is allowed to import machinery, plant, and raw materials as a manufacturer. However, this is subject to the submission of a post-dated cheque to customs authorities, equal to the difference in duties and taxes applicable for manufacturers.
FBR emphasized that compliance is critical. If the applicant fails to meet the requirements outlined in the omitted sub-rule (2) of Rule 5 within 60 days, the temporary registration will be deactivated, and the submitted post-dated cheques will be encashed.
During the temporary registration period, businesses are required to file monthly tax returns in the form of STR-7. However, they are not permitted to issue sales tax invoices. Any invoices issued during this period will not qualify for input tax credit. Additionally, no sales tax refunds will be processed for businesses holding temporary registration. Instead, the input tax amount can be carried forward for subsequent tax periods.
The FBR’s clarification aims to ensure transparency and efficiency in the registration process. Temporary registration provides a vital window for new manufacturers to set up their operations while complying with tax regulations. However, businesses must adhere to the specified requirements and timelines to avoid disruptions in their registration status.
This move underscores FBR’s commitment to supporting industrial growth while maintaining regulatory oversight. Businesses planning to utilize temporary sales tax registration are encouraged to review Rule 5A in detail to ensure compliance.