Karachi, December 15, 2023 – The Federal Board of Revenue (FBR) has announced that non-active taxpayers will no longer be allowed to file goods declarations, as per the updated Sales Tax Rules, 2006 for the tax year 2024.
The FBR’s decision comes as part of its ongoing efforts to streamline taxation procedures and promote a culture of fiscal responsibility among businesses and individuals.
The FBR highlighted Rule 12A of the Sales Tax Rules, 2006, which defines the status of non-active taxpayers and outlines the consequences of falling under this category. According to the rule:
1. Automated Classification as Non-Active Taxpayer: A registered person failing to meet the conditions specified in clause (1) of section 2 of the Act will automatically be classified as a non-active taxpayer. Subsequently, their name will be removed from the active taxpayers list maintained by the Board.
2. Restrictions for Non-Active Taxpayers: Non-active taxpayers will face several restrictions, including the inability to:
• File Goods Declarations for import or export.
• Issue sales tax invoices.
• Claim input tax or refund.
• Avail any concessions under the Act or rules made thereunder.
3. Purchasing Restrictions: No person, including government departments, autonomous bodies, and public sector organizations, will be allowed to make purchases from a non-active taxpayer.
4. Input Tax Credit Limitations: If a registered buyer includes an invoice issued by a non-active taxpayer in Annexure-A of their return, a message will appear indicating that the supplier is a non-active taxpayer. Furthermore, no input tax credit will be admissible against such an invoice.
To regain active taxpayer status, the FBR has outlined a process under Rule 12B, which includes:
• The registered person filing the return or statement along with the payment of any tax due under the Act or Income Tax Ordinance, 2001 (XLIX of 2001).
• The Regional Tax Office (RTO) or Large Taxpayers Office (LTO), after conducting necessary audits or investigations, recommending restoration to the Board.
• The Board issuing an order for the restoration of active taxpayer status.
These measures are designed not only to ensure tax compliance but also to deter businesses and individuals from remaining non-compliant. The FBR’s move is part of broader efforts to strengthen the tax base, curb tax evasion, and create a fair and transparent taxation environment in the country.
It is imperative for businesses and individuals to stay abreast of these regulatory changes and take proactive steps to maintain compliance with tax obligations. Non-active taxpayers are encouraged to rectify their status promptly by fulfilling the outlined criteria to avoid disruptions in their business operations. As the tax year 2024 approaches, the FBR’s commitment to fostering a culture of responsible tax citizenship remains at the forefront of its initiatives.
