Karachi, December 30, 2024 – The Federal Board of Revenue (FBR) has outlined the categories of individuals and businesses that are mandated to register for sales tax under the Sales Tax Act, 1990. This move is part of the FBR’s ongoing efforts to ensure compliance and expand the tax net.
Section 14 of the Sales Tax Act, 1990, defines the criteria for mandatory sales tax registration. According to the FBR, the following provisions explain the requirements:
Sub-section (1): Any person engaged in making taxable supplies within Pakistan, including zero-rated supplies, during the course or furtherance of taxable activity, is required to register if they fall into any of the following categories:
(a) Manufacturers: Except those operating as cottage industries, manufacturers must register for sales tax. Cottage industries are typically small-scale operations that meet specific criteria defined by the law.
(b) Retailers: Retailers liable to pay sales tax under the Act or associated rules must register, excluding those paying sales tax through electricity bills under Section 3(9).
(c) Importers: All importers are required to be registered to comply with the law.
(d) Exporters: Exporters seeking sales tax refunds against their zero-rated supplies must register.
(e) Wholesalers, Dealers, and Distributors: These entities must register to ensure proper sales tax collection and compliance.
(f) Others as Mandated by Law: Any person obligated under Federal or Provincial laws to register for duties or taxes treated as sales tax must also comply.
Sub-section (2): Individuals not engaged in making taxable supplies within Pakistan but required to register for import/export activities or other provisions under the Act or Federal law may apply for registration.
Sub-section (3): The process and regulations governing sales tax registration are prescribed by the FBR through official notifications published in the Gazette.
The FBR emphasized that timely registration is crucial for businesses to avoid penalties and facilitate smoother tax processes. By clarifying these requirements, the FBR aims to create greater awareness and encourage voluntary compliance among taxpayers.
