Karachi, February 17, 2024 – The Federal Board of Revenue (FBR) has announced the identification of specific categories for mandatory sales tax registration for the tax year 2024, a move aimed at ensuring a broader tax base and enhancing revenue collection.
In a circular issued today, the FBR highlighted the following categories that are now required to register with the Sales Tax:
1. Importers: All entities involved in importing goods into the country are now mandated to register for sales tax. This includes businesses engaged in international trade to ensure comprehensive coverage of taxable transactions.
2. Wholesalers and Distributors: The FBR has extended the requirement to register to all wholesalers, including dealers and distributors. This step is taken to include the entire supply chain and capture transactions at various stages.
3. Manufacturers not falling in the Cottage Industry: The exemption for manufacturers in the cottage industry is clearly defined. Manufacturers whose annual turnover from taxable supplies exceeds ten million rupees or whose annual utility bills exceed eight hundred thousand rupees are now obligated to register for sales tax.
4. Retailers: The criteria for retailers have been specified, and registration is now mandatory for Tier-1 retailers. This includes retailers operating as units of national or international chains, those in air-conditioned shopping malls, and wholesalers-cum-retailers engaged in bulk import and supply of consumer goods.
5. Persons Required under Provincial or Federal Law: Service providers such as hotels, clubs, caterers, customs agents, ship chandlers, stevedores, and courier services, who are obligated under any Provincial or Federal Law to be registered for the purpose of any duty or tax, are now required to register for sales tax.
6. Persons Making Zero-Rated Supplies: This category includes commercial exporters who intend to obtain sales tax refunds against their zero-rated supplies.
Failure to comply with the mandatory registration requirement may lead to compulsory registration by the department after a proper inquiry under sub-rule 1 of Rule 6 of Sales Tax Rules, 2006.
The FBR aims to streamline the tax registration process, reduce tax evasion, and enhance revenue collection by including a diverse range of businesses within the tax net. This move is expected to contribute significantly to the government’s efforts in achieving fiscal stability and economic development.
Businesses falling under these identified categories are urged to promptly initiate the registration process to avoid any penalties or legal consequences. The FBR emphasizes the importance of a transparent and accountable tax system for the overall economic well-being of the nation.
