Karachi, January 6, 2025 – The Federal Board of Revenue (FBR) has announced a specific monetary penalty for individuals who fail to obtain sales tax registration before making taxable supplies. This penalty is part of the enforcement of the Sales Tax Act, 1990, which governs the registration and taxation of goods and services in Pakistan.
According to the FBR, individuals who are required to apply for registration under the Sales Tax Act and fail to do so before initiating taxable supplies will be subject to a penalty. The penalty, as specified under the law, is either a fixed amount of ten thousand rupees or five percent of the tax amount involved—whichever is greater. This move aims to encourage compliance with the registration requirement, ensuring that businesses operate within the legal framework and contribute to the country’s tax system.
The FBR also clarified that if an individual who is obligated to register under the Sales Tax Act fails to do so within sixty days from the commencement of taxable activity, further legal action will be taken. In such cases, the individual will be liable to face severe consequences. Upon conviction by a Special Judge, the person could be sentenced to imprisonment for up to three years, a fine equivalent to the tax amount involved, or both.
The FBR’s new regulation underscores the importance of timely sales tax registration and the consequences of non-compliance. With this announcement, the tax authority seeks to ensure that businesses contribute to the tax system from the outset of their taxable activities.
In addition to monetary penalties, the threat of imprisonment highlights the seriousness of this issue and serves as a reminder to all taxpayers about their legal obligations under the Sales Tax Act. The FBR’s approach reflects its commitment to enforcing tax regulations and maintaining a fair and efficient taxation system in Pakistan.
As businesses continue to grow and engage in taxable activities, timely registration under the Sales Tax Act is essential to avoid penalties and legal repercussions.