Islamabad, April 17, 2025: The Federal Board of Revenue (FBR) has introduced fresh and more stringent guidelines for the suspension of sales tax registration under new Statutory Regulatory Order (SRO) 608(I)/2025, issued on Thursday.
This move is aimed at curbing tax evasion, fraudulent invoicing, and misuse of the sales tax regime by non-compliant businesses.
According to the FBR, the new rules empower the Commissioner of Inland Revenue to suspend the sales tax registration of a registered person through the electronic system, without prior notice, if there is credible evidence or suspicion of wrongdoing. The suspension will remain in effect pending the outcome of a detailed inquiry.
The FBR outlined several key triggers that may lead to such suspension. These include the non-availability of a registered person at the declared business address, refusal to provide access to premises under Sections 40B and 40C, or failure to furnish required records under Sections 25 and 37 of the Sales Tax Act, 1990. Additionally, any suspicious business activity where the scale of operations exceeds five times the sum of declared capital and liabilities may also raise red flags.
The updated sales tax suspension rules also address dealings with other non-compliant businesses. If a registered entity makes more than 10% of its purchases from or sales to another suspended person, or if such transactions exceed Rs50 million in value, it may also face suspension. Furthermore, consistent failure to file sales tax returns — three consecutive months of non-filing or six months of null filing — can lead to immediate action.
The FBR stated that these revised parameters, particularly those listed under clauses B to F, aim to tighten the sales tax enforcement framework and ensure that only genuine and compliant taxpayers benefit from registration status.
By strengthening the monitoring of sales tax compliance, the FBR hopes to enhance revenue collection, reduce fraudulent practices, and improve overall tax administration efficiency across the country.