Karachi, December 31, 2024 – The Federal Board of Revenue (FBR) has issued a stern warning to individuals and businesses failing to comply with sales tax laws. Non-compliant taxpayers may face the disconnection of their gas and electricity connections under strict provisions of the Sales Tax Act, 1990.
According to the FBR, Section 14AB of the Sales Tax Act empowers tax authorities to instruct gas and electricity distribution companies to disconnect utility services for non-compliant entities. This enforcement measure is aimed at encouraging compliance with sales tax registration and integration requirements.
The FBR explained that under Section 14AB, it has the authority to direct the disconnection of utility services for two categories of taxpayers:
1. Unregistered Individuals or Entities: Any person, including tier-1 retailers, who fail to register for sales tax purposes.
2. Non-Integrated Tier-1 Retailers: Retailers who, despite being registered, have not integrated their systems with the FBR’s Computerized System for real-time sales tax reporting.
The FBR clarified that the discontinuation of gas and electricity connections will be enforced through a Sales Tax General Order. However, it added that compliance could lead to the restoration of utility services. Upon registration or integration with the FBR system, the relevant taxpayer’s gas and electricity connections will be reinstated through another Sales Tax General Order.
This move by the FBR underscores its commitment to enhancing tax compliance and broadening the tax net. The authority has been actively pursuing measures to bring non-compliant businesses into the formal economy, ensuring equitable tax collection and reducing revenue leakages.
Tax experts have highlighted the importance of complying with FBR regulations to avoid operational disruptions. Gas and electricity are essential for business continuity, and losing access to these services could result in significant financial losses for non-compliant entities.
The FBR’s announcement serves as a reminder to taxpayers, particularly tier-1 retailers, to adhere to sales tax laws and integrate their operations with the FBR’s computerized system. By doing so, they can avoid potential disconnections and contribute to the nation’s economic stability.
