For various reasons, a registered taxpayer in Pakistan may find their name removed from the Active Taxpayer List (ATL) maintained by the Federal Board of Revenue (FBR). Being classified as a non-active taxpayer restricts business operations, input tax claims, and legal transactions.
Rules 12A and 12B of the Sales Tax Rules, 2006 (updated for 2026) govern the status of non-active taxpayers and the procedure to regain active taxpayer status.
⚠ What Is a Non-Active Taxpayer? (Rule 12A)
A registered person automatically becomes a non-active taxpayer if they fail to meet any conditions prescribed in Section 2(1) of the Sales Tax Act, 1990.
❌ Restrictions for Non-Active Taxpayers
• Cannot file Goods Declarations for imports or exports
• Cannot issue sales tax invoices
• Cannot claim input tax or refunds
• Cannot avail concessions under the Act or rules
🚫 Business Implications
• Government departments, autonomous bodies, and public sector organizations cannot make purchases from non-active taxpayers.
• If a registered buyer enters an invoice from a non-active taxpayer in Annexure-A, the system displays a warning message, and no input tax credit is allowed.
🔄 How to Restore Active Taxpayer Status (Rule 12B)
If your business has been marked non-active, you may regain active status by following this step-by-step procedure:
1. File Outstanding Returns and Tax Payments
• Submit all pending sales tax returns
• Pay any due tax under the Sales Tax Act or Income Tax Ordinance, 2001
2. Audit & Verification by LTO/RTO
• The Regional Tax Office (RTO) or Large Taxpayers Office (LTO) will:
o Conduct audits or necessary investigations
o Ensure compliance with tax obligations
o Recommend restoration to FBR if satisfied
3. Issuance of Restoration Order by FBR
• Upon receipt of a positive recommendation, the Board issues an order restoring the taxpayer to the Active Taxpayer List
• Once restored, all business, invoicing, and input tax rights are reinstated
✅ Key Takeaways
• Being a non-active taxpayer blocks core business operations and tax rights
• Restoration requires full compliance, tax payment, and audit verification
• The process is governed by Rule 12A & 12B of the Sales Tax Rules, 2006 (2026)
• Always maintain accurate records and timely filings to avoid ATL removal
Disclaimer: This article is for general informational purposes only and is based on Rules 12A and 12B of the Sales Tax Rules, 2006 (2026). It does not constitute legal, tax, or professional advice. Taxpayers should consult a qualified tax advisor or the FBR before taking any action. The publisher is not liable for any loss arising from reliance on this information.