Mandatory sales tax registration Requirements in TY2024

Mandatory sales tax registration Requirements in TY2024

Karachi, December 11, 2023 – Tax authorities have issued mandatory requirement for sales tax registration during tax year 2024.

In a bid to enhance tax compliance and streamline revenue collection, tax authorities have introduced mandatory requirements for sales tax registration during the upcoming tax year 2024. The Federal Board of Revenue (FBR) has issued updated Sales Tax Rules, 2006, specifically under Rule 6, outlining the procedures and criteria for compulsory sales tax registration.

Rule 6. Compulsory Registration:

1. Notice Issuance

If a person, obligated to be registered under the Sales Tax Act, fails to apply for registration, the Commissioner Inland Revenue or any authorized officer, following a thorough inquiry, will issue a notice to the concerned person. The notice will be in the Form STR-6, notifying the individual or entity of their obligation to register for sales tax.

2. Contesting Liability

Upon receiving a written reply contesting the liability for registration within the specified time mentioned in the notice, the Commissioner will provide an opportunity for a personal hearing if requested by the concerned party. Subsequently, an order will be issued determining whether or not compulsory registration is applicable. A copy of the order will be furnished to the individual or entity. If compulsory registration is mandated, the Commissioner will initiate the registration process through the computerized system.

3. Non-Responsive Cases

In cases where the person, upon receiving the notice, fails to respond within the stipulated timeframe, the Commissioner will proceed to compulsorily register the individual or entity through the computerized system. The affected party will be informed of the registration via a courier service.

4. Compliance and Consequences

A person registered compulsorily is required to adhere to all provisions of the Sales Tax Act and the rules therein from the date of compulsory registration. Failure to comply may lead to the Commissioner Inland Revenue issuing a notice under section 25 of the Act, demanding the production of records or documents and personal appearance. The Commissioner may assess the amount of sales tax payable under section 11 of the Act and take any other legal actions against the non-compliant individual or entity.

Provided that if it is subsequently established that a person was wrongly registered due to inadvertence, error, or misconstruction, the Commissioner shall cancel the registration through the computerized system. In such cases, the individual or entity will not be liable for any tax, default surcharge, or penalty under the Act or rules, subject to conditions specified under section 3B of the Act.

These stringent measures aim to ensure that businesses and individuals fulfill their statutory obligations, contributing to a more robust tax system. The FBR emphasizes the importance of timely and accurate registration to avoid legal consequences and encourages stakeholders to proactively engage with the registration process. The new rules seek to strike a balance between enforcing compliance and addressing genuine cases of registration errors.