The Federal Board of Revenue (FBR) has clearly laid down the procedure for sales tax de-registration under Rule 11 of the Sales Tax Rules, 2006, applicable for the tax year 2026. This rule applies when a registered person ceases business operations, becomes exempt from sales tax, or fails to comply with filing obligations.
This guide explains who can apply, how to apply, timelines, restrictions, and legal consequences—in a simplified and interactive manner for easy understanding.
✅ Who Can Apply for Sales Tax De-Registration?
You may apply for de-registration if:
• You have ceased to carry on business
• Your supplies become exempt from sales tax
• You no longer meet the registration threshold
• You intend to close operations permanently
🧾 Step-by-Step Procedure for De-Registration (Rule 11(1))
🔹 Step 1: Online Application
• Submit Form STR-3 through the FBR computerized system
• Application must clearly state the reason for de-registration
🔹 Step 2: Commissioner’s Order
• The Commissioner Inland Revenue may:
o Act on your application, or
o Initiate de-registration on his own motion
• De-registration must be completed within 60 days, calculated from:
o Date of application, or
o Date of payment of all outstanding dues
(whichever is later)
🚫 Restrictions After Applying for De-Registration
Once the online application is submitted:
• ❌ Annex-C and Annex-D cannot be filed
• ❌ Sales tax returns cannot be filed
• ❌ Input tax adjustment or refund is not admissible
• ❌ Other registered persons cannot claim input tax on invoices issued by you during the de-registration period
👉 These restrictions apply until de-registration is finalized or rejected.
🔍 Audit or Inquiry by Commissioner (Rule 11(2))
If the Commissioner decides to verify your liabilities:
• You may be required in writing to submit records
• Audit or inquiry must be completed within 90 days from the date of application
• Adjournments are excluded but total time cannot exceed 90 days
📌 Final Compliance Requirement
• File a final sales tax return under Section 28
• Pay any outstanding liability
• System will automatically de-register you after 90 days
(subject to Rule 11(4))
Suspension of Monthly Returns (Rule 11(2A))
Good news for applicants:
• Your obligation to file monthly sales tax returns under Section 26 is suspended
• Suspension remains valid until:
o De-registration is approved, or
o Application is rejected
⚠ Forced De-Registration by FBR (Rule 11(2))
If a registered person:
• Fails to file sales tax returns for six consecutive months
Then:
• Commissioner may issue a show-cause notice
• After giving an opportunity of being heard
• Order of de-registration may be issued
• System will automatically de-register the person
⚖ Legal Liabilities Continue After De-Registration (Rule 11(3))
Important clarification:
De-registration does not wipe out past liabilities.
• All tax obligations, penalties, and liabilities relating to the period of registration remain enforceable
• FBR can still initiate recovery or legal proceedings
📌 Key Takeaways for Tax Year 2026
• De-registration is fully online via STR-3
• Strict timelines of 60 and 90 days apply
• Input tax and refunds are blocked during de-registration
• Non-filers risk forced de-registration
• Past liabilities survive cancellation
Disclaimer: This article is published for general informational and educational purposes only and is based on Rule 11 of the Sales Tax Rules, 2006 (updated for tax year 2026). It does not constitute legal, tax, or professional advice. Readers are advised to consult a qualified tax professional or the Federal Board of Revenue (FBR) before making any compliance or de-registration decisions. The publisher assumes no responsibility for any loss arising from reliance on this information.