ISLAMABAD – In a bid to enhance transparency and compliance, the Federal Board of Revenue (FBR) has stipulated that registered businesses must retain their sales tax records for a period of six years for audit and examination purposes.
As outlined on the official FBR website (Sales Tax Records), this requirement applies to all registered persons, who are obligated to maintain a comprehensive record and documents for six years after the conclusion of the tax period to which the records relate.
The electronic sales tax return, along with any relevant attachments, must be stored in the electronic records of the registered person. Upon demand, these records are to be produced to the officer-in-charge along with supporting documents. However, any delay exceeding 15 days in presenting these records may result in a penalty of Rs. 5,000 per month.
A registered person is mandated to maintain records in English or Urdu documenting all goods and services supplied, purchased, or imported in the course of business. For sales records, specific details are required, including description, quantity, value, name and address of the customer, and the amount of tax charged. At the end of each month, the total sales tax indicated in these records should be transferred to the sales tax account as output tax.
Similarly, the record of purchases and imports should include details such as description, quantity, value, name, address, and registration number of the supplier, along with the amount of tax paid on purchases. Notably, all payments or receipts of sales tax on transactions exceeding Rs. 50,000 (excluding utility bills) should be conducted through bank instruments specifying the designated bank accounts of both the sellers and purchasers. Keeping records and photocopies of all bank instruments, along with bank statements, is recommended to ensure compliance with Section 73 of the Act and mitigate potential audit complications.
Moreover, registered persons are required to maintain records of zero-rated and exempt supplies, along with documentation for invoices, credit notes, debit notes, bank statements, inventory, utility bills, salary and labor bills, rental agreements, sale purchase agreements, and lease agreements.
The FBR emphasizes that these records and documents should be preserved for six years after the conclusion of the respective tax period. Failure to comply with this requirement may result in penalties, with delays beyond 15 days in producing electronic records incurring a penalty of Rs. 5,000 per month.
This regulatory move by the FBR aligns with efforts to streamline tax-related processes, enhance accountability, and foster a culture of compliance among registered businesses. As businesses navigate these requirements, ensuring robust record-keeping practices will be essential for adherence to tax regulations and avoiding potential penalties.
