Karachi, September 7, 2025 – The Federal Board of Revenue (FBR) has been granted sweeping powers to disconnect gas and electricity supplies to businesses that fail to comply with mandatory sales tax registration requirements.
The FBR announced the move after issuing the updated Sales Tax Act, 1990, which incorporates significant changes introduced through the Finance Act, 2025. Among the most impactful provisions is Section 14AB, which directly addresses the consequences of avoiding or delaying sales tax registration.
Under this section, the FBR may issue a Sales Tax General Order to instruct gas and electricity distribution companies to discontinue services to any business falling into two categories:
1. Persons, including tier-1 retailers, who fail to obtain sales tax registration despite being legally required to do so.
2. Notified tier-1 retailers who have registered but remain unintegrated with the FBR’s computerized system.
The law further provides that once such businesses either complete their pending registration or fulfill integration requirements, the FBR will promptly notify distribution companies to restore their utilities.
Tax experts believe this step will tighten compliance and reduce revenue leakages, as non-registered businesses often escape the tax net while enjoying public utilities. For retailers and service providers, the provision sends a clear signal: compliance is no longer optional but essential for business continuity.
With this new measure, the FBR aims not only to boost tax collection but also to promote fairness in the marketplace by ensuring all eligible businesses contribute to the national exchequer.
Disclaimer: This article is intended for informational purposes only and does not constitute legal or tax advice. Businesses are advised to consult the Federal Board of Revenue (FBR) or a qualified tax professional for specific guidance regarding sales tax registration and compliance requirements.