Islamabad, August 25, 2025 – The Federal Board of Revenue (FBR) has clarified the legal framework for handling excess sales tax collections under Section 3B of the Sales Tax Act, 1990.
The clarification applies to businesses and taxpayers for the fiscal year 2025-26 and sets out how incorrectly collected amounts will be treated.
Key Provisions of Section 3B
1. Mandatory Payment to Federal Government
Any tax or charge collected in excess of what was legally payable must be deposited with the Federal Government. This includes amounts collected under a misinterpretation of the law or otherwise.
2. Recovery as Arrear of Tax
Once collected, such excess amounts are treated as arrears of tax. They are recoverable under the same provisions that apply to unpaid taxes, leaving no room for delay in remittance.
3. Refund Claims Not Admissible
No refund claim will be admissible in respect of excess tax collected. Courts, including the Supreme Court and High Courts, cannot direct refunds to registered persons or consumers.
Burden of Proof
The responsibility to prove whether the incidence of tax was passed on to the consumer lies solely with the person who collected it. Businesses must maintain proper documentation to avoid disputes.
Disclaimer
This article is for informational purposes only and does not constitute legal or financial advice. For specific guidance on tax compliance and handling of excess collections, consult the Federal Board of Revenue (FBR) or a qualified tax professional.