Islamabad, September 13, 2025 – The Federal Board of Revenue (FBR) has introduced important amendments to Section 26 of the Sales Tax Act, 1990, clarifying who must file a sales tax return during the tax year 2025-26.
These changes are designed to make compliance more transparent, efficient, and aligned with Pakistan’s digital transformation in taxation.
Filing of Sales Tax Return
Under the updated rules, every registered person is required to submit a complete and accurate return by the due date. This return must include details of purchases, supplies, tax payable, and tax already paid. The FBR has specified that such returns can be filed with designated banks or electronically through approved platforms. To ensure inclusivity, electronic filing via the FBR portal, magnetic media, or other computer-readable formats is officially recognized as a valid sales tax return.
Frequency of Returns
The law allows flexibility in frequency. While monthly filing remains the norm, the FBR may direct certain individuals or classes of taxpayers to file on a quarterly or even annual basis. This system aims to balance compliance requirements with the nature of businesses. Online marketplaces, payment intermediaries, and courier services are specifically mandated to furnish monthly statements detailing taxable supplies and tax deductions.
Notices and Compliance
If a person fails to file the required return, an Inland Revenue officer may issue a written notice requiring compliance within 15 days. In cases of tax fraud, notices can be issued within 15 years of the financial year concerned, whereas for ordinary cases, the limit is five years. This provision ensures that sales tax return compliance remains enforceable over the long term.
Revised Returns and Voluntary Corrections
Taxpayers are also given opportunities to correct errors. A revised return can be submitted within 120 days of the original filing, subject to approval from the Commissioner Inland Revenue. If the revised return is filed within 60 days and shows an increase in tax payable or a decrease in refund claimed, approval is not required. Importantly, if a taxpayer voluntarily pays tax shortfalls along with default surcharge before receiving an audit notice, no penalty will be imposed.
Penalties and Relief Measures
In cases where tax liabilities are identified during an audit, taxpayers may reduce penalties by making timely payments. If payment is made before the issuance of a show-cause notice, only 25% of the penalty is charged. However, if payment occurs after a notice has been issued, the full penalty becomes applicable along with the revised return.
Summary Reporting
The FBR also retains the authority to demand additional details for certain goods or classes of taxpayers. This ensures that the tax system captures imports, supplies, and purchases more comprehensively.
In summary, the updated framework emphasizes timely filing, digital compliance, and opportunities for voluntary correction. By strengthening rules around sales tax return filing, the FBR aims to promote transparency and accountability while providing businesses with flexible compliance options.
Disclaimer: This article is for informational purposes only and does not constitute legal or tax advice. Taxpayers are advised to consult the Federal Board of Revenue (FBR) or a qualified tax professional for guidance specific to their situation.