Sales tax registration process has been recently simplified by FBR. This post is going to be a pain reliever for many small and medium business owners who are unregistered for sales tax purpose and the companies they buy products stopped selling goods to them due to their unregistered status.
The Government in its latest Budget i.e. Budget 2019 or
Finance Act, 2019 made commendable efforts for documentation of economy.
However some sectors of the economy believes that these measure are abruptly
introduced by the Government, without denying the need for documentation they
believe the implementation of these measure could be made in steps wise setup.
Without being biased on the Government’s step or the
reaction of those steps by the business community we believe that the
Government is simultaneously facilitating the people for implementation of it
documentation of economy drive.
One of the facilitations provided, which we believe ‘Pain
reliever’ is simplification of Sales tax registration process and removal of
human intervention from the process. However minimal involvement of FBR
officials is still there in the form of physical site verification but this is
done after approval of registration which means it does not hurdles your
business, you can start your business transactions from the very moment you got
Before this simplified process for sales tax registration,
business owners had to work both ways i.e. official and unofficial way to get
it done. Further the time to get registration for other than manufacture
business was not less than 15 days and for manufacturing business registration
it was 30 days to say the least. Pertinent to mention that during this period
you were not allowed to transact your business legally which includes sale,
purchase and import of goods or machinery.
One can understand the pain of restriction on business when
business owners are all-ready to get registration. What was taking that much
time for registration of business ‘willing’ to get registration?. The answer to
this question is well known to FBR, all we know is that the same registration
is done in minutes after the introduction of this new process.
So, coming to the new system, lets discuss briefly about the
process and time required.
Process for sales tax registration :
The process starts with online application for which you need
Pictures of Office / Shop / Warehouse (One from outside)
of electric meter
Bank Account maintenance certificate
of Plant and Machinery (only in case of Manufacturer)
6. Code received on mobile of any of the selected Director
of the Company (only in the case of Company)
Note: Location services must be “on” in your mobile while
Time required for sales tax registration:
1 hour. For manufacturer and non-manufacturers.
After sales tax registration compliance:
1. Once registration is complete and sales tax registration
number is allotted within 30 days, you will need to visit any NADRA center for
bio-metric verification, in case of company the selected director’s visit is required.
This is very important step as the consequence of not doing this step will make
your registration ‘inactive’ which will expose you to the same old methods of
getting things done officially or unofficially to make your registration active
again. So it’s very important to get this step done as soon as possible within
30 days of registration.
2. Monthly sales tax return filing After registration, sales
tax return filing becomes mandatory even if there is no activity or you got
registration on the last day of the month. You will need to calculate your
sales payable (if any) on 15th day of the month subsequent to registration and
file sales tax return on 18th day of the month subsequent to sales tax
3. Facilitate visit by FBR officials Even in the new
process, in the case of manufacturers, FBR officials would visit the
manufacturing site (day, time the name of person visiting would be informed in
advance to avoid any confusion or mal-practice). Physical inspection thing is
fair enough in view of mal-practices business owners do, for example there are
many cases discovered by FBR where there was no manufacturing facility was
available and the registered person was enjoying benefit that are available to
a manufacturing concern only.4. Reply to any notice issued by FBR. Notices from
FBR should be respected and taken seriously as FBR is one the most powerful
fiscal authorities in Pakistan further being Government’s functionary it should
be treated with priority. Having said that, the Sales Tax Act, 1990 requires
every registered person to provide any information that may be requested by FBR
from time to time. In case of non-compliance penalty as well as other
repercussions will follow. We tried to cover major difficulty areas for sales
tax registration or FAQs related to the subject.
Nonetheless, our readers are requested to seek professional
advice before concluding anything based on the information provided above.
Before closing this post, we feel it appropriate to inform that the new process
has all good things to do, however there is no option of modification therefore
you need to do it correctly in the very first time. You may contact us for more