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 registration.
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 following
1. Two Pictures of Office / Shop / Warehouse (One from outside)
2. Picture of electric meter
3. Electricity bill
4. Business Bank Account maintenance certificate
5. Pictures 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 taking photos
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 registration.
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 information.