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| Sales tax registration & sales tax return filing |
What is sales tax in FBR Pakistan?
Sales tax is a tax that is levied on the sale of goods and services in Pakistan. In FBR Pakistan, sales tax is a form of indirect tax that is collected by registered businesses on behalf of the government. The tax is charged on the final consumer of the goods or services and is added to the price of the product or service.
The standard rate of sales tax in Pakistan is 17%, but there are some products and services that are subject to a reduced rate of sales tax or are exempt from sales tax altogether.
Businesses that have an annual turnover exceeding a certain threshold are required to register for sales tax with the FBR. Registered businesses are required to collect sales tax from their customers and submit it to the FBR on a monthly basis.
Sales tax returns must be filed with the FBR every month, even if no sales tax has been collected or paid during the period. The due date for filing sales tax returns is the 18th of the month following the tax period.
Non-compliance with sales tax regulations can result in penalties and legal issues. Therefore, it is important for businesses to properly register for sales tax, collect and remit sales tax on time, and file accurate sales tax returns.
Advantages of Registering in sales tax?
There are several advantages of registering for sales tax in FBR Pakistan, including:
Legal compliance: Registering for sales tax ensures that your business is compliant with the tax laws of Pakistan. Failure to register can result in penalties, fines, and legal action.
Input tax adjustment: Registered businesses can adjust the sales tax paid on their purchases (input tax) against the sales tax collected on their sales (output tax). This can assist in decreasing the overall tax obligation.
Competitive advantage: Registering for sales tax can provide your business with a competitive advantage over non-registered businesses. Many customers prefer to deal with registered businesses as it provides them with a sense of trust and reliability.
Government contracts: Registered businesses are eligible to bid for government contracts and tenders, which can provide a significant boost to your business.
Access to credit: Registered businesses can apply for loans and credit facilities from financial institutions, using their sales tax registration certificate as proof of their credibility.
Overall, registering for sales tax in FBR Pakistan can help your business operate legally, reduce tax liability, improve competitiveness, and provide access to new opportunities.
How to Register for sales tax?
To register for sales tax in FBR Pakistan, businesses need to follow these steps:
Acquire a National Tax Number NTN from the Federal Board of Revenue (FBR).. If you don't have an NTN, you can apply for it through the FBR's online portal or by visiting their offices.
Apply for registration with the Sales Tax Department of the FBR. This can also be done online through the FBR's portal.
Provide the required information such as business name, NTN, address, type of business, and bank account details.
Once the application is submitted, a Sales Tax Registration Certificate (STRN) will be issued within 3 to 7 working days.
The business will be assigned a tax period, which is usually monthly, and will be required to file sales tax returns accordingly.
It is important to note that businesses with an annual turnover of less than Rs. 5 million are exempt from sales tax registration. However, if the turnover exceeds this threshold, registration is mandatory.
Registered businesses must keep accurate records of all sales tax transactions and should be prepared to provide them to the FBR upon request.
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