FBR imposes major restrictions on ST-registered persons

ISLAMABAD: The Federal Board of Revenue (FBR) has imposed major restrictions on sales tax registered persons, who would apply for de-registration from the FBR.

The FBR has issued an SR .608(l)/2025 to amend Sales Tax Rules.2006.

According to the revised rules, the FBR has amended Rule 11 pertaining to the de-registration of registered persons. Major changes have been made for the persons applying for de-registration process.

(a) Changes in Application Process:

Previously, a person had to apply through the Commissioner Inland Revenue having jurisdiction.

Now: The application for de-registration must be submitted online through the computerized system.

Manual applications are no longer allowed.

(b) Timeframe Adjustment:

Earlier, the Commissioner had 90 days to process de-registration.

Now: 60 days timeframe is given for processing the application.

© Provisions Added – Restrictions after De-Registration Application:

After online submission of the de-registration application, the registered person is barred from filing Annex-C, Annex-D, Sales Tax Returns and no Input Tax Adjustment or Refund.

The applicant cannot claim any input tax adjustment or refund during the de-registration process.

Other taxpayers cannot claim input tax based on invoices issued by the de-registered person during this period.

Audit/Inquiry Require-ments before De-Registration:

If the Commissioner wants to audit or inquire into the applicant’s affairs, he will issue a written notice requesting necessary records.

Upon receiving the records, the Commissioner must complete the audit or inquiry within 90 days from the date of the de-registration application.

After the audit, if any outstanding liability is determined, applicant must discharge it by filing a final return under Section 28.

After final return filing and payment:

Entry is made in the computerized system, and auto de-registration happens after 90 days (subject to adjournments but not exceeding the maximum limit).

Amendments in Rule 12 – Suspension of Registration:

Change of Terminology has been done, “LTUs” (Large Taxpayer Units) replaced with “LTOs” (Large Taxpayer Offices) wherever mentioned.

The “Tax fraud” is now specifically linked to clause (37) of Section 2 of the Sales Tax Act, 1990.

Under the new rules, the “non-availability” changed to “Non-existence” of the business.

Conditions for suspension have been elaborated:

Suspension can occur in cases refusal to Allow Access:

-Business premises inspection refused under Sections 40B and 40C.

-Records demanded under Sections 25 and 37 are not provided.

Disproportionate Activity included business turnover becomes five times more than the sum of declared capital and liabilities.

Disproportionate Activity also included transactions with Suspended Persons; making purchases from or sales to suspended persons exceeding 10% of total purchases/supplies, or exceeding Rs. 50 million, whichever is higher; non-filing of Sales Tax Returns; non-filing for three consecutive months; null filing (zero activity) for six consecutive months and tax fraud activity detected under Section 2(37), tax expert added.

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