How to Register for Sales Tax in Pakistan?

A sales tax is defined as a tax paid to the government for the sales and supply of certain services and goods. The Federal Government of Pakistan levies sales tax under the 1990 Sales Tax Act on the services or goods being sold and supplied as well as on the goods imported into the country.

In Pakistan, the consumer is obligated to pay the sales tax charges as per the price of the services and goods being purchased. The proceeds collected through sales tax are a major source of revenue for the government of Pakistan.

How to Register for Sales Tax?

1. The person willing to register for sales tax is required to submit the application to the CRO i.e. the Central Registration Office through Form (STR-1) either via courier or postal services or by electronic means. The applicant can also submit the hard copy of the application to the LRO i.e. the Local Registration Office. After a thorough scrutinization of documents along with required editing, the application is forwarded to the CRO electronically. 
2. It is mandatory for the applicant to fill the form carefully and duly in accordance with the instructions attached with the form. 
3. After authentication, a registration certificate holding a registration number is mailed to the applicant on Form (STR-5) by the CRO.

Usually, the CRO verifies the provided information from the available data; however, at times it calls for an enquiry to be carried out by the LRO in order to authenticate the declaration contents submitted by the applicant. The CRO reserves the rights to reject the application by specifying the reason and giving intimations to the applicant.

Who is Accountable to Pay Sales Tax?

As per section 25 of the 1990 Sales Tax Act, the sales tax accountability can be assessed by the tax authorities only with respect to the registered tax payers. Moreover, sales tax is charged on every imported as well as locally produced good other than medicines, computer software, some unrefined agricultural products, poultry feed and other goods mentioned in the 1990 Sales Tax Act.

In addition, the business sectors that are obligated to get registered for the sales tax and are liable to charge customers sales tax on their services or goods are:

• Retail
• Manufacturing
• Wholesale
• Import
• Distribution
• Services

Who is Obligated to Get Registered for Sales Tax?

Every single individual belonging to the above mentioned sectors and is engaged in taxable supplies in Pakistan is legally responsible to get sales tax registration. Yet, from taxable goods supplied in any tax term through the preceding 12 months concluding any tax term does not go beyond 10 million rupees or the ones with yearly utility (telephone, gas and electricity) bills through the preceding 12 months concluding any tax term do not go beyond Rs. 800,000.

How to File Sales Tax Returns?

In accordance with the law every registered individual should submit a return not later than the fifteenth of each month in relation the the sales generated in the previous month. Every registered individual is obligated to submit the returns by electronic means; in such event the imbursement is to be carried out by the 15th while returns can be filed on e-portal run by the Federal Board of Revenue (FBR) by the 18th.