How to file sales Tax Return in Pakistan?

There are different kinds of Taxes in Pakistan, however, these taxes can be categorized into Direct and Indirect taxes. Direct Taxes are those which are charged directly from the taxpayer while indirect taxes are those in which the burden is eventually upon the end-consumer to pay the same. Sale Tax is an indirect tax which in Pakistan is based in multiple points and instances. This mean that at each instance of commercial sale of goods or services, sales tax is required to be charged. The 18th Amendment in the Constitution of Pakistan, 1973, promises the financial autonomy of the provinces. In same sequel, Sales tax on services had been given in domain of the provinces and in not the subject matter in discuss in this article. This article focus on the procedure of filing sales tax return with regard to sale of goods only. Sales Tax on goods is the domain of Federal government and is regulated by Federal Board of Revenue in terms of Sales Tax Act 1990.

The Act 1990 applies to each and every business engaged in import, export, sale and purchase of goods that fall within its domain. Regardless of whether you own a start-up business or are owner of established business in Pakistan, you are required to file Sales Tax Return, if your engaged in commercial sale and purchase, import or export of goods.

Who is required to be registered under Sales Tax Act 1990?

  1. All importers
  2. All wholesalers (including dealers) and distributors
  3. Manufacturers except cottage industry. [Cottage industry is defined as having annual turnover below Rs.5 million and whose annual utility bill (including electricity , gas and telephone) does not exceed Rs. 600,000/-].
  4. Retailers having value of supplies of over 5 million rupees, in any tax period during the last 12 months.
  5. A person required under any Law to be registered e.g. service providers like hotels, clubs, caterers, customs agents, ship chandlers, stevedores, courier services etc.
  6. Persons making zero-rated supplies, including commercial exporter who intends to obtain sales tax refund against his zero rated supplies.
  7. A person who is required to be registered but avoids to get registered can still be compulsory registered by FBR after conducting inquiry.

Steps to File Sales Tax Return:

Easy steps to file sales tax return in Pakistan:

  1. Register in Sales Tax with FBR on TRF 1 form. Can be available from district FBR office.
  2. After you have been registered, you will be assigned a unique login and password for your business. Visit fbr.gov.pk and enter your credential. A window will appear showing your company’s profile and previously submitted return files.
  3. Click on declaration, if you wish to file sales tax return for a certain month. Select tax year and Tax month for which you wish to file the return.
  4. Open the “Annexure C” window and click on “Add Sale Invoice” button and submit your monthly sales. You can review your draft return after you have detailed all the invoices.
  5. Go to “Annexure A” if you have made any monthly purchases and click ‘search’ button. It will show all the purchases made in the month and ensure to select the entire purchase data.
  6. Submit all Annexure and now open e.fbr.gov.pk to create PSID of the amount of due tax payable. You can opt to pay online or by depositing tax at nearest NBP branch. Bank shall provide you with CPR.
  7. Login again and open the draft. You will find ‘feed CPR’ button at the end of the draft. Click on it and attach the CPR.
  8. Click on ‘process & submit’ button. And after verification your sales tax returns will be submitted successfully.

Important Points to Remember:

  • Make sure you submit all relevant Annexures. Annexure C must be submitted before the 10thof every month.
  • PSIDs should be submitted by the 15thof each month.
  • Return should be filed by max 18thof every month.