FBR Imposes New Restrictions on Sales Tax De-Registration in 2025
The Federal Board of Revenue (FBR) has introduced major changes to the Sales Tax Rules, 2006 through SRO 608(I)/2025. These changes mainly affect people or businesses who want to cancel (de-register) their sales tax registration.
Below is a simple breakdown of what’s new:
Table of Contents
1. Changes in De-Registration Process
a) Online Application Only
Previously, a person had to send a request for de-registration to the Commissioner Inland Revenue.
Now:
All applications must be submitted online through the FBR’s computerized system.
Manual applications are no longer accepted.
b) Faster Processing Time
Before: The Commissioner had 90 days to process the application.
Now: The application must be processed within 60 days.
2. Restrictions During De-Registration Process
Once a business applies for de-registration, the following restrictions will apply immediately:
The person cannot file:
Annex-C
Annex-D
Sales Tax Returns
The person cannot claim any input tax adjustment or refund.
Other businesses cannot claim input tax on invoices issued by this person during this time.
3. Audit or Inquiry Before De-Registration
If the tax department wants to check your business before de-registration:
The Commissioner will send a written notice asking for business records.
The audit or inquiry must be completed within 90 days from the date of de-registration application.
If any tax is due after the audit, the person must pay it and file a final return under Section 28.
After the final return is submitted and payment is made, the system will automatically complete the de-registration within 90 days.
4. Amendments to Rule 12 – Suspension of Sales Tax Registration
The FBR also made some changes to the rules about suspending sales tax registration.
a) Updated Terms
“LTUs” (Large Taxpayer Units) are now called “LTOs” (Large Taxpayer Offices).
The term “tax fraud” now follows the official definition under Clause (37) of Section 2 of the Sales Tax Act, 1990.
b) “Non-Availability” Changed to “Non-Existence”
If the business is found to be non-existent, registration can be suspended.
c) Reasons for Suspension
The FBR can suspend your registration for the following reasons:
Refusing access to business premises (under Section 40B or 40C).
Not providing records when requested (under Section 25 or 37).
Business turnover is much higher (five times) than declared capital and liabilities.
Dealing with suspended persons:
If you buy from or sell to a suspended person and it exceeds 10% of your total business or Rs. 50 million, whichever is more.
Not filing sales tax returns:
Not filing for three months in a row.
Filing zero returns for six months.
Involvement in tax fraud, as defined by law.
Conclusion
These new rules by the FBR aim to make the sales tax system more transparent and reduce fraud. If you’re planning to de-register your business, make sure to follow the new online process and be aware of the restrictions during the application period.
If you’re unsure how to proceed, it’s best to talk to a tax advisor or chartered accountant.
