FBR Broadens Scope of Sales Tax Suspension for Registered Individuals

ISLAMABAD: The Federal Board of Revenue (FBR) has broadened the range of sales tax suspensions applicable to registered individuals.

As per revisions implemented within the Sales Tax Rules 2006, the FBR has outlined specific conditions leading to the suspension of sales tax registration. Suspension may be initiated if there’s a refusal to grant access for business premises inspection, as stipulated under Sections 40B and 40C of the Sales Tax Act.

Furthermore, failure to provide records when requested under sections 25 and 37 may also result in suspension.

Key Restrictions Imposed by FBR

The suspension can be enforced in instances of disproportionate business activity. This includes situations where business turnover exceeds the combined declared capital and liabilities by a factor of five; involvement in transactions with suspended individuals; procurement from or sales to suspended individuals surpassing 10% of total procurements/provisions, or exceeding Rs50 million (whichever is higher); failure to submit sales tax declarations for three successive months; consistent null filing (zero activity) for six consecutive months; and identification of tax fraud under Section 2(37).

A tax expert clarified that the revocation of a suspension must be processed within 30 days after the tax payer responds to the suspension notice.

Clarification on Tax Fraud

The term “tax fraud” is now specifically associated with clause (37) of Section 2 of the Sales Tax Act, 1990.