The Federal Board of Revenue (FBR) has broadened the scope for suspending sales tax registration under the recently amended Sales Tax Rules 2006. The revisions provide clearer conditions under which registered businesses may face suspension of their sales tax status.
According to revised rules, the FBR now has the authority to suspend businesses if they refuse access to premises for inspection as outlined in Sections 40B and 40C of the Sales Tax Act. Similarly, businesses failing to provide requested records under Sections 25 and 37 are subject to suspension.
Other grounds for suspension include cases of disproportionate business activity, where a company’s turnover exceeds five times the sum of its declared capital and liabilities.
Transactions with suspended individuals or companies, purchases or sales exceeding 10% of total business or Rs50 million, whichever is higher, also trigger the suspension.
Non-filing of sales tax returns for three consecutive months or filing only zero-activity returns for six consecutive months are additional criteria for suspension, as is involvement in tax fraud activities, defined under Section 2(37) of the Sales Tax Act.
Once suspension is imposed, businesses have 30 days to respond to the notice, after which the suspension may be revoked depending on the taxpayer’s reply.
