Who pays the sales tax to FBR?

Question

If I, as retail ,buy goods from distributor and I pay sales tax to him, then how could I submit the tax to FBR.

And if I purchased goods from distributor without paying sales tax then distributor must have restrictions, from government, to perform only B2B businesses such that government can collect sales tax from retailers?

Hope you understand the question?

Answer 1

Yes, your question is understood, and it touches on an important aspect of Sales Tax compliance in Pakistan. Here's a clear explanation based on your two parts:

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1. If you, as a retailer, buy goods from a distributor and pay sales tax to him:

✅ You are not required to submit the same tax again to FBR.
Here’s how it works:

• When a registered distributor sells goods to you, they charge sales tax on the invoice.

• You, as the buyer/retailer, pay the total invoice amount including sales tax.

• The distributor is responsible for depositing that collected sales tax to FBR.

• You should ensure the distributor issues a proper sales tax invoice and is active on the FBR Active Taxpayers List (ATL) for sales tax.

• If you are also registered under sales tax (e.g., if you're a Tier-1 retailer), you can claim input tax credit for the sales tax you paid, while charging sales tax on your own sales to customers.

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2. If you purchase goods from a distributor without paying sales tax:

This is not allowed for registered distributors under normal circumstances. Here's what you should know:

✅ For registered distributors:

• A registered distributor is required to charge sales tax on all taxable supplies, even if the buyer is unregistered.

• Sales tax must be charged and invoiced, regardless of whether the buyer is a retailer, wholesaler, or end-consumer.

• Selling without charging sales tax would mean tax evasion by the distributor.

⚠️ If no sales tax is charged:

• Either the distributor is unregistered (which is rare and non-compliant for many sectors), or they are committing a violation.

• FBR does not allow registered distributors to "choose" not to charge tax. The sales tax law mandates charging sales tax on taxable supplies.

• Distributors are not specifically restricted to only B2B sales, but they must ensure proper invoicing and tax collection, regardless of whether the buyer is a business or an end-consumer.

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✅ Summary:

Situation	Who collects/submits sales tax	Your responsibility
You buy from registered distributor with sales tax	Distributor collects and submits to FBR	Get proper invoice; no need to submit yourself unless you're registered
You buy without paying sales tax	Distributor is violating tax law or unregistered	Avoid such transactions; you can’t claim input tax or show compliance

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Tip:

Always buy from registered, active suppliers and ask for a tax invoice, so the sales tax chain remains unbroken and you stay compliant — especially if you plan to become a registered seller or retailer under sales tax regime.