Breaking Down SRO 350: Sales Tax Registration & Filing for Small Businesses in Pakistan

Brief Explanation of FBR SRO 350 Sales Tax Pakistan:

The Federal Board of Revenue (FBR) has issued a new Statutory Regulatory Order (SRO) 350(I)/2024, which introduces changes to the Sales Tax Rules, 2006. These changes primarily affect small businesses with only one owner/member (individuals, associations, or single-shareholder companies) who are not manufacturers.

Here’s a breakdown of the key changes:

New Registration Requirements:

  • You will need to submit a balance sheet showing your business capital and corresponding assets (e.g., bank accounts, partner contributions with percentages).
  • This information will be uploaded electronically to the IRIS system, used for sales tax registration and filing.
  • Existing businesses with only one owner/member who haven’t fulfilled this requirement will need to do so within 30 days. Otherwise, they won’t be able to file returns electronically without Commissioner approval.

Biometric Verification:

  • Every individual, member of an association, or director of a single-shareholder company will need to visit a National Database and Registration Authority (NADRA) e-Sahulat Centre for biometric verification annually in July.
  • Failure to do so will restrict electronic return filing, requiring Commissioner authorization through IRIS.

Return Scrutiny based on Business Capital:

  • The FBR will compare your declared sales tax with your business capital. If the sales are five times more than the capital, your electronic return filing may require Commissioner approval through IRIS.

Impact on Buyers:

  • If you purchase from a seller who fails to file their sales tax return, your provisional return (filed electronically) might be impacted.
  • IRIS may remove those invoices and corresponding input tax credit from your return, potentially increasing your sales tax liability.

Changes for Sellers:

  • If you file your return with sales tax payment by the due date, your buyer’s provisional return with your invoice and input tax credit will be accepted by IRIS.

Overall, these changes aim to improve tax compliance and reduce potential misuse of the system by small businesses.

Frequently Asked Questions:

5 Comments

  1. MUHAMMAD SHABBIRsays:

    EXTERMELY FOOL PERSONS ARE APPOINTED ON SECRETERY LEVEL. THIS WILL BE LOSS OF 18% TAX ALREADY COLLECTING. Mian Shahbaz Sharif in his 1st speech was informed to the nation, that in every department of govt., 10 persons are needed, while 60 are appointed inspite of 10 persons. Those 50 are unnecessary burdon on govt., revenue and collection. Also such fools are issuing THIS TYPE OF SRO.350(i)2024. To much can be written if necessay.

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