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If you receive dividends from Independent Power Purchasers (IPPs), Filers pay a 7.5% tax while Non-Filers surrender 15%. • Importing basic goods from Part-I of the Twelfth Schedule costs Active Taxpayers just 1% in tax, while Non-Filers have to pay 2%. • Registering a 2001cc to 2500cc luxury vehicle incurs a 7% tax for Active Filers, but a staggering 21% tax for Non-Filers. • Buyers of 1301cc to 1600cc cars pay a 2% advance tax if they are Filers, but Non-Filers pay exactly triple at 6%. • Payments to electronic and print media for advertising services are taxed at just 1.5% for Active Taxpayers, compared to 3% for Non-Filers. • Commercial importers of Part-II goods face a 3.5% withholding tax if they are Filers, but the rate doubles to 7% for Non-Filers. • Salaries under Rs. 600,000 are completely tax-free, maintaining a 0% rate regardless of your taxpayer status. • Winning a raffle, lottery, or sales promotion prize costs Non-Filers a whopping 40% in tax, compared to 20% for Filers. • The sale of petroleum products is taxed at 12% for Filers and exactly double that at 24% for Non-Filers. • Selling rice, cotton seed, or edible oils comes with a low 1.5% tax for Filers, but a 3% tax for Non-Filers. • Payments made to non-resident sportspersons incur a 15% tax if they are on the ATL, and a massive 30% if they are non-ATL. • Winning a prize bond or crossword puzzle means you lose 15% to taxes as an Active Filer, but a massive 30% if you are a Non-Filer. • Companies generating rental income from immovable property pay a 15% tax if they are Active Filers, but face a 30% rate as Non-Filers. • Dividends from Real Estate Investment Trusts (REITs) and general companies cost Active Filers 15% in tax, but Non-Filers lose a massive 30%. • Registering a 1000cc motor vehicle costs Filers just 1% in tax, while Non-Filers are penalized with a 3% tax. • Capital gains arising on the disposal of certain debt securities are taxed at 15% for Filers, but double to 30% for Non-Filers. • Profits on debt from mutual funds deriving 50% or more income from debt carry a huge 50% tax for Non-Filers, compared to 25% for Filers. • Active Filers importing CKD kits for Electric Vehicles pay a minimal 1% tax, whereas Non-Filers pay double at 2%. • Purchasing a 1601cc to 1800cc vehicle will cost Non-Filers a 9% tax, which is three times the 3% rate given to Active Filers. • Cash withdrawals by a person whose name does not appear on the Active Taxpayers’ List are hit with an automatic 0.8% advance tax. • Providing IT and IT-enabled services costs Active Taxpayers just 4% in withholding tax, while Non-Filers must pay 8%. • Pensions under 10 million rupees remain 100% tax-exempt for everyone, no matter what your filing status is. • Buying a high-end 2501cc to 3000cc vehicle leaves Filers with a 9% tax bill, but absolutely punishes Non-Filers with a massive 27% tax rate. • Importing pharmaceutical products carries an 8% tax for Non-Filers, which is exactly double the 4% rate applied to Active Taxpayers. • The withholding tax on banking and financial institution profits is set at 20% for those on the Active Taxpayers’ List, but jumps to 40% for those off the list. • Commercial importers bringing in Part-III items are hit with a 12% tax rate if they are Non-Filers, compared to only 6% for Active Filers. • If you receive dividends from Independent Power Purchasers (IPPs), Filers pay a 7.5% tax while Non-Filers surrender 15%. • Importing basic goods from Part-I of the Twelfth Schedule costs Active Taxpayers just 1% in tax, while Non-Filers have to pay 2%. • Registering a 2001cc to 2500cc luxury vehicle incurs a 7% tax for Active Filers, but a staggering 21% tax for Non-Filers. • Buyers of 1301cc to 1600cc cars pay a 2% advance tax if they are Filers, but Non-Filers pay exactly triple at 6%. • Payments to electronic and print media for advertising services are taxed at just 1.5% for Active Taxpayers, compared to 3% for Non-Filers. • Commercial importers of Part-II goods face a 3.5% withholding tax if they are Filers, but the rate doubles to 7% for Non-Filers. • Salaries under Rs. 600,000 are completely tax-free, maintaining a 0% rate regardless of your taxpayer status. • Winning a raffle, lottery, or sales promotion prize costs Non-Filers a whopping 40% in tax, compared to 20% for Filers. • The sale of petroleum products is taxed at 12% for Filers and exactly double that at 24% for Non-Filers. • Selling rice, cotton seed, or edible oils comes with a low 1.5% tax for Filers, but a 3% tax for Non-Filers. • Payments made to non-resident sportspersons incur a 15% tax if they are on the ATL, and a massive 30% if they are non-ATL. • Winning a prize bond or crossword puzzle means you lose 15% to taxes as an Active Filer, but a massive 30% if you are a Non-Filer. • Companies generating rental income from immovable property pay a 15% tax if they are Active Filers, but face a 30% rate as Non-Filers. • Dividends from Real Estate Investment Trusts (REITs) and general companies cost Active Filers 15% in tax, but Non-Filers lose a massive 30%. • Registering a 1000cc motor vehicle costs Filers just 1% in tax, while Non-Filers are penalized with a 3% tax. • Capital gains arising on the disposal of certain debt securities are taxed at 15% for Filers, but double to 30% for Non-Filers. • Profits on debt from mutual funds deriving 50% or more income from debt carry a huge 50% tax for Non-Filers, compared to 25% for Filers. • Active Filers importing CKD kits for Electric Vehicles pay a minimal 1% tax, whereas Non-Filers pay double at 2%. • Purchasing a 1601cc to 1800cc vehicle will cost Non-Filers a 9% tax, which is three times the 3% rate given to Active Filers. • Cash withdrawals by a person whose name does not appear on the Active Taxpayers’ List are hit with an automatic 0.8% advance tax. • Providing IT and IT-enabled services costs Active Taxpayers just 4% in withholding tax, while Non-Filers must pay 8%. • Pensions under 10 million rupees remain 100% tax-exempt for everyone, no matter what your filing status is. • Buying a high-end 2501cc to 3000cc vehicle leaves Filers with a 9% tax bill, but absolutely punishes Non-Filers with a massive 27% tax rate. • Importing pharmaceutical products carries an 8% tax for Non-Filers, which is exactly double the 4% rate applied to Active Taxpayers. • The withholding tax on banking and financial institution profits is set at 20% for those on the Active Taxpayers’ List, but jumps to 40% for those off the list. • Commercial importers bringing in Part-III items are hit with a 12% tax rate if they are Non-Filers, compared to only 6% for Active Filers. •

Businesses in Pakistan that no longer meet the criteria for sales tax registration—such as ceasing taxable activities or falling below the turnover threshold—must formally de-register with the Federal Board of Revenue (FBR). This process is managed via the IRIS portal and involves compliance, documentation, and possibly an audit.

Here’s a detailed step-by-step guide on how to de-register from sales tax in Pakistan, based on the latest regulations, including SRO.608(I)/2025.

When to Apply for De-Registration

You should initiate the de-registration process if:

You have ceased making taxable supplies (e.g., business shutdown, change in nature of business).
Your annual taxable turnover falls below the mandatory registration threshold.

Note: All pending sales tax returns must be filed, and liabilities cleared before you apply.

Step-by-Step Process for Sales Tax De-registration

1. Ensure Compliance and Eligibility

Before proceeding, confirm that:

Your business has ceased taxable activity or turnover is below threshold.
You have filed all past sales tax returns.
You have cleared all outstanding sales tax liabilities.

2. Log into the FBR IRIS Portal

Visit https://iris.fbr.gov.pk
Log in using your NTN/STRN and password.

3. Access the De-registration Form

Go to Registration Services > Sales Tax De-registration.
Locate the application form related to sales tax de-registration.

4. Complete and Submit the Application

Fill in the de-registration form carefully.
Provide your reason for de-registration (e.g., ceased business, turnover below threshold).
Mention the effective date you want de-registration to apply from.
Upload supporting documents (e.g., closure certificate, financials, business bank statements).

Important: As per SRO.608(I)/2025, from the moment your de-registration application is submitted:

No input tax adjustment or refund will be allowed.
You will not be able to file Annex-C, Annex-D, or sales tax returns going forward.

5. Respond to FBR Inquiry or Audit (If Initiated)

FBR may initiate an audit or inquiry to verify your claim and assess final tax liabilities. If contacted, you must:

Provide business records, books of accounts, and past returns.
Cooperate fully to avoid delays.

6. File Final Return and Pay Outstanding Tax

If the audit determines any final liability, you must:

File a final sales tax return under Section 28 of the Sales Tax Act, 1990.
Pay all determined liabilities within the given time frame.

7. Wait for Final De-registration Entry

Once the final return is filed and dues are paid:

An entry will be made in the FBR system reflecting completion of requirements.
Your sales tax registration will be canceled after 90 days from the date of your final return submission.

FBR is required to complete any audit or proceedings within 90 days of your application under SRO.608(I)/2025.

Important Considerations

Input Tax Loss: From the date of de-registration application submission, you lose the right to claim input tax or refunds.
Audit Risk: FBR may initiate a full audit before final de-registration.
Record Keeping: Maintain all financial records, invoices, and returns for several years even after de-registration. These can be requested during audits.
Partial Business Closure?: If you’re still engaged in any taxable supplies, de-registration may be rejected.

Conclusion

De-registering from sales tax in Pakistan requires strict compliance with FBR requirements and accurate filing of final obligations. The process is streamlined via IRIS, but any pending dues or incomplete returns can cause delays or complications. To avoid penalties and ensure a smooth exit, always follow the steps carefully, and consider getting advice from a qualified tax consultant.

Syed Babar

Articles: 51

2 Comments

Khan Mast Khan

June 27, 2025 / 4:14 pm Reply

I was in a Partnership business (firm) but on we liquidated it and applied in FBR for de registration of sales tax and income tax on 14/05/2024 now I have checked that it is marked by the FBR for de registration but no liquidation date assigned to it? Are we submit sales tax returns for this firm or it’s not required. My law officer say that there’s no need to submit sales tax returns for this firm.
- Saif Ali Sabri
  
  September 8, 2025 / 3:50 pm Reply
  
  Here’s the situation explained simply:
  
  You applied for de-registration (Income Tax + Sales Tax) on 14/05/2024.
  FBR has marked the case as “de-registration in process” but has not assigned a liquidation date yet.
  
  Sales Tax Law requirement:
  
  Until FBR officially approves the de-registration and assigns a liquidation date, the firm is still considered registered.
  
  As long as a firm is registered, monthly sales tax returns must be filed, even if there are no sales (in which case a nil return is filed).
  
  Once de-registration is finalized with a liquidation date, only returns up to that date are required. After that, no further sales tax returns are needed.
  
  Risk if you don’t file:
  If you stop filing before FBR issues the liquidation date, the system may treat your firm as a “non-filer/defaulter” and penalties can apply for each non-filed return.
  
  Conclusion:
  Your law officer is partly right (long-term, no returns will be required). But until the de-registration process is completed and liquidation date assigned by FBR, you must keep filing monthly sales tax returns (nil, if no activity).
  
  ✅ Next Step for You:
  
  Keep filing nil sales tax returns until FBR finalizes de-registration.
  
  You can also follow up with your RTO/LTU to request quick assignment of the liquidation date.
  —————–
  Would you like me to also guide you on Income Tax side of the partnership dissolution (filing of last return & closing wealth statement)? That’s also important along with sales tax.
  ———————————————
  Perfect Let’s cover the Income Tax side of partnership dissolution step by step.
  
  1. Final Return of the Partnership (Firm)
  
  Even though you applied for de-registration, the firm (AOP) must still file its final income tax return for Tax Year 2024 (period 01-07-2023 to 14-05-2024).
  
  This return should show:
  
  Income earned till the liquidation date.
  
  Business expenses till liquidation.
  
  Balance sheet up to 14/05/2024 (showing distribution of assets/liabilities among partners).
  
  Relevant section: Section 98B of the Income Tax Ordinance, 2001 covers dissolution of an AOP.
  
  2. Final Wealth Statement (Partners)
  
  Each partner must update their personal wealth statement for TY 2024.
  
  The firm’s assets, cash, and liabilities distributed among partners should appear in their wealth statements as additions.
  
  Example:
  
  If firm had a bank balance of PKR 2,000,000 and machinery of PKR 500,000, these must be shown as transferred to partners according to their profit-sharing ratio.
  
  3. Notice of Discontinued Business
  
  Section 117 of the Ordinance requires a taxpayer to notify the Commissioner about discontinuance of business.
  
  Since you already applied for de-registration, this condition is largely fulfilled. But FBR may still ask for a formal discontinuance notice in the return.
  
  4. Future Tax Filing Obligation
  
  After liquidation, the firm (AOP) will no longer file returns.
  
  Only the individual partners will continue to file their returns and wealth statements every year.
  
  ✅ Next Steps for You:
  
  Prepare Income & Expense statement of the firm up to 14/05/2024.
  
  Prepare Balance Sheet showing distribution of assets/liabilities among partners.
  
  File Final Income Tax Return of the firm (AOP) for TY 2024.
  
  Each partner should reflect transferred assets/liabilities in their Wealth Statement for TY 2024.
  
  Keep record of dissolution deed, de-registration application, and distribution workings (FBR may ask during audit).
  
  Would you like me to prepare a sample draft format for:
  
  (a) Final Profit & Loss Statement and
  
  (b) Balance Sheet of the dissolved firm (showing distribution among partners)?
  
  This will help you file the final return smoothly.