The Sales Tax Act, 1990 (STA) is a law that governs the levy and collection of sales tax in Pakistan. The STA defines an “in-active taxpayer” as a registered person who has not filed a sales tax return for six consecutive months.
There are a number of reasons why a taxpayer might become in-active. Some common reasons include:
- has not filed tax returns for two consecutive months
- is blacklisted
- has not filed previous year income tax return
- have not filed final tax return 115 or quarterly or annual withholding statements
Consequences of Being an In-Active Taxpayer
There are a number of consequences for being an in-active taxpayer. These consequences include:
- The taxpayer may be subject to penalties, such as fines or interest.
- The taxpayer may be barred from registering for sales tax in the future.
- The taxpayer may be liable for sales tax on all of its sales, even if they are not reported.
- The taxpayer may be subject to audit by the Federal Board of Revenue (FBR).
How to Avoid Becoming an In-Active Taxpayer
There are a number of things that taxpayers can do to avoid becoming in-active. These include:
- Filing sales tax returns on time and accurately.
- Keeping good records of all sales and purchases.
- Paying sales tax liabilities promptly.
- Registering for sales tax if the business meets the registration threshold.
Conclusion
Being an in-active taxpayer can have a number of negative consequences for businesses. By following the tips above, businesses can avoid becoming in-active taxpayers and protect themselves from the penalties and other consequences associated with this status.
