Once your business is registered for sales tax, filing becomes a monthly obligation rather than a once-a-year task — and it's one of the areas FBR is least forgiving about. Here's what's involved, from who has to register to what happens if you miss a deadline.
Who Needs to Register for Sales Tax
- Manufacturers whose annual turnover crosses Rs. 10 million
- Importers, who must register regardless of turnover size
- Tier-1 retailers and distributors above the threshold
- Exporters, who typically register to claim back input tax
- Any business FBR determines should be registered based on its supply chain role
Sales Tax Rates
The standard rate on most manufactured goods and commercial supplies is 18%. Certain food items and agricultural inputs get a reduced 10%, select machinery and medical equipment sit at 5%, exports are zero-rated (with input tax refundable), and a short list of exempt items — basic foodstuffs, medicines, educational materials — carry no tax at all.
How the Monthly Return Works
- Log in to FBR's IRIS portal with your sales tax credentials
- Go to Returns > Sales Tax Return and select the relevant month
- Enter your output tax — all sales made during the period, with invoice details
- Enter your input tax — purchases with valid tax invoices from registered suppliers
- The system nets output against input to arrive at tax payable (or refundable)
- Generate a Payment Slip ID and pay any net amount due at a bank
- Submit the return once payment is confirmed
Both filing and payment are due by the 18th of the month following the tax period — miss it and penalties apply automatically, no reminder issued.
Penalties Worth Knowing
- Late filing: Rs. 10,000 per return or 5% of the tax due, whichever is higher
- Late payment: default surcharge at KIBOR plus 3% annually
- Non-filing for several consecutive months: suspension of your STRN
- Fraudulent invoices or fake input claims: penalties up to three times the tax involved, plus possible prosecution
If your input tax regularly exceeds output tax — common for exporters — you can apply for a refund from FBR, though it requires clean documentation and the process can take a few weeks to a few months.