ISLAMABAD: Tax experts and advisers have alleged that the Federal Board of Revenue (FBR) is deliberately declaring sales tax registrations inactive to generate additional revenue through the imposition of Extra Sales Tax on businesses.
The allegations, described as serious cases of maladministration, administrative excess, and willful neglect, have sparked concerns about the treatment of compliant taxpayers and the functioning of Pakistan’s tax administration system.
Tax adviser Waheed Shahzad Butt, who is pursuing the matter, claimed that FBR officials have unlawfully blocked the filing of sales tax returns, effectively forcing taxpayers to pay inflated amounts through Extra Sales Tax. He said the situation raises important questions about accountability and the rule of law within Pakistan’s apex revenue authority.
According to details shared by the tax adviser, a company provisionally filed its monthly sales tax return for December 2025 through the FBR online portal. However, the return was automatically locked by the system due to a negative figure appearing in Annexure H-1. The issue reportedly arose from an incomplete annexure submission during provisional filing, creating a technical anomaly that required administrative intervention from FBR officials to unlock the return.
Despite repeated requests by the taxpayer, the return remained locked and no corrective action was taken. As a result, the company was unable to submit subsequent sales tax returns from January 2026 onward.
The unresolved issue triggered an automatic system action that rendered the company’s sales tax registration inactive. Tax experts argue that such a status can have serious commercial and legal consequences for businesses operating in Pakistan’s formal economy, including restrictions on claiming input tax adjustments and conducting transactions with registered taxpayers.
Waheed Shahzad Butt stated that a formal written application was submitted to the Secretary (Sales Tax Operations) seeking resolution of the matter. He added that the taxpayer also made several documented visits to FBR headquarters and met relevant officials on multiple occasions.
According to him, despite repeated follow-ups and personal meetings, no written response was issued and no administrative action was taken to unlock the return or restore the company’s active sales tax registration status.
Tax practitioners have expressed concern that delays in resolving system-generated issues are unfairly penalizing taxpayers. They argue that when registrations are declared inactive due to unresolved technical problems, businesses may face additional tax liabilities, including Extra Sales Tax, despite making efforts to comply with tax laws.
The allegations have renewed calls for greater transparency, accountability, and timely intervention by FBR authorities to ensure that genuine taxpayers are not adversely affected by administrative delays and system-related complications.
