KARACHI: The Karachi Tax Bar Association (KTBA) has urged the government to remove legal and procedural inconsistencies in the declaration of business bank accounts by registered sales taxpayers, highlighting difficulties caused by outdated references in the Sales Tax Act, 1990.
In its budget proposals for 2026-27, the KTBA pointed out that registered taxpayers face challenges when declaring business bank accounts through the Federal Board of Revenue’s (FBR) digital tax system, as the prescribed registration form mentioned in the law is no longer available on the tax authority’s online platform.
The issue relates to Section 73 of the Sales Tax Act, 1990, which regulates the declaration and operation of business bank accounts for registered sales tax taxpayers. Under the existing law, a business bank account is defined as an account declared to the Commissioner through Form STR-1.
However, according to the KTBA, Form STR-1 is no longer available within the FBR’s digital registration framework. Taxpayers seeking to update registration information through the eFBR portal are automatically redirected to the IRIS system, where all registration amendments are processed using Form 181 under Section 181 of the Income Tax Ordinance, 2001.
The association noted that this mismatch between the legal provisions and the actual digital registration process has created confusion and uncertainty for taxpayers. While the law continues to reference Form STR-1, taxpayers are required to use Form 181 to update registration details and declare business bank accounts.
KTBA stated that maintaining references to a non-existent form creates unnecessary compliance complications and may lead to administrative issues for businesses attempting to fulfill documentation requirements under sales tax laws.
To address the problem, the association has recommended amending Section 73 of the Sales Tax Act by replacing the reference to Form STR-1 with Form 181. The proposed change would align the law with the procedures currently implemented through the FBR’s IRIS portal and digital registration system.
Tax experts believe that harmonizing legal provisions with online tax procedures would simplify compliance, reduce disputes between taxpayers and tax authorities, and improve the efficiency of Pakistan’s tax administration framework.
The recommendation forms part of a wider package of tax reform proposals submitted by the KTBA ahead of the Federal Budget 2026-27. The association has emphasized the need for practical amendments that support digitalization, streamline tax procedures, and facilitate ease of doing business for registered taxpayers across Pakistan.
If approved, the amendment could help eliminate ambiguity surrounding business bank account declarations and strengthen compliance with sales tax documentation requirements.
