Sales tax filing is typically a monthly process in Pakistan, not an annual one, which confuses many companies that have just been registered for Sales Tax. If your company has been through Sales Tax Registration, below are the key considerations when it comes to filing returns.
Your Tax Period is a Month
When you file a return in IRIS, you will note that you have to pick the period you are filing for – which is a month. As our Sales Tax Return Filing Guide elaborates, when you open the task to file a return in IRIS, the first thing you will have to do is pick the month you are filing for. There is no option to file two periods at once – you have to file month after month, after the end of each.
There Are Two Components to Filing Sales Tax Returns
While it is a single task in IRIS, technically, a sales tax filing has two components, which have separate due dates (and, therefore, separate pressures):
- The payment (CPR) for the period – if you have a payable amount for the period, you have to generate the Computerized Payment Receipt (CPR) through your bank or internet banking before you can finalize the return.
- The annexures (sales, purchases, credit/debit/payable calculations) and return submission in IRIS. In practice, this means that you have to allow a couple of days between the payment (and associated challan) being cleared by the FBR and the submission of the actual annexures and return in IRIS. You can’t really leave things till the last minute to file the return as a whole, along with the annexures.
Exactly When Does the Due Date Fall?
This is a question I have deliberately avoided answering. The reason for that is that the FBR has been changing the due dates for sales tax filing through various SROs, so much so that it has changed more than once in recent months and years, for both manufacturers and non-manufacturers. Therefore, rather than give you a date that may well have expired the moment you read this, my advice to you is to look at whichever dashboard you access in IRIS to file returns – the due date for the return period will be visible there. If that is not possible, ask us – it’s a five-minute question. Either way, don’t rely on anything before the end of the month, because there is always a risk that the due date has changed unexpectedly and officially.
What Happens if I Miss the Due Date?
It is important that you understand that missing the due date for payment or return filing is not a minor hiccup. It has serious consequences, ranging from default surcharge to a change in your compliance status. We have addressed the subject in detail in our Penalty for Late or Non-filing of Sales Tax Return article.
A Practical Approach to Sales Tax Filing That Works For Many
The general rule of thumb among many of our clients who manage to file their sales tax returns on time and without incident is to reconcile purchase and sales invoices on a monthly basis in the Invoice Management section of IRIS, before finalizing the payable/credit position a few days before the end of the month. From there, generate and pay the CPR, and only then, finalize and submit the return. One of the main reasons people fail to meet the sales tax filing deadline is because they wait till the last moment to even open IRIS.
Frequently Asked Questions
Is sales tax filing a monthly or quarterly process?
Sales tax filing is a monthly process. While you may have the option to file quarterly under certain circumstances, for most taxpayers, it is done on a monthly basis.
Do I have to make the payment before I can file the return, or can I file the return first and pay later?
In practice, you will find that you cannot file the return if you have not made the payment already (generated the CPR and cleared the challan).
Where can I find out the due date for the current month?
You can find it by logging onto the dashboard where you file your returns in IRIS. That said, do not rely on any particular date, as it is known to change with official notifications from the FBR. If in doubt, ask your consultant.
