Sales tax registration in Pakistan is mandatory for certain businesses and service providers under the Sales Tax Act, 1990 and is governed by the Federal Board of Revenue (FBR). It ensures that taxable persons collect, report, and deposit sales tax on goods and services. The process is now largely digitized and can be completed via the FBR IRIS portal or mobile apps like Tax Asaan.

Below is the updated and detailed guide for Sales Tax Registration in 2025, along with eligibility criteria and the complete step-by-step process.

Who Must Register for Sales Tax in Pakistan (2025 Update)?

The following categories of persons are required to register for sales tax:

1. All Importers
   Any person or entity importing goods into Pakistan must obtain Sales Tax Registration.

2. All Wholesalers and Distributors
   Those engaged in wholesale business or supply chains including dealers and agents are required to register.

3. Manufacturers (Excluding Cottage Industry)
   A cottage industry is exempt if:

   • Annual turnover is less than PKR 10 million, and

   • Annual utility bills (electricity, gas, telephone) are less than PKR 800,000

4. Retailers – Especially Tier-1 Retailers
   Tier-1 retailers are defined as:

   • A retailer operating as a unit of a national/international chain

   • A retailer operating in an air-conditioned shopping mall, plaza, or center (excluding kiosks)

   • A retailer with annual electricity bills exceeding PKR 600,000

   • Wholesaler-cum-retailer engaged in bulk imports and direct-to-consumer retail sales

5. Service Providers under Federal or Provincial Laws
   Includes but is not limited to:

   • Hotels and Clubs

   • Caterers and Customs Agents

   • Ship Chandlers, Stevedores

   • Courier Services, Event Planners, etc.

6. Zero-Rated Suppliers
   Persons engaged in zero-rated supplies (e.g., exporters) who want to claim refunds must register for sales tax.

7. Persons Liable for Compulsory Registration
   A person falling under any of the above categories but failing to register voluntarily may be forcefully registered by the FBR under Rule 6(1) of Sales Tax Rules, 2006 after due inquiry.

Step-by-Step Process to Register for Sales Tax (Online – 2025)

Step 1: Visit the FBR Website
Go to https://www.fbr.gov.pk and click on the “e-Services” tab.

Step 2: Select “NTN/STRN Registration”
This section leads to the online registration portal to apply for both National Tax Number (NTN) and Sales Tax Registration Number (STRN).

Step 3: Create a User Account (if not already created)
Provide your CNIC, mobile number (registered in your name), and email address to create an account.

Step 4: Fill in the Online Application Form (Form 181)
Enter the following:

• Business information (type, name, address)

• Principal activity and sector

• Ownership or tenancy details of the premises

• Bank account details linked with the business

• Upload scanned documents (see list below)

Step 5: Upload Required Documents (PDF Format)
• CNIC/NICOP (for individuals)
• SECP Certificate (for companies)
• Partnership deed (for AOPs/firms)
• Business address proof (rent deed or ownership document)
• Recent utility bill (not older than 3 months)
• Bank maintenance certificate or account statement

Step 6: Verification and STRN Issuance
Once FBR verifies your documents and business activity, you will be issued:
• National Tax Number (NTN)
• Sales Tax Registration Number (STRN)

These credentials are available in your IRIS profile and emailed/SMS to you upon approval.

Step 7: Start Filing Monthly Sales Tax Returns
Sales tax registered persons must file monthly returns (Form STR-7) by the 15th of every month, even if there is no taxable activity during the month.

Alternate Methods of Registration (Mobile App – 2025 Update)

Sales Tax Registration is also available via:
• IRIS Mobile App (Available on Google Play and iOS)
• Tax Asaan App – Simple interface for both salaried and business users

These apps support registration, return filing, payment tracking, and real-time alerts. Detailed instructions for using these apps are available within the apps or on FBR’s official website.

Post-Registration Compliance

Once registered, the taxpayer must:
• Display the registration certificate at the business premises
• Issue Sales Tax Invoices with proper STRN
• Maintain proper books of accounts
• Submit accurate and timely monthly sales tax returns
• Make online payments of sales tax liability before filing the return

Domestic Taxes, comprising Income Tax, Sales Tax, and Federal Excise Duty, constitute about 90% of the revenue collected by the Federal Board of Revenue (FBR). These taxes are not only similar in essence but are also interdependent in practice. Below are key taxes collected by the Government of Pakistan, including updates based on the latest tax regulations and budget announcements for the fiscal year 2024–25:

• Income Tax: Income tax is imposed on individuals, associations of persons (AOPs), and companies based on their income level. For the tax year 2025, individual tax rates range from 0% to 35%, and corporate tax rates vary between 29% and 39%, depending on business structure and industry. All taxpayers are required to file income tax returns and, where applicable, wealth statements annually.

• Sales Tax: Sales tax is levied on the supply of goods at a federal level and on services at the provincial level. The standard federal sales tax rate is now 18%, as increased in the 2024 Finance Act. Provincial sales tax rates on services vary from 13% to 16% depending on the province.

• Federal Excise Duty (FED): This duty is imposed on certain goods (like cigarettes, beverages, cement, and petroleum products) and services (e.g., air travel and telecom). Rates are product-specific. For example, FED on sugary drinks is now 20%, and on tobacco products it exceeds 30%.

• Customs Duty: Customs duty applies to imported goods under the Customs Act, 1969. Rates can range from 0% to 50% based on the nature, classification, and origin of the goods. Goods from countries under Free Trade Agreements (like China) may be exempted or have reduced duty.

• Agricultural Income Tax: This is a provincial tax on income from agricultural land. It is levied at rates typically ranging from 5% to 10%, depending on the size of landholding and income level. Agricultural income is exempt from federal income tax only if documented per provincial laws.

• Withholding Tax: WHT is deducted at the source on transactions such as contracts, dividends, salaries, and banking transactions. For example, dividend WHT is 15% for Active Taxpayers and 30% for non-ATL persons. It is the largest contributor to direct tax collection in Pakistan.

• Property Tax: Property tax is levied by provincial governments based on the annual rental value or area of a property. Rates vary significantly between urban and rural areas and by province. For instance, in Punjab, the property tax ranges from 5% to 20% of the annual rental value.

• Capital Value Tax (CVT): CVT is imposed by the federal government at 1% of the fair market value of property located in urban areas, applicable on transactions above PKR 50 million. Some provincial governments also levy their own CVT on immovable property.

• Token Tax: Token tax is charged on motor vehicles either annually or at the time of registration. The rate depends on engine capacity, vehicle type (private/commercial), and whether the vehicle is locally assembled or imported. Hybrid/electric vehicles may have reduced token tax.

• Professional Tax: This is a provincial tax levied annually on salaried professionals and self-employed individuals such as doctors, lawyers, consultants, and contractors. The tax amount ranges from PKR 500 to PKR 100,000, depending on income level and profession type.

In Pakistan, the income tax rates for individuals are determined based on the amount of income earned and are progressive in nature. The tax year in Pakistan runs from July 1 to June 30.

Pakistan-source income is defined in Section 101 of the Income Tax Ordinance, 2001, which caters to incomes under different heads and situations. Some of the common Pakistan-source incomes are as under:
• Salary received or receivable from any employment exercised in Pakistan wherever paid;
• Salary paid by, or on behalf of, the Federal Government, a Provincial Government, or a local Government in Pakistan, wherever the employment is exercised;
• Dividend paid by a resident company;
• Profit on debt paid by a resident person;
• Property or rental income from the lease of immovable property in Pakistan;
• Pension or annuity paid or payable by a resident or permanent establishment of a non-resident.

In the Federal Budget 2024–25, the government of Pakistan has retained and adjusted the income tax rates for salaried individuals as follows:

Salaried Individuals (Tax Year 2025):
• For income up to Rs. 600,000, the tax rate is 0%
• For income between Rs. 600,001 and Rs. 1,200,000, the tax rate is 2.5% of the amount exceeding Rs. 600,000
• For income between Rs. 1,200,001 and Rs. 2,400,000, the tax rate is 15% of the amount exceeding Rs. 1,200,000 + Rs. 15,000
• For income between Rs. 2,400,001 and Rs. 3,600,000, the tax rate is 20% of the amount exceeding Rs. 2,400,000 + Rs. 195,000
• For income between Rs. 3,600,001 and Rs. 6,000,000, the tax rate is 25% of the amount exceeding Rs. 3,600,000 + Rs. 435,000
• For income between Rs. 6,000,001 and Rs. 12,000,000, the tax rate is 32.5% of the amount exceeding Rs. 6,000,000 + Rs. 1,035,000
• For income above Rs. 12,000,000, the tax rate is 35% of the amount exceeding Rs. 12,000,000 + Rs. 3,975,000

These rates are applicable to salaried individuals only. For non-salaried individuals, slightly different slabs apply.

Corporate and Business Tax Rates (2024–25):
• Companies (other than banking companies): 29%
• Banking companies: 39%
• Small companies (as defined under Section 2(59A)): 20%
• Associations of Persons (AOPs): Variable rates, subject to final taxation in certain cases.

It’s worth noting that several exemptions and deductions are still available under the Ordinance. These include deductions for:
• Investments in approved pension funds (under VPS Rules)
• Zakat payments
• Charitable donations under Section 61
• Tax credits for health insurance, education, and solar panels

These exemptions can significantly reduce the effective tax liability for compliant taxpayers.

As always, these rates and reliefs are subject to change and it’s recommended to consult with a qualified tax advisor or verify from the Federal Board of Revenue (FBR) for the most recent and applicable updates.

Overall, the income tax structure in Pakistan aims to be progressive and supportive, especially for lower- and middle-income earners, while ensuring revenue generation from high-income groups and corporations.

HOW TO FILE FBR INCOME TAX RETURN

Filing your Income Tax Return (ITR) with Pakistan’s Federal Board of Revenue (FBR) is a legal obligation and an essential step in responsible financial management. Whether you are salaried, self-employed, a landlord, or a business owner, tax filing is a necessary annual process that helps you remain compliant and eligible for government benefits.

This article provides a step-by-step guide on how to file your tax return through the FBR IRIS portal for the Tax Year 2025.

Why Filing Your Tax Return Is Important

• It is legally required under the Income Tax Ordinance, 2001

• Ensures your name appears in the Active Taxpayers List (ATL)

• Helps avoid higher withholding tax rates on banking, property, and vehicle transactions

• Required for loan applications, visa processing, and participating in government tenders

• Builds your credibility and financial history with FBR and banks

• May entitle you to tax refunds or credits if you’ve overpaid during the year

Who Must File an Income Tax Return in Pakistan?

The following persons or entities must file a tax return:

• Salaried individuals with income above Rs. 600,000 per year

• Business owners and freelancers with income over Rs. 400,000 per year

• Landlords earning rental income

• Professionals, including doctors, lawyers, consultants, etc.

• Companies and AOPs (Associations of Persons)

• Anyone who owns a vehicle above 1000cc, property, or has undertaken foreign travel

• Anyone issued a notice by FBR to file a return

Step 1: Register with FBR and Obtain NTN

If you’re filing for the first time, you need to create an account and get your National Tax Number (NTN).

1. Visit: https://iris.fbr.gov.pk

2. Click on “Registration for Unregistered Person”

3. Enter your CNIC, email, and mobile number (must be registered in your name)

4. Once submitted, you will receive login credentials to access the IRIS system

If you already have an NTN but no login access, click on “E-enrollment for Registered Person” to retrieve your IRIS credentials.

Step 2: Gather Required Documents

You’ll need the following documents before filing:

• CNIC and NTN

• Salary certificate or payslips (for employees)

• Bank statements showing transactions and deductions

• Property documents (if you’re declaring rental income)

• Business income/expense records (if self-employed or a freelancer)

• Zakat, donations, or investment records to claim deductions

• Tax deduction certificates from banks, employers, or mobile companies

• Utility bills or tenancy agreements for address verification, if needed

Step 3: Log into the IRIS Portal

• Go to https://iris.fbr.gov.pk

• Use your CNIC as username and the password received during registration

• Once logged in, navigate to: Declaration → File Return

Step 4: Choose the Correct Tax Year and Form

• Select Tax Year 2025 (this covers income from July 1, 2024 to June 30, 2025)

• Choose the correct form based on your profile:

  • Salaried individuals

  • Business individuals (sole proprietors or freelancers)

  • AOPs or companies

Step 5: Fill the Income Tax Return

The form includes the following key sections:

• Personal Profile (your CNIC, contact, bank account, and employer details)

• Salary Income (enter your total annual salary and tax deducted by your employer)

• Business Income (gross receipts, expenses, and net profit)

• Rental Income (property location, rent received, and deductions)

• Capital Gains, Dividends, and Income from Other Sources

• Tax Deducted at Source (WHT) on bank, utilities, contracts, etc.

• Tax Credits and Allowable Deductions such as Zakat, donations, VPS contributions

Step 6: File Your Wealth Statement (Mandatory)

Every taxpayer is also required to file a Wealth Statement (Form 116). This includes:

• All assets you own (property, vehicles, gold, savings, etc.)

• Liabilities (loans, credit card dues, mortgages)

• A comparison between opening and closing net wealth for the year

Ensure your declared income supports your increase in net assets, or FBR may issue a notice for discrepancy.

Step 7: Submit and Pay Tax if Due

• Click on “Calculate” to check if you have any tax payable

• If tax is due, generate a PSID (Payment Slip ID)

• Pay the tax via ATM, online banking, mobile wallet (e.g., Easypaisa), or bank

• Once payment is made, link the PSID in your IRIS portal before final submission

After submission, you will receive an Acknowledgment Receipt confirming your filing.

Step 8: Keep a Copy for Your Records

Always download and save:

• Acknowledgment Receipt

• Income Tax Return PDF

• Wealth Statement PDF

• Keep digital and hard copies along with supporting documents for 6 years, as FBR may require them during audits

Common Mistakes to Avoid

• Forgetting to file your Wealth Statement

• Not reconciling withholding tax with bank statements

• Using wrong NTN of employer or incorrect income figures

• Not updating your personal profile (email, phone, address)

• Missing tax payment before submission

What Happens If You Don’t File?

• Exclusion from Active Taxpayer List (ATL)

• Higher withholding tax rates on various financial transactions

• Penalties starting from Rs. 1,000 up to Rs. 50,000

• Legal notices or audit selection by FBR

• Ineligibility for tax refunds and financial clearances

Filing your Income Tax Return (ITR) is not just a legal obligation—it’s a vital financial responsibility that enhances your creditworthiness, legal standing, and access to government benefits. Whether you’re a salaried employee, freelancer, business owner, or landlord, this guide will help you file your tax return in Pakistan by yourself through the FBR’s IRIS portal.

Here’s a step-by-step breakdown of how to file your income tax return in Pakistan for Tax Year 2025.

Why Filing a Tax Return Matters

• Mandatory for individuals earning above the taxable threshold

• Required for appearing on the Active Taxpayer List (ATL)

• Helps avoid higher withholding tax rates

• Needed for loan applications, tenders, and visa processing

• Ensures compliance with the Income Tax Ordinance, 2001

Step-by-Step Process: How to File Your Income Tax Return

Step 1: Gather All Required Documents

Before you begin, collect all necessary information and documents:

• CNIC and NTN/TIN

• Salary certificate or payslips (for salaried individuals)

• Bank account statements

• Utility bills, rent receipts, or lease agreements (for rental income)

• Profit and loss statement (for business owners or freelancers)

• Zakat, charitable donations, and tax-deductible investments

• Withholding tax certificates (from banks, mobile operators, etc.)

• Any foreign income details, if applicable

Step 2: Calculate Your Taxable Income

Add up income from all sources:

• Salary

• Business or freelance income

• Rental income

• Capital gains (stocks, property)

• Dividends, interest, and other investments

• Foreign income (if you’re a resident taxpayer)

Also, deduct:

• Tax credits and rebates

• Zakat and donations (approved institutions)

• Allowable business expenses

Use FBR’s Income Tax Slabs to determine how much tax you owe based on your total taxable income.

Step 3: Register on the FBR IRIS Portal (If Not Already Registered)

To file online, you must be registered on the FBR IRIS portal.

1. Visit: https://iris.fbr.gov.pk

2. Click on “Registration for Unregistered Person”

3. Submit CNIC, mobile number (in your name), and email address

4. Receive password via SMS and email

5. Log in to the portal using your CNIC as login ID

If you are already registered and forgot your password, use the “Forgot Password” option.

Step 4: Prepare Your Income Tax Return

After logging in:

1. Go to Declaration → File Return

2. Select the Tax Year (e.g., 2025 for income earned during July 2024–June 2025)

3. Click “Periodical → Income Tax Return”

4. Fill in the following sections:

   • Personal Profile (update if anything has changed)

   • Employment Income (salary details and employer NTN)

   • Business Income (if applicable)

   • Property/Rental Income

   • Capital Gains & Other Sources

   • Tax Deductions & Credits

   • Tax Paid/Withheld (WHT on bank transactions, utilities, mobile, etc.)

Attach any supporting documents, if required.

Step 5: Submit the Return

Once all sections are completed:

• Click “Calculate” to confirm your tax payable/refundable

• Submit the form

• If tax is payable, generate a PSID (Payment Slip ID)

• Pay through ATM, mobile banking, or bank branch

After successful payment, go back to IRIS and link your paid PSID to the return.

Step 6: Submit Wealth Statement (Mandatory for Filers)

Every filer is required to file a Wealth Statement (Form 116), which includes:

• Assets held (property, vehicles, bank balances, investments)

• Liabilities (loans, credit cards, etc.)

• Increase/decrease in wealth compared to last year

Submit the statement along with your income tax return.

Step 7: Confirmation & Record-Keeping

After submission:

• Download or print your Acknowledgment Receipt

• Save a PDF copy of your Income Tax Return and Wealth Statement

• Keep digital records of all supporting documents for 6 years

Common Filing Deadlines

• Individuals & AOPs: September 30

• Companies (with June year-end): December 31

• Deadlines may be extended by FBR notifications, so keep an eye on FBR’s website or subscribe to alerts

What If You Miss the Deadline?

• You will be excluded from ATL

• Higher withholding tax will apply to banking and transactions

• You may face penalties or default surcharge

• You can still file a return later, but with reduced benefits