Legal obligations for registered businesses in Pakistan

Once a business is formally registered in Pakistan—whether as a sole proprietorship, partnership, private limited company, or non-profit organization—it becomes subject to a set of legal, tax, and regulatory obligations imposed by federal and provincial authorities. Fulfilling these obligations is not just a compliance requirement but essential for ensuring the continuity, credibility, and lawful operation of the business.

Failure to meet these obligations can result in heavy penalties, license revocation, suspension of tax privileges, and even legal prosecution. This article provides a detailed overview of the legal obligations for registered businesses in Pakistan, covering tax compliance, labor laws, company filings, sector-specific regulations, and record-keeping duties.

Overview of Legal Framework

Registered businesses in Pakistan must operate in accordance with various laws and regulations, including but not limited to:

• Companies Act, 2017 (for SECP-registered companies)

• Partnership Act, 1932 (for partnership firms)

• Income Tax Ordinance, 2001

• Sales Tax Act, 1990

• Provincial Revenue Laws (PRA, SRB, KPRA, BRA)

• Labor and Employment Laws

• Environmental Protection Acts

• Provincial and municipal licensing laws

1. Tax Obligations

a. Income Tax Registration and Filing

All registered businesses must obtain a National Tax Number (NTN) and file annual income tax returns with the Federal Board of Revenue (FBR).

Requirements:

• File return by September 30 (individuals/firms) or December 31 (companies)

• Include financial statements, declarations of assets/liabilities, and withholding statements

• File Wealth Statement and Reconciliation Statement (for proprietors and AOPs)

• Submit Audited Accounts (mandatory for companies with capital over PKR 10 million)

b. Sales Tax Registration and Monthly Returns

Businesses dealing in taxable goods or services must obtain a Sales Tax Registration Number (STRN) and file monthly returns.

Key Points:

• File return by the 18th of every month

• Include input/output tax, invoices, and stock details

• File Annexure C, F, and H along with return (via IRIS)

• Issue FBR-approved Sales Tax Invoices with STRN mentioned

c. Withholding Tax Compliance

Businesses must deduct and deposit withholding tax for:

• Salaries

• Rent

• Contractors

• Service providers

• Commission payments

Monthly and annual withholding tax statements (e.g., 236, 244) must be filed through the FBR IRIS portal.

d. Tax Payment and CPR Generation

All taxes must be paid via:

• PSID (Payment Slip ID) generated through FBR

• Payment made via bank branches or internet banking

• Retain Computerized Payment Receipt (CPR) as proof

2. SECP Compliance (For Registered Companies)

Companies registered under SECP must comply with several post-incorporation obligations.

a. Annual Filings

• Form A (Annual Return): Filed within 30 days of AGM

• Audited Financial Statements: Must be submitted with Form A

• Form 29: Report changes in directors, auditors, or legal representatives

b. Statutory Meetings and Records

• Hold at least one Annual General Meeting (AGM) every year

• Maintain Statutory Registers:

  • Register of Members

  • Register of Directors

  • Minutes Book

  • Register of Charges

c. Appointment of Auditors

Companies must appoint an external auditor approved by ICAP (Institute of Chartered Accountants of Pakistan). The audit report must accompany financial statements.

d. Maintenance of Registered Office

The company must maintain a physical registered office and notify the SECP of any change via Form 21.

3. Provincial Tax and Service Compliance

Businesses offering services must register and comply with provincial tax authorities:

• Punjab Revenue Authority (PRA)

• Sindh Revenue Board (SRB)

• Khyber Pakhtunkhwa Revenue Authority (KPRA)

• Balochistan Revenue Authority (BRA)

Key Requirements:

• Obtain Service Tax Registration

• File Monthly Service Tax Returns

• Maintain digital invoice and record-keeping

• Pay Withholding Sales Tax where applicable

4. Labor and Employment Compliance

All registered businesses that hire employees must comply with labor laws:

a. Employee Record Maintenance

• Maintain employment contracts

• CNIC copies, joining letters, and pay slips

• Attendance and leave records

b. Minimum Wage and Working Hours

Comply with provincial minimum wage notifications and labor laws regarding:

• 8-hour workday

• Weekly rest day

• Overtime payments

c. EOBI and Social Security

Mandatory registration of employees with:

• Employees’ Old-Age Benefits Institution (EOBI)

• Provincial Social Security Institutions (PESSI/SESSI)

Monthly contributions must be deposited by the employer.

5. Trade License and Local Registrations

Certain businesses require additional registrations:

• Trade License from Metropolitan/Tehsil Municipal Authority

• Shop Act Registration from Labor Department

• Signboard Tax or Professional Tax from Excise Department

• Food Authority License for food-related businesses (e.g., Punjab Food Authority)

6. Intellectual Property Protection

For businesses owning brand assets:

• Trademark Registration via IPO Pakistan

• Copyrights for original content or software

• Patents for inventions

Legal protection ensures exclusivity and enforcement against infringement.

7. Environmental and Sector-Specific Compliance

Industries involved in manufacturing, chemicals, mining, or exports must fulfill additional legal obligations:

• Environmental NOC from EPA (Environmental Protection Agency)

• Export/Import Registration with Pakistan Single Window (PSW)

• PPE and Safety Regulations in factories

• ISO Certifications (if applicable)

• PSEB registration for IT and software exporters

8. Bookkeeping and Financial Record Maintenance

Under the Companies Act and tax laws, all businesses must maintain proper financial records:

• Journals and ledgers

• Bank reconciliations

• Payroll registers

• Tax invoices

• Inventory records

• Asset and depreciation schedules

Records must be preserved for a minimum of 6 years and made available for audit or inspection when required.

9. Legal Obligations for Partnership Firms

Registered partnership firms must:

• Notify Registrar of Firms of any change in constitution

• Update partnership deed in case of changes

• Maintain a record of profit sharing and capital accounts

• File income tax returns annually (as AOP)

• Register for sales tax and PRA/SRB (if applicable)

10. Legal Obligations for Sole Proprietorships

Sole proprietors must:

• Register with FBR and obtain NTN

• File personal income tax return annually

• Maintain business bank account (recommended)

• Apply for STRN if offering taxable goods/services

• Pay professional tax (if applicable)

11. Legal Obligations for Section 42 Companies

Non-profit organizations registered under Section 42 of the Companies Act must:

• Renew SECP license every 3 years

• File annual audited accounts

• Submit Form A and Form 29

• Apply for tax exemption certificates from FBR

• Maintain donation and grant records

• Comply with Anti-Money Laundering (AML) and Counter Financing of Terrorism (CFT) regulations

12. Annual Review and Compliance Calendar

A compliance calendar helps businesses track deadlines:

Penalties for Non-Compliance

Role of Corporate Consultants

A corporate services firm like Sterling.pk ensures that your business:

• Remains compliant with SECP, FBR, PRA, and labor regulations

• Files returns and statements accurately and on time

• Maintains proper records for audits and inspections

• Avoids penalties, fines, and legal issues

• Secures required licenses, registrations, and renewals

Our ongoing compliance packages include return filing, statutory filings, employee registrations, and legal advisory.

Conclusion

Registering a business is just the beginning. Maintaining legal compliance is an ongoing responsibility that demands attention, accuracy, and consistency. From tax filings and SECP updates to labor compliance and record-keeping, registered businesses in Pakistan must fulfill various legal obligations to avoid penalties and ensure operational continuity.

At Sterling.pk, we provide complete legal, tax, and corporate compliance solutions so that you can focus on growing your business while we take care of the paperwork, deadlines, and regulatory requirements.