Introduction
In Pakistan’s tax system, many registered businesses are eligible for sales tax refunds—especially when their input tax exceeds output tax. Unfortunately, due to unclear processes and paperwork, most businesses either delay their claims or forgo them entirely.
This blog simplifies the sales tax refund process, including guidance on FBR Sales Tax Return, Sindh Sales Return, and rules related to sales tax on services.
What Is a Sales Tax Refund?
A sales tax refund is a reimbursement of excess input tax paid on purchases compared to the output tax collected on sales. If you’re registered with FBR or SRB (Sindh Revenue Board) and your input tax exceeds your output tax in a given period, you may be entitled to claim a refund.
Who Can Claim Sales Tax Refunds in Pakistan?
You may be eligible if:
- Your business is a registered taxpayer
- Your input tax (on purchases) is greater than output tax (on sales)
- You deal with zero-rated supplies or export services
- You provide sales tax on services under provincial regulations like SRB (Sindh)
Sales Tax on Services vs. Goods
- Sales tax on goods is handled by the Federal Board of Revenue (FBR).
- Sales tax on services falls under provincial bodies like Sindh Revenue Board (SRB) and Punjab Revenue Authority (PRA).
Understanding where your services fall is key to filing the correct return and claiming your refund appropriately.
Step-by-Step: How to Claim a Sales Tax Refund
1. File FBR Sales Tax Return or Sindh Sales Return
Submit monthly sales tax returns through the FBR portal or the SRB portal depending on whether your business is registered federally or provincially.
2. Attach Supporting Documents
This includes:
- Invoices with sales tax amounts
- Proof of input tax paid
- Bank statements or payment proofs
- Contracts (for service providers)
3. Apply for Refund via the Portal
Use the refund tab on the IRIS (FBR) or e-portal (SRB) systems to apply.
4. Follow Up
Refunds may take 30-60 days. Stay in touch with your tax consultant or sales tax department for updates.
Challenges in Sales Tax Refunds
- Incomplete documentation
- Delays in processing
- Misclassification between goods and services
- Changes in provincial tax rules (e.g., Sindh)
To overcome these, it’s advised to work with a sales tax consultant who understands both FBR Sales Tax Returns and Sindh Sales Return regulations.
Conclusion
Claiming a sales tax refund in Pakistan doesn’t have to be complex. By understanding whether your business falls under sales tax on services or goods, filing the correct return—be it FBR Sales Tax Return or Sindh Sales Return—and submitting accurate documentation, you can recover significant funds for your business.
Need help? Our tax consultants can guide you through the entire process to ensure your claim is approved smoothly and efficiently.
