The Federal Board of Revenue (FBR) has introduced a clear and organized process for sales tax de-registration in 2026 as outlined under Rule 11 of the Sales Tax Rules, 2006. This procedure is required for individuals or businesses that are no longer eligible or required to remain registered under the Sales Tax Act, 1990.
The FBR has set up this de-registration system to ensure that only active and compliant taxpayers remain on the sales tax register.
Those who are no longer conducting business or have changed their status are properly removed from the system.
Who Must Apply for Sales Tax De-Registration?
Under Rule 11, a registered person must apply for de-registration in the following situations:
1. Business Closure
If the taxpayer permanently shuts down the business, ends a partnership, or liquidates the company.
2. Business Becomes Tax-Exempt
If the supplies no longer require sales tax or have fallen below the required registration threshold.
3. Turnover Below Minimum Level
Small taxpayers who no longer meet the annual turnover limit may apply for removal from the sales tax register.
4. Change in Business Structure
This includes converting the business type, merging with another entity, acquiring a business, changing ownership, or restructuring the business.
5. Persistent Non-Compliance
The FBR may terminate registration if there is:
– Non-filing of sales tax returns
– Suspicious or fake transactions
– Misuse of the registration
S
tep-by-Step Procedure for Sales Tax De-Registration in 2026
The FBR has made the de-registration process easier and more transparent through the IRIS system.
Step 1: Log in to the IRIS Portal
Go to iris.fbr.gov.pk and enter your User ID, password, and PIN.
Step 2: Submit a De-Registration Request
Navigate to:
Registration → De-Registration Request (Rule 11)
Complete the online form and provide details such as:
– Reason for de-registering
– Date of business closure
– Updated business information
– Closing stock details (if applicable)
Step 3: Upload Required Documents
Commonly needed documents include:
✔ Proof of business closure (such as a letter or resolution)
✔ Bank statements
✔ Tax return history
✔ Proof of exemption (if applicable)
Step 4: Clear All Outstanding Liabilities
The FBR checks:
– Sales tax return status
– Pending assessments
– Sales tax arrears
– Input tax adjustments
All tax obligations must be settled before the application is approved.
Step 5: Verification by the Commissioner Inland Revenue
The relevant Commissioner:
– Verifies that the business has closed
– Reviews tax history
– Confirms the final return has been filed
They may ask for extra documents or conduct a site visit if needed.
Step 6: Final Approval and Notification
If the applicant meets all the conditions, the FBR will update the status to:
✔ “De-Registered”
The taxpayer will receive an official message through IRIS.
Important Requirements Before Applying for De-Registration
To stop any rejection, ensure the following:
✔ All sales tax returns are up to date
✔ There are no unpaid tax liabilities
✔ Stock and input tax have been properly settled
✔ Unused invoices have been destroyed or disposed of, and this has been reported
The FBR will not process the application if the compliance requirements are not met.
Consequences of Not Applying for De-Registration
If a business ceases to operate or becomes exempt but does not formally deregister, the FBR can:
– Continue charging minimum tax liabilities
– Impose penalties for not filing
– Freeze refunds and tax credits
– Take legal action under the Sales Tax Act
Therefore, it is very important to formally deregister.
Benefits of Proper De-Registration
✔ Prevents late filing penalties and fines
✔ Stops unnecessary tax assessments
✔ Ends sales tax obligations in a legal manner
✔ Makes the transition smoother in case of business restructuring
Conclusion
The FBR has outlined an updated and clear procedure under Rule 11 for taxpayers in 2026 who need to leave the sales tax system.
By following the process step by step, taxpayers can ensure smooth and compliant de-registration while avoiding legal consequences.
