Avoid 7 Mistakes to Prevent Suspension of Sales Tax Registration: We often hear in the news that someone’s business has been closed due to tax issues, some people have been caught who were involved in tax fraud. Many people’s GST Registration has been cancelled and some have even been blacklisted. Today we will talk about this.
Types of Tax Fraud
If a registered person issues fake invoices, evades tax or is Involved in any activity that constitutes tax fraud means a person intentionally or dishonestly attempts to revenue loss These include:
- Involved in the Preparation of forged Documents
Making, preparing or using false or forged documents (such as returns, receipts, invoices and annexures) - Making a false claim for input tax credit by showing fictitious transactions.
- Concealing, losing or destroying important evidence or required documents.
- Making false or fake entries in the annexures of tax returns through online filing system like IRIS
- Bank wire fraud meaning the registered person intentionally routes money to a specific bank account or a specific supplier, making it appear that the payment is legitimate and benefits the registered person.
Selling Fictitious Goods
- Holding goods that are taxable.
- Issuing tax invoices without supplying goods.
- Selling goods without issue any sales tax invoices.
- If anyone fails to pay withholding tax or any withheld tax in accordance with the prescribed procedure, and payment is not made for three months after the due date.
- Buying, concealing, keeping or reselling goods which are liable to be seized under the law.
- Sale taxable goods without being registered.
Monthly Sales Exceed Threshold Limit
- If your sales revenue exceeds 5 times your business capital (equity + liabilities) declared in a balance sheet in a single month, the system will highlight your business activity and your registration may be suspended. For example, if your capital + liabilities are 500,000, then 5 times of it is 2500,000 now if your sales reach 2600,000 in a month, the system may consider you as high risk and suspend your registration.
- If you are doing business with a person or business whose registration has already been suspended, and these transactions exceed 10% of your total sales or purchases or 50 million (whichever is higher), your registration may be suspended.
Submission of Null or Non-Filing Sales Tax Returns
Your registration may also be suspended if you do not file returns for three consecutive months or file null returns for six consecutive months.
Wrong business address is provided
The address provided at the time of Enrolment is not physically existed.
Not allowing the FBR team to visit Business Premises
If an FBR officer visits your business permit and you do not allow him to enter or see the records, then your registration can be suspended.
Enforcement of suspension order
Since the suspension can only be temporary, the Commissioner shall send a notice of this order to the taxpayer within seven days after the order is issued and shall direct him to submit a response within fifteen days.
If notice is not issued within seven days of the order, the suspension order shall be deemed to be ineffective from the date of its issuance.
How to revoke suspension
If the taxpayer is not involved in any activity on the basis of which his GST Enrolment has been suspended and he wants to have the suspension lifted, he must respond to the notice. If the registered person proves that he is not involved in the charges listed in the suspension order, the Commissioner may, after being satisfied withdraw his order and restore the taxpayer GST status Active.
Why a person is blacklisted in sales tax
If the taxpayer failed to respond, to provide records or access to the business, or is found guilty, the Commissioner shall issue a blacklisting order.
The blacklisting order shall state for how long the person will not receive a refund, the input tax claimed will not be received, and if any recovery or penalty is to be imposed, that shall also be stated in the order.
Avoid 7 Mistakes to Prevent Suspension of Sales Tax Registration :
The consequence of GST Suspension:
During the period of suspension, the registered person shall not be entitled to any input adjustment or refund. Similarly, no input adjustment or refund shall also be allowed to any other registered person on the basis of sales tax invoices issued by the suspended person during that period (irrespective of whether the sales tax invoices are issued before or after the suspension).
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