The Federal Board of Revenue (FBR) has revised its policy on granting relief for delayed compliance in sales tax matters, reducing the allowable condonation period from three years to two years for registered taxpayers. The move marks a shift toward stricter enforcement of statutory deadlines.
The updated policy has been communicated through a formal notification issued by the FBR. As per the revised framework, the Commissioner Inland Revenue (CIR) can now approve delays only within a maximum window of two years, narrowing the scope of discretion that previously allowed relief for a longer duration.
This change has been implemented by amending condition (e) of SRO 1444(I)/2024, originally issued on September 12, 2024. Exercising powers under the proviso to Section 74 of the Sales Tax Act, 1990, the FBR has officially replaced the earlier three-year limit with a two-year cap.
Earlier, Commissioners Inland Revenue were authorized to relax time limits prescribed under the Sales Tax Act and related rules, provided they were satisfied with the justification for the delay. While this authority still exists, it has now been restricted, signaling a tighter compliance environment for sales tax–registered persons.
The notification also sets out a defined process for taxpayers seeking condonation. An affected registered person, or their duly authorized representative, must file an application with the relevant Commissioner Inland Revenue, explaining the circumstances that led to the delay.
If the application does not require additional clarification or supporting documents, the commissioner must issue a decision within 30 days. Where further information is requested, the case must be finalized within 45 days from the date the application is received.
In every instance, the Commissioner Inland Revenue is required to assess the request objectively and document clear reasons for approving or rejecting the application.
The revised policy underscores the FBR’s intent to promote timely compliance while still providing limited flexibility in genuine cases. Registered taxpayers are advised to review their compliance processes carefully, as the reduced timeframe leaves less room for delayed filings or applications.