Sales Tax Reconciliation in Pakistan Annex-A, Annex-C, books and returns in agreement

FBR matches your return against your suppliers' returns

Pakistan's sales tax system cross-matches every invoice. When a supplier fails to declare a sale, or declares it with a different value or NTN, the input tax you claimed on it is at risk. Monthly reconciliation finds these gaps while they can still be fixed.

Under the Sales Tax Act, 1990, a registered person claims input tax under section 7 on purchases supported by valid invoices, subject to restrictions in section 8 and the adjustment limit in section 8B. In practice, FBR's systems allow input tax only where the supplier has declared the same invoice in its own Annex-C and paid the tax. Purchases are reported in Annex-A, sales in Annex-C, and the two sides are matched across taxpayers. Mismatches, unverified invoices, purchases from blacklisted or inactive suppliers, and differences between returns and books are frequent causes of notices and disallowed claims. Section 73 also requires payments above the prescribed limit to be made through banking channels for input tax to be allowed.

Reconciliation also covers your own side. Every sale in your ledger should be in Annex-C, debit and credit notes should be reported correctly, and the tax in each return should agree with the challans paid. At year-end, the turnover in your sales tax returns should agree with your income tax return, after explaining any timing or classification differences. Our income tax reconciliation service completes that picture.

Reconciliations are fastest when your ledgers are clean. Our bookkeeping and accounts reconciliation teams can prepare the books so sales tax matching becomes routine.