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Are your favourite restaurants paying the govt sales tax?

September 8, 2019
Are your favourite restaurants paying the govt sales tax?

Ever since the FBR began its crackdown on traders evading sales tax, customers eyes have been opened. More people are concerned about whether the sales tax they’re being charged at restaurants or shops is actually going to the government. 

In case of cash dealings where no receipt is given, it is highly likely that the sales tax you paid on your meal or your new favorite kurta is not going to the government, but even when you get a receipt, verifying if your tax is going to the government is still a big confusing. Don’t worry, Samaa Money has done some research and here is what we found.

If you live in Karachi, you can check online with the Federal Board of Revenue (for federal tax) or Sindh Revenue Board (for provincial tax) whether this money is going to the government or not. If you live in another province, you can check with your provincial tax authority.

What you need to know about sales tax is that there are types of sales tax. One is the tax you pay on services, such as dining at restaurants, renting a marriage hall, getting a haircut or buying a movie ticket. This one goes to the provincial government. In the case of Karachi or Hyderabad, for example, the Sindh Revenue Board collects this tax.

Here is how you can verify whether the restaurant that charged you 13% tax on your meal is actually paying this money to the SRB.

Note the SNTN on your restaurant bill and check it online at the SRB’s website. If the restaurant is paying tax to the government, the search result will show their compliance status to be 100%. If it doesn’t, there is a problem and you can certainly challenge the restaurant owner to explain this discrepancy. All provinces have an online verification system for provincial sales tax.

The other type of sales tax is the one you pay on products, such as grocery items, clothes, home appliances, furniture and so on. This goes to the federal government and the FBR collects it.

To check whether the sales tax you paid on your purchases is going to the FBR or not, note the SRTN or NTN on your sales receipt and verify it online here — in case of an NTN, select the eight digit number (with a dash before the last one). If the result shows your shopkeeper’s status as operative, the money is going to the government. If the status is suspended, inactive or blacklisted, you know what to do.

If you are a next-level investigator, you can even verify the status of sales tax paid on a particular item. For that, note the 26-digit FBR invoice number on your bill and check it here. However, not all retailers print this invoice number, which is a violation of the FBR’s sales tax rules.

But that’s not all we found. As evident from discussions taking place on social media, people are confused about all these acronyms — SNTN, NTN, GST and SRTN. We have solved this mystery by studying more than a dozen sales receipts from apparel brands, grocery chains, and restaurants.

In order for you to verify whether the money you pay in sales tax goes to the government or not, you should know which number to use from your sales receipt. Some restaurants and shopkeepers have not updated their receipts following the change in tax policy.

For example, some businesses registered with the Sindh government are printing SST or NTN instead of SNTN, but this doesn’t necessarily mean they are cheating. As long as they give you an eight-digit number (with a dash before the last digit), you can verify it online the way you do with SNTN.

The confusion was caused by a change in tax policy, which split the tax collection of goods and services between the federal and provincial governments. For example, some services-based businesses formerly registered with the FBR are still printing NTNs on their bills instead of SNTNs as required by the Sindh government. Regardless of the way businesses are printing their registration status, the actual number remains the same.

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