BUSINESSES Written by Hamza Shahnawaz in Taxation Sales Tax Act clarifies tax liability on inherited estates and businesses operating under bankruptcy ISLAMABAD: The Federal Board of Revenue (FBR) has clarified the legal procedure for recovering outstanding sales tax liabilities from the estate of a deceased registered person and businesses operating under bankruptcy, according to the Sales Tax Act, 1990, updated up to June 30, 2026. The updated law outlines how tax liabilities are to be treated in both circumstances, ensuring that government tax claims remain enforceable even after the death or bankruptcy of a registered taxpayer. Tax liability on estate of a deceased person Under the Sales Tax Act, the outstanding sales tax liability of a deceased registered person becomes the first charge on the deceased’s estate in the hands of the legal heirs or successors. This means any unpaid sales tax must be recovered from the estate before the remaining assets can be distributed among the heirs or beneficiaries. The provision gives the FBR priority in recovering outstanding sales tax from the assets left by the deceased taxpayer. Tax recovery from bankrupt businesses The updated law also prescribes the…