What records and stock registers must a registered wholesaler keep, for how long, and what if stock does not match the books?

A registered wholesaler’s books are the evidence for every rupee of output tax declared and every rupee of input tax claimed. The Sales Tax Act, 1990 lists what must be kept, sets how long, and says what an officer may do when the records are not there.

What records does section 22 require?

Section 22(1) applies to a registered person making taxable supplies. The records must be kept at the business premises or registered office, in English or Urdu, for goods purchased, imported and supplied, including zero-rated and exempt supplies. They must be in a form that permits ready ascertainment of the tax liability for each tax period.

Clause	Record
(a)	Supplies: description, quantity and value of goods, name and address of the buyer, and tax charged
(b)	Purchases: description, quantity and value, name, address and registration number of the supplier, and tax on purchases
(c)	Imports: description, quantity, value and tax paid at import
(d)	Zero-rated and exempt supplies
(da)	Double entry sales tax accounts
(e)	Invoices, credit notes, debit notes, bank statements, banking instruments, inventory records, utility bills, salary and labour bills, cash book, rental agreements, sale purchase agreements and lease agreements
(ea)	Gate passes, inward or outward, and transport receipts
(eb)	Electronic version of the records in clauses (a) to (ea)
(f)	Other records the Board specifies

Three further powers sit in the same section. Section 22(1A) lets the Board require a registered person to declare and use only a specified number of business bank accounts. Section 22(2) and 22(3) let the Board specify other records, or software for keeping records electronically. Under section 22(4), a registered person whose accounts are audited under the Companies Ordinance, 1984 submits a copy of the audited accounts with an auditor’s certificate on payment of due tax.

How long must the records be kept?

Section 24 requires every person who must keep records under the Act to retain them for six years after the end of the tax period they relate to. If an assessment, appeal, revision, reference, petition or alternative dispute resolution proceeding is still running, the records are kept until it is finally decided.

Section 25(4) sets the matching limit on the officer: records cannot be called for after six years from the end of the financial year they relate to.

What happens at a sales tax audit?

Under section 25(1) and (2), the Commissioner directs an audit for reasons recorded in writing and communicated in the notice. Section 25(3) says those reasons must identify risk factors and cannot be the mere verification of input tax or output tax.

The officer may then call for any record, including electronic records with access to the machine and software (section 25(4)), and require attendance (section 25(5)). Section 25(7) directs the audit to verify declared tax, input tax, refunds, and “stocks consumed or available”. Section 25(8B), inserted by the Finance Act, 2026, requires an audit report after the person’s explanation is obtained.

What if stock does not match the books, or records are not produced?

The Act does not set a formula for treating a stock shortage or surplus. What it does say:

• Section 25(10) lets the officer proceed to a best judgment assessment under section 11D where the registered person fails to produce records required under the Act.
• Section 11D(1)(b) allows that assessment after a show cause notice, based on available information, together with penalty and default surcharge.
• Section 11D(2) lets the officer disallow or reduce input tax that the person cannot support with an invoice or other evidence.

The section 33 Table adds separate penalties:

S. No.	Offence	Penalty
8	Failing to maintain records required under the Act or rules	Rs. 50,000 or 5% of the tax involved, whichever is higher
9	Failing, without reasonable cause, to produce records under section 25	Rs. 5,000 on the first notice, Rs. 10,000 on the second, Rs. 50,000 on the third
12	Denying access to premises, stocks, accounts or records, or failing to present them	Rs. 25,000 or 100% of the tax involved, whichever is higher, with possible prosecution

The Rs. 50,000 figure in serial 8 was substituted by the Finance Act, 2026.

Worked example (illustrative figures)

Qureshi Traders, a registered wholesaler in Sialkot, claims input tax of Rs. 900,000 for one month. At audit it produces invoices supporting Rs. 760,000 and cannot produce records for the rest. All amounts are invented.

1. Unsupported input tax: Rs. 900,000 minus Rs. 760,000 = Rs. 140,000.
2. Under section 11D(2), the officer may disallow or reduce that Rs. 140,000.
3. If serial 8 is applied with Rs. 140,000 as the tax involved: 5% of Rs. 140,000 = Rs. 7,000, which is below the floor, so the penalty is Rs. 50,000.
4. If the firm had also ignored three notices to produce records, serial 9 adds Rs. 5,000 + Rs. 10,000 + Rs. 50,000 = Rs. 65,000.

The Table does not define “tax involved” for serial 8, so step 3 shows one reading only.

Common mistakes

• Keeping only sales and purchase invoices. Section 22(1)(e) and (ea) also cover inventory records, cash book, bank statements and gate passes.
• Destroying records at five years. Section 24 says six, and longer while proceedings are open.
• Assuming a missing invoice only costs a penalty. Section 11D(2) can also remove the input tax itself.

What to check in the official text

Read sections 22, 24, 25 and 11D of the Sales Tax Act, 1990 as amended to 30 June 2026, and serials 8, 9 and 12 of the section 33 Table in the official PDF. Any Board notification under section 22(1A), 22(2) or 22(3) specifying extra records, bank accounts or software for your class of business is not held on this site.