NBR Sets 60-Day Auto-Approval Rule for Startup Sandbox

Registration with the National Board of Revenue (NBR) has been made mandatory to avail of startup sandbox facilities. If the NBR fails to make a decision within 60 days of receiving a registration application, it will be automatically deemed approved. Furthermore, the agency holds the authority to cancel the registration if evidence of providing false information or obstructing access to digital systems is found.

The NBR shared this information on Thursday, October 29, 2026. Prior to this, these provisions were clarified in a directive signed by NBR Chairman Ahsan Habib on Wednesday.

The directive was issued to ensure the application, effective implementation, and tax compliance of the provisions concerning the 'Startup Sandbox' mentioned in the second part of the eighth schedule of the Income Tax Act, 2023.

According to the directive, startup companies interested in receiving sandbox benefits must register with the NBR by fulfilling prescribed legal conditions. To this end, companies must apply to the NBR Member (Tax Appeal and Exemption).

Applicants must submit the incorporation certificate from the Registrar of Joint Stock Companies and Firms (RJSC), Memorandum of Association (MoA), and a description of the startup's operations alongside the application. Additionally, a consent letter must be provided granting income tax authorities read-only access to the ERP, accounting software, core digital systems, or ledgers used by the startup.

Upon receiving the application, the NBR will scrutinize it and issue a 'Startup Sandbox Registration Certificate' within 60 days. If no decision is rendered within this timeframe, the application will be automatically considered approved.

Specific procedures have also been outlined for the cancellation of registration. If evidence is found that a startup provided false data or created barriers to digital system access, the concerned institution will be issued a show-cause notice. A period of 60 days must be provided to submit a response to the notice.

Moreover, the startup's representative must be given a reasonable opportunity for a hearing prior to registration cancellation. Following the hearing, the NBR can cancel the registration through a written order based on appropriate grounds.

The directive outlines specific procedures for startup sandbox registration, data verification, digital accounting access, and cancellation processes.

Stakeholders noted that the startup sandbox is a special regulatory and policy framework created by the government for new and innovative initiatives. Its primary objective is to help nascent businesses grow easily in their initial stages without facing rigorous taxation and legal complexities.

//DBTech/SC/DE/OE//