FBR advised tracing unregistered persons instead collecting further tax

FBR advised tracing unregistered persons instead collecting further tax

KARACHI: Federal Board of Revenue (FBR) has been urged to trace unregistered persons instead collecting three percent further sales tax on local supplies.

Karachi Chamber of Commerce and Industry (KCCI) in its proposals for budget 2020/2021 submitted to the FBR, said that through the Finance Act, 2013, FBR levied 1 percent further sales tax on supplies to un-registered persons.

The rate was increase to 2 percent through Finance Act, 2015 and further increase to 3 percent through Finance Act, 2018.

The purpose of such further tax is only to collect the extra amount of sales tax rather increase the tax base.

The imposition of such additional / further tax on supplies has not been effective to broaden the tax base, rather it has increased the unregistered supplies and has negatively impacted the revenue collection and documentation of such un-registered persons.

The KCCI proposed that FBR may utilize available sales tax returns and other data of transactions to trace the un-registered buyers and force them to get registered in sales tax.

After implementation of electronic systems and return filing, there is no need for impose such further tax as a tool to trace the un-registered buyers. It was previously imposed during the period of 1998 to 2004 when no such IT solutions were available.

The actual purpose to register the un-registered persons would be achieved by using the available data instead of just punishing the registered entities and place the responsibility on field officers to identify non-compliant persons instead of just imposing additional taxes under different names such as Further Tax.