Karachi, January 19, 2025 – The Federal Board of Revenue (FBR) has announced that it will no longer entertain claims for sales tax refunds filed beyond a one-year period. This decision, based on Section 66 of the Sales Tax Act, 1990, emphasizes strict adherence to the stipulated time frame for refund claims.
Key Provisions of Section 66 of the Sales Tax Act, 1990
Under Section 66, any sales tax refund claim stemming from inadvertence, error, misconstruction, or unclaimed input adjustments must be submitted within one year of the tax payment date. Claims exceeding this period will be automatically disallowed.
Specific Guidelines for Sales Tax Refund Claims:
1. Time Limit for Claims: Refund claims related to sales tax paid or overpaid due to inadvertent errors or unclaimed input adjustments are strictly limited to a one-year filing window. Failure to comply with this timeframe will result in the rejection of such claims.
2. Commissioner’s Discretion for Input Adjustments: In cases where a registered taxpayer fails to claim input tax adjustments within the relevant tax period, the Commissioner of Inland Revenue, upon thorough verification, may allow adjustments in a specified tax period. This provision grants some flexibility while maintaining compliance with the sales tax regulations.
3. Refunds Based on Judgements or Decisions: If a sales tax refund arises from a decision or judgment issued by a court, tribunal, or an officer of Inland Revenue, the one-year period will commence from the date of the ruling. This ensures that taxpayers affected by legal outcomes are given adequate time to process their claims.
4. Consumer Protection Clause: Refunds will not be granted if the incidence of sales tax has been directly or indirectly passed on to the end consumer. This measure prevents undue benefit to taxpayers at the expense of consumers.
5. Processing Timeframe: All refund applications filed under Section 66 must be resolved within 90 days from the date of submission. This ensures timely processing and reduces bureaucratic delays for legitimate claims.
The FBR’s decision underscores the importance of timely compliance with sales tax regulations. Taxpayers are urged to meticulously track their refund eligibility and submit claims within the designated period to avoid disallowance. This move is expected to streamline refund processes and reinforce accountability in the sales tax system.