KARACHI: Federal Board of Revenue (FBR) has been recommended to reduce the time limit to past three years for retention of sales tax record.
Karachi Chamber of Commerce and Industry (KCCI) in its proposals for budget 2020/2021 submitted to the FBR, highlighted the issue of Section 24 of Sales Tax Act, 1990, which required retention of record and document for six years.
The KCCI said that the long time period only allows the officers of Inland Revenue to blackmail and harass the tax payers by issuing demands from closed accounts as far back as 6 years.
The negative impact of such provision is that the revenue officials spend more time in fishing for discrepancies in old records instead of focusing their efforts on broadening of tax base.
The KCCI proposed that the period retention of record and documents be reduced to 3 years, which is an established practice worldwide for all financial transactions.
Regional Tax Offices (RTOs) and officers will have to work more on identifying new tax-payers instead of fishing in old records and create demand.
The period of 6 years is counter-productive for revenue generation and renders the RTOs inefficient.
In this era of computerization where all the transactions of the registered persons are cross verified instantaneously by the FBR, and the audits are conducted without any delay, the period of maintenance of records and documents should be reduced from 6 to 3 years.