Karachi, August 1, 2024 – The Federal Board of Revenue (FBR) has announced the relaxation of various requirements for filing sales tax returns, addressing the challenges faced by taxpayers following the issuance of SRO 350.
The new provisions, detailed in SRO 1130(I)/2024 dated August 1, 2024, are expected to streamline the process and alleviate the burden on registered persons.
The FBR’s recent issuance introduces Rule 18A to the Sales Tax Rules, 2006, effectively waiving the conditions stipulated under sub-rule (3) of rule 18 of the main rules. The sub-rule (3) previously mandated that a registered person must enter data of supplies in Annexure-C and data of Debit or Credit Notes in Annexure-I, and submit the said data by the 10th day of the month following the end of the tax period. Once the supplier submits this data, it becomes immediately available to the buyer in their “Purchase Data” and “Debit or Credit Note Data.” The buyer would then load this data into Annexure-A and Annexure-I to prepare their return.
However, the provisions of the second proviso to sub-rule (3) of rule 18 will no longer apply to specific cases, providing significant relief to various sectors. The exemptions are as follows:
1. Gas Transmission and Distribution Companies: Invoices issued to registered persons by these companies from March 7, 2024, onwards.
2. Electricity Distribution Companies: Invoices issued to registered persons by these companies from March 7, 2024, onwards.
3. Independent Power Producers or WAPDA: Invoices issued to registered persons from March 7, 2024, onwards, provided the sales tax liability has been paid by these entities.
4. Specific Items in Distribution Chain: Invoices related to items issued by manufacturers or traders to distributors, wholesalers, or retailers from March 7, 2024, onwards, under the following conditions:
o The sales tax liability for these items has been paid by the manufacturer.
o Distributors, wholesalers, or retailers, other than manufacturers, are not the ultimate suppliers of these items.
5. Petroleum Exploration and Production Companies: Invoices issued to registered persons from March 7, 2024, onwards, provided the sales tax liability has been paid by these companies.
6. Registered Buyers: Buyers whose suppliers have paid their sales tax liability as recomputed by applying the second proviso to sub-rule (3) of rule 18 after the deletion of invoices along with corresponding input tax, within six days from the end of the month in which their returns were provisionally accepted.
The FBR clarified that the term “items” in this rule refers to “items pertaining to the Third Schedule to the Act.”
The relaxation in the filing requirements comes in response to the practical difficulties faced by taxpayers and aims to facilitate smoother compliance. By easing these conditions, the FBR intends to create a more efficient and less burdensome process for registered persons, ultimately contributing to better compliance and improved tax administration.
Stakeholders have welcomed the move, noting that it addresses the real-world challenges of adhering to stringent timelines and data entry requirements. The changes are expected to significantly ease the operational burden on businesses, allowing them to focus more on their core activities while ensuring timely tax compliance.