The Federal Board of Revenue (FBR) has laid out the procedure for claiming input tax credit against supplies made by individuals registered in Azad Jammu and Kashmir (AJK) and Gilgit Baltistan (GB).
The guidelines, issued on Tuesday, aim to streamline the process and ensure compliance with tax regulations.
According to the FBR’s directive, individuals registered under the sales tax law in AJK and GB can provide input tax credit against their invoices to buyers registered under the Act in Pakistan. However, certain conditions must be met for this credit to be applicable.
To qualify for the input tax credit, AJK and GB registered individuals must be enrolled with the FBR’s Computerized System and listed on the active taxpayer list maintained by the sales tax authorities of AJK and GB. This dual requirement ensures that the suppliers are not only part of the federal system but are also compliant with the respective regional tax authorities.
As part of the enrollment process with the FBR, individuals from AJK and GB are obligated to submit an undertaking. This undertaking assures that they will provide their supply records and returns filed in AJK and GB whenever requested by the relevant Regional Tax Office (RTO), Central Tax Office (CTO), or Large Taxpayer Office (LTO). This step is crucial in ensuring the accuracy of sales made to registered buyers in Pakistan.
The FBR’s directive further specifies that the adjustment for input tax credit against supplies made by AJK and GB registered persons will only be available from the date when electronic filing (e-filing) is instituted by the respective authorities in AJK and GB. This move emphasizes the importance of digital processes in ensuring transparency and efficiency in tax-related matters.
The introduction of this procedure aligns with the FBR’s broader goals of enhancing tax compliance, fostering transparency, and facilitating seamless transactions between regions. By laying out clear guidelines, the FBR aims to create a standardized and efficient mechanism for claiming input tax credit, benefiting both suppliers and buyers in the process.
The FBR’s initiative is expected to contribute to a more organized and accountable tax system, encouraging businesses to adhere to regulations while availing themselves of the benefits provided by the input tax credit mechanism. The move also signifies the FBR’s commitment to leveraging technology and establishing robust connections between federal and regional tax systems for more effective governance.
The FBR’s issuance of the procedure for claiming input tax credit against supplies from AJK and GB represents a positive step towards harmonizing tax practices across regions. The guidelines not only ensure compliance but also promote a cooperative and transparent tax environment, fostering economic growth and cross-regional trade. As businesses continue to navigate complex tax landscapes, these standardized procedures are poised to simplify processes and contribute to a more conducive business environment in Pakistan.
