Karachi, September 13, 2024 – The Karachi Tax Bar Association (KTBA) has called upon the Federal Board of Revenue (FBR) to introduce an exemption for taxpayers reporting the disposal of fixed assets, highlighting significant procedural challenges faced by taxpayers in complying with current regulations.
In a formal letter addressed to FBR Chairman Rashid Mahmood, KTBA President Syed Zafar Ahmed expressed concerns regarding taxpayers’ difficulties in reporting transactions involving the sale and disposal of fixed assets. The KTBA underscored the importance of rectifying these issues to ensure timely compliance with tax regulations and prevent unnecessary delays in filing returns.
The KTBA outlined the standard procedure under which taxpayers are required to issue a sales tax invoice at the standard rate of 18%, as stipulated under Section 3(1) of the Sales Tax Act, 1990. This invoice is intended to be declared in Annexure-C of the Sales Tax Return (STR) for the tax period in which the relevant sale occurs. However, taxpayers encounter significant obstacles when attempting to report such transactions due to a restriction on the FBR’s electronic portal, which stems from the enforcement of Sales Tax General Order (STGO) No. 13 of 2022.
The STGO No. 13 of 2022 was originally introduced to regulate transactions involving the buying and selling of goods in their original state, specifically targeting entities such as importers, wholesalers, dealers, and distributors. The KTBA emphasized that this order is irrelevant to many taxpayers, particularly service providers and those engaging in the disposal of fixed assets. Despite not falling under the specified categories, these taxpayers are still subject to restrictions that impede their ability to declare sales transactions involving fixed assets.
“The imposition of these restrictions on service providers is unjustifiable, as they were not intended to be subject to the STGO No. 13 of 2022 in the first place,” stated KTBA President Syed Zafar Ahmed in the letter. “This not only creates unnecessary hurdles but also places taxpayers in a precarious position, preventing them from meeting their tax obligations in a timely manner.”
The KTBA further noted that numerous taxpayers have sought assistance from the FBR Helpline through various emails, requesting the removal of these portal restrictions. Unfortunately, these appeals have largely gone unanswered, leaving taxpayers unable to declare sales invoices and submit their STRs for the relevant tax periods by the stipulated deadlines.
As a result of these challenges, many taxpayers are unable to fulfill their sales tax liability within the prescribed timeframe, potentially subjecting them to penalties or additional scrutiny. The KTBA has strongly urged the FBR to take immediate action by revisiting the provisions of STGO No. 13 of 2022 and implementing an exception for the reporting of fixed asset disposals.
The association has called for the FBR to address the concerns swiftly, ensuring that taxpayers are not unfairly penalized for issues arising from a misapplication of regulations. By removing these restrictions and providing the requested exemptions, the FBR would facilitate smoother tax compliance processes for affected businesses, fostering a more cooperative relationship between the revenue authority and the taxpayer community.
In conclusion, the KTBA remains hopeful that the FBR will respond proactively to their requests, alleviating the current difficulties faced by taxpayers and ensuring that the regulatory environment remains conducive to economic growth and compliance.
