ISLAMABAD: Federal Board of Revenue (FBR) has explained amendments made through Finance Act, 2021 in Sales Tax Act, 1990 and Federal Excise Act, 2005 for ease of doing business.
The FBR said that there are certain provisions in the Sales Tax Act, 1990 and Federal Excise Act, 2005, which required some corrections or streamlining, while some changes have been made for the purpose of ‘ease of doing business’ for registered persons.
Further, some drafting errors have also been corrected.
All such measures are listed below:
1. Section 2(4AA) of Sales Tax Act, 1990: A new definition has been inserted to define Commissioner (Appeals).
2. Section 2(5AB) of Sales Tax Act, 1990: Annual threshold for the cottage industry has been increased from Rs 3 million to Rs. 10 million by amending section 2(5AB).
3. Section 2(18A) of Sales Tax Act, 1990: For the purpose of defining online market place, new clause (18A) has been inserted under section 2.
4. Section 2(37) of Sales Tax Act, 1990: Drafting error has been corrected in clause (37) of section 2.
5. Section 2 (4 3A) of Sales Tax Act, 1990: Definition of tier-1 retailer has been streamlined through insertion of a new clause, whereby a retailer who has acquired point of sale is also included therein.
6. Section 2(44) of Sales Tax Act, 1990: Advance receipt of payment has been excluded from the purview of definition of time of supply.
7. Section 3 of Sales Tax Act, 1990: Besides correcting drafting error and deleting proviso regarding cash back, new sub-section (9AA) has been inserted in section 3 for fixation of minimum production as per criteria specified in newly added Thirteenth Schedule.
8. Section 8B of Sales Tax Act, 1990: In order to encourage listed corporate sector, Public limited Companies listed on Pakistan Stock Exchange have been excluded from the purview of section 8B of the Sales Tax Act, 1990. Moreover, in order to enhance cost of retailers not integrated with the FBR’s online system, disallowance of input tax adjustment by such retailers has been further enhanced to 60 per cent.
9. Section 11 of Sales Tax Act, 1990: Sales tax returns are filed on monthly basis, while audit is carried out on annual basis. Hence, in order to streamline section 11, the words “relevant date” have been substituted with the words “end of the financial year in which the relevant date falls”.
10. Section 22 of Sales Tax Act, 1990: Section 22 has been amended by inserting cash book and electronic version of record to strengthen and streamline the requirement of record keeping.
11. Section 25AA of Sales Tax Act, 1990: A new sub-section has been added in section 25AA to provide enabling provision for prescribing rules for determining transfer pricing of taxable supplies between associates to reflect fair market value in arm’s length transactions.
12. Section 26AB of Sales Tax Act, 1990: For the purpose of facilitation of the registered persons and in order to streamline the procedure for extension of time for furnishing of sales tax returns, new section 26AB has been inserted.
13. Section 40D of Sales Tax Act, 1990: Border Sustenance Markets have been included in the tax exempt areas and accordingly supplies made from such areas to the taxable areas shall be chargeable to sales tax.
14. Section 40E of Sales Tax Act, 1990 & Section 45AA of Federal Excise Act, 2005: New section has been added in both STA and FEA making it mandatory for manufacturers of the specified goods to obtain brand license for each separate brand or stock keeping unit (SKU) produced by them.
15. Section 48 of Sales Tax Act, 1990 & Section 14 of Federal Excise Act, 2005: Enabling provision has been inserted in both STA and FEA regarding assistance in collection and recovery of taxes with other countries on mutual basis.
16. Section 50 of Sales Tax Act, 1990: Procedure for publishing and placing the rules has been streamlined.
17. Section 56A of Sales Tax Act, 1990 & Section 47A of Federal Excise Act, 2005: Enabling provisions regarding sharing of data with other ministries or divisions of Federal Government or Provincial Governments besides providing for mechanism for assistance in recovery of taxes with foreign countries on reciprocal basis have been inserted in section 56A of STA and 47A of FEA.
18. Section 56C of Sales Tax Act, 1990: Enabling provision has been inserted in section 56C to monitor and regulate the invoices issued by tier-1 retailers by way of mystery shopping.
19. Section 67 of Sales Tax Act, 1990: Benefit of additional payment has also been extended to those persons in whose case any order is passed under section 66 and refund is not issued within forty-five days of date of refund order.
20. Section 73 of Sales Tax Act, 1990: For the purpose of promoting ease of doing business, the concept of constructive payment (setting off payables against receivables from the same registered person) has been introduced in section 73 by inserting a new proviso in sub-section (1).
21. Section 76 of Sales Tax Act, 1990 & Section 49 of Federal Excise Act, 2005: Enabling provision has been inserted in in both STA and FEA for authorizing and prescribing the manner for utilizing the fees and service charges collected by the Board from taxpayers.
22. S. Nos. 18, 19 & 20 of Table-II of the Sixth Schedule to Sales Tax Act, 1990: S. No. 18 of Table-ll of Sixth Schedule to STA, which grants exemption to marble and granite manufacturers having annual turnover less than Rs. 5 million, has been omitted, as the said exemption is already available under section 2(5AB) of STA. Moreover, exemptions on bricks and crush stones have already expired on 30th June, 2018; hence these serial numbers have been omitted, being redundant.
23. Section 4 of Federal Excise Act, 2005: Provision for revision of return without seeking approval from the Commissioner has been incorporated in section 4 of the FEA.
24. S. No. 56 of Table-1 of the First Schedule to Federal Excise Act, 2005: To correct drafting error, PCT heading for filter rod has been substituted.