Karachi, April 18, 2024 – The implementation of new provisions in the sales tax laws by the Federal Board of Revenue (FBR) has significantly disrupted the process of return filing for the month of March 2024.
Tax experts are eagerly awaiting clarification from the FBR on several provisions that are deemed practically impossible to apply for filing returns.
The FBR introduced various amendments to the Sales Tax Rules, 2006, through SRO 350 of 2024 dated March 7, 2024. However, the rollout of these provisions has been met with considerable challenges, prompting tax bars to highlight the problems faced by taxpayers in fulfilling their monthly sales tax obligations.
While the FBR recently extended the deadline for filing sales tax returns for March 2024 until April 22, 2024, tax experts remain skeptical about resolving the issues without clear guidance from the revenue authority.
Key observations and concerns raised by taxpayers include:
Requirement for Filing Balance Sheet: Taxpayers, particularly individuals, associations of persons, and companies with only one shareholder or member (other than the manufacturer), have raised concerns about the requirement to file balance sheets within 30 days. They argue that since balance sheets are already submitted along with income tax returns, assessing officers should access this information directly. Taxpayers propose that if the balance sheet is not provided with the tax return, assessing officers should issue electronic notices to file it within the stipulated time frame.
Permission Requirement for Turnover: Rule 18 stipulates that taxpayers must seek permission from the Commissioner through IRIS if their turnover exceeds five times their capital. Taxpayers have highlighted the diverse nature of business activities, such as credit facilities, bank loans, advances received from suppliers, and personal loans, which can significantly impact turnover. They recommend amending the rule to consider these factors and suggest that if the balance sheet reflects any such reasons for increased turnover, taxpayers should not face penalties.
Approval Process for Credit Notes: Taxpayers are concerned about the new proviso added to rule 30, sub-rule 3, which requires prior approval from the Commissioner for issuing credit notes. They propose streamlining the approval process by granting the Commissioner approval within seven days from the date of the request, aligning it with the specified sales tax filing returns date.
In response to these observations and suggestions, taxpayers have urged the FBR chairman to issue directives for appropriate amendments to SRO 350 of 2024. They emphasize the importance of enabling compliant taxpayers to fully adhere to the provisions of the amendment and ensure a smooth and hassle-free implementation process.
As the deadline for filing sales tax returns approaches, taxpayers await clarity from the FBR to navigate the complexities introduced by the new provisions effectively. The resolution of these issues is crucial to maintaining transparency and compliance in the tax regime, ultimately fostering a conducive environment for businesses to thrive.
