KARACHI, April 25, 2025 – The Pakistan Chemicals & Dyes Merchants Association (PCDMA) has raised serious alarms over the growing complications surrounding the filing of sales tax returns, citing newly introduced formats and technical glitches as major hurdles for taxpayers.
In a formal letter addressed to Rashid Mehmood Langrial, Chairman of the Federal Board of Revenue (FBR), PCDMA Chairman Salim Valimuhammad and Danish Saleem, Advisor to the Subcommittee for Sales Tax and Income Tax, highlighted several structural and operational issues in the sales tax return filing mechanism. Chief among these concerns are the recently introduced Annex H1 and Annex J, which are reportedly riddled with ambiguities, portal malfunctions, and calculation errors.
Salim Valimuhammad stated that Annex H1 is overly complex and lacks clear instructions, making it increasingly difficult for taxpayers to reconcile withholding statements. He pointed out a critical flaw in the form’s design, where it incorrectly subtracts Sales Value instead of Cost Value, leading to potential errors in return assessments, delayed refunds, and penalties.
The PCDMA also noted similar flaws in Annex J, where users struggle with reconciliation due to frequently shifting tax rates and technical problems with the online system. Like Annex H1, Annex J mistakenly deducts Sales Value rather than Cost Value—a systemic issue the PCDMA believes is leading to widespread inaccuracies across the taxpayer base.
Another area of concern is the confusion around Unit of Measure (UoM) codes. Members reported that the lack of standardized classifications and frequent portal glitches are making it extremely difficult to file accurate sales tax returns, particularly for businesses dealing with diverse inventories or import/export activities.
The PCDMA has urged the FBR not to implement such significant changes without prior consultation with industry stakeholders. The association emphasized the importance of including trade bodies and tax professionals in the decision-making process to ensure effective implementation and reduce taxpayer grievances.
In their letter, PCDMA leaders also appealed for an extension of the sales tax return filing deadline until these pressing technical and structural issues are fully resolved. “A collaborative approach,” said Salim Valimuhammad, “is essential to improving compliance and rebuilding trust between the FBR and the business community.”