The Federal Board of Revenue (FBR) has intensified efforts to curb unauthorized practices in the realm of sales tax by implementing penalties for the unauthorized issuance of sales tax invoices.
According to Section 33(3) of the Sales Tax Act, 1990, individuals engaging in the unauthorized issuance of invoices specifying a tax amount will be subject to penalties, reinforcing the FBR’s commitment to maintaining the integrity of the tax system.
In its updated Sales Tax Act, 1990, incorporating amendments through the Finance Act, 2021, the FBR has introduced stringent measures to address unauthorized practices, particularly those related to the issuance of sales tax invoices. Section 33(3) of the Act outlines the penalties associated with unauthorized issuance of invoices.
The text of Section 33(3) of the Sales Tax Act, 1990, reads as follows:
33. Offences and penalties.– “Whoever commits any offence shall, in addition to and not in derogation of any punishment to which he may be liable under any other law, be liable to the penalty mentioned against that offence: –
3. Any person who unauthorizedly issues an invoice in which an amount of tax is specified.
Such person shall pay a penalty of ten thousand rupees or five per cent of the amount of the tax involved, whichever is higher.”
This provision underscores the significance of adhering to legal procedures and obtaining proper authorization for the issuance of sales tax invoices. The penalty applies to individuals who engage in unauthorized practices by specifying tax amounts on invoices without the requisite authorization.
Key points regarding the penalties for unauthorized issuance of sales tax invoices under Section 33(3) include:
1. Unauthorized Issuance: The provision specifically targets individuals who issue invoices without proper authorization and include an amount of tax.
2. Penalty Amount: Individuals engaged in unauthorized issuance are liable to pay a penalty of Rs10,000 or five percent of the amount of tax involved, whichever is higher. This penalty is in addition to any other punishments that may apply under relevant laws.
3. Deterrent Measure: The imposition of penalties serves as a deterrent, discouraging individuals from engaging in unauthorized practices related to sales tax invoices.
4. Compliance Emphasis: The provision highlights the importance of compliance with tax regulations, particularly in the context of sales tax invoicing. It underscores the need for adherence to legal procedures and obtaining proper authorization.
The FBR encourages businesses and individuals to familiarize themselves with these regulations to ensure compliance and avoid potential penalties. By adhering to legal requirements, businesses contribute to the transparency and fairness of the tax system.
The inclusion of such provisions reflects the FBR’s commitment to fostering a tax environment characterized by accountability, fairness, and adherence to legal procedures. The penalties for unauthorized issuance of sales tax invoices underscore the FBR’s dedication to upholding the principles of equity and transparency in the tax system.