Karachi, July 22, 2023 – Pakistan Tax Bar Association (PTBA) has brought to light a series of illegal restrictions in the national sales tax return process, which are causing significant hardships for taxpayers trying to fulfill their duties.
In a formal letter addressed to the Chairman of the Federal Board of Revenue (FBR), the PTBA expressed its concerns regarding the implementation of unlawful automated restrictions within the National Sales Tax Return module, known as the IRIS e-portal. While the initial purpose of the module was to facilitate taxpayers and streamline data automation, over time, certain system-based checks and restrictions have been introduced without proper authority, leading to undue complications and difficulties for taxpayers.
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The PTBA highlighted several instances that require immediate attention and resolution:
1. Automated Disallowance of Input Tax Credit: The PTBA stated that the automated disallowance of input tax credit, as per Section 7(2) read with Section 8(1) of the Sales Tax Act, 1990, is unlawful. This action, which involves coercive measures against taxpayers, should require prior human deliberation and adherence to the principle of Audi Alteram Partem. It should not be solely dependent on an automated system but must involve the concerned Commissioner Inland Revenue as the appropriate authority under the law.
2. Missing Export and Import Goods Declarations: The failure of the system to upload export and import goods declarations in the National Sales Tax Return poses serious issues for exporters and importers. It leads to delayed filing of returns and may cause discrepancies between sales tax declarations and income tax declarations, potentially resulting in unnecessary litigation.
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3. Issues with Annexure-H Filing: Taxpayers have been unable to file Annexure-H for the last two months due to unnecessary and illegal value addition checks. This hinders exporters and taxpayers from claiming their legitimate refunds.
4. Recurring Disallowance of Input Tax Credit: The system reportedly continues to disallow specific input tax credits in subsequent months even after they have been disallowed in a previous month. This is considered double jeopardy and highlights the need for more nuanced and human-deliberated actions.
5. Restrictions on Tax Periods’ Order: The National Sales Tax Return Module restricts the order in which tax periods can be filed, which causes complications for taxpayers who are awaiting input taxes from their suppliers for a particular month but need to file subsequent months’ returns. The PTBA argues that each tax period is independent and should be treated as such for ease of compliance.
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6. Inclusion of Irrelevant Data: The module includes unnecessary data that taxpayers have no concern over, leading to inadvertent claims and potential coercive actions.
7. Lack of Explanation for Discrepancies: The system often displays input tax credit disallowed without providing any report or reason, contrary to the principle of confronting the taxpayer with discrepancies for explanation.
8. Outdated Challan Generation System: The current challan generation system for both income tax and sales tax is slow and time-consuming. The PTBA urges the implementation of challan generation within the IRIS e-portal to save precious time and enhance taxpayer facilitation.
9. Restrictions on Credit Notes by Sellers: The system imposes restrictions on sellers from entering credit notes, affecting their sales tax liability for a particular month and potentially subjecting them to penalties due to delays caused by purchasers.
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In light of the mentioned concerns, the PTBA has appealed to the Chairman of the Federal Board of Revenue to personally address these issues and take appropriate measures to remove all unlawful restrictions and checks from the National Sales Tax Return module of the IRIS e-portal. The aim is to restore the intended purpose of the system and ensure smooth and fair taxation procedures for all taxpayers.
