The Karachi Tax Bar Association (KTBA) has called upon the Federal Board of Revenue (FBR) to institute a definitive time limit for concluding audit proceedings in sales tax cases.
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Withholding agents should be allowed filing separate statements for salary cases
KARACHI: Tax practitioners have urged the Federal Board of Revenue (FBR) to allow withholding agents to file separate statements for salary and other than salary cases.
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WTO tariff heading proposed for sales tax on services
KARACHI: Tax practitioners have urged the Federal Board of Revenue (FBR) to adopt tariff headings of World Trade Organizations (WTO) for effectively impose sales tax services.
Tax practitioners under the umbrella of Karachi Tax Bar Association (KTBA) held a pre-budget 2021/2022 conference and discussed issues of sales tax on services.
It is discussed that all the service sales tax laws contain their own list of taxable services, which are couched in such a way that there are many entries with overlapping scope which lead to interpretational issues.
Further all the provincial laws envisage origin as well as destination principle for levying tax on service- double taxation Proposal.
It is recommended that the government should co-ordinate to promulgate negative list approach and specify place of supply rules at earliest.
It is suggested: “WTO tariff heading for services may also be adopted.”
It is discussed that despite lapse over ten years, since promulgation of 18th Constitutional Amendment, disputes regarding jurisdiction and basis for levying the sales tax are still unresolved.
A lot of unnecessary litigation on such issues has piled up.
National Tax Council has been announced to resolve such issues, however, no tangible results till date.
It is proposed that the governments should resolve jurisdictional disputes at earliest.
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Tax fraud cases should be investigated through special directorate
KARACHI: Tax practitioners have discussed sales tax matters at a pre-budget seminar and recommended that tax fraud cases should be investigation through a special directorate.
Members of Karachi Tax Bar Associations (KTBA) in the pre-budget seminar discussed various issues pertaining to sales tax laws.
They highlighted the issue where jurisdiction for audit and adjudication of cases involving tax fraud as well as routine audit and assessments lies with the same officer. Further, the two proceedings require different type of skill set and approach.
It is also discussed that same officer is responsible for conducting audit and adjudication- KTBA also filed petition in SHC seeking segregation of same which still pending
Lack of segregation, results in inefficiency and undue harassment of law compliant taxpayer, as officers invariably include allegation of tax fraud in almost every show cause notice, the members discussed.
They proposed for the budget 2021/2022 that cases of tax fraud should be investigated and adjudicated by a Special Directorate to be set up for this purpose.
Further, concerned officer exercising jurisdiction over a taxpayer, if has determined that taxpayer is involved in suspicious/criminal activity the case should be turned over to the Special Directorate.
Function of conducting audit and assessment of tax/adjudication should also be separated
Detailed framework / rules should be prescribed after consultation with all the stakeholders.
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Corporate tax rate should be brought down to 25pc
KARACHI – Tax practitioners gathered at a pre-budget seminar organized by the Karachi Tax Bar Association (KTBA) have urged the government to consider reducing the corporate tax rate to 25 percent in the upcoming budget for 2021/2022.
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FBR advised to use withholding statements for identifying new taxpayers
KARACHI: Tax practitioners have advised the Federal Board of Revenue (FBR) to examine withholding statements and extract information of persons not paying taxes and not filing their annual returns.
The members of Karachi Tax Bar Association (KTBA) in their pre-budget 2021/2022 seminar urged the FBR for mining of its database to identify new taxpayers & those not fully discharging their liabilities
FBR should extract information from withholding statements, details of government supplies and maintain a database of above third party information, according to a presentation made by Haider Patel, former president, KTBA.
He further suggested that relevant organizations, departments, institutions including utility companies, banks, NADRA and information obtained related to offshore transactions should submit prescribed information on quarterly basis to the FBR.
The FBR has been further advised effective enforcement for compliance of filing of Return of Income under section 114 of Income Tax Ordinance, 2001.
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Karachi Tax Bar highlights issues in input tax adjustment on provincial invoices
KARACHI: Karachi Tax Bar Association (KTBA) on Wednesday wrote a letter to chairman of the Federal Board of Revenue (FBR) highlighting issues faced by taxpayers on disallowance of input adjustment against entry of provincial invoices.
The tax bar said: this is with reference to above cited subject and the following intimation uploaded on the web portal of Federal Board of Revenue:
“Manual entry of provincial invoices for input tax credit of services in Annex A is disallowed from 01 April 2021 for the tax period from March 2021, Taxpayers as buyers will get monthly input tax credit based on submission of sales invoices and Return in respective tax authority for which the data is made available in Purchase Data Tab. For previous data please contact at [email protected] subject Services data.”
KTBA highlighted the following issues which the Members of KTBA in general and Taxpayers in particular are facing due to the sudden change made through intimation on the web portal:
Till the filing of this letter, the data/invoices of all provinces are not synchronized and are not readily available automatically; this is not only creating problems for the Taxpayers to claim the Provincial Input Tax (Services Input Tax), but the Taxpayers would not be able to submit their monthly Sales Tax Returns for the Tax Period of March 2021 (last date of e-filing April 18, 2021) due to non-availability of Service Input Tax.
In most of cases, the KTBA observed that Service Input Tax data prior to Tax Period March 2021 is not available; due to which the Taxpayers are unable to claim Service Input Tax for tax periods prior to tax period March 2021.
At present, banks and other businesses such as courier services etc., as a routine deposit Provincial Sales Tax (Service Tax) as a bulk entry instead of depositing the same against each Taxpayer which is affecting in claiming the Service Input Tax.
At present, Service Input Tax of only those Taxpayers is being retrieved who have e-filed / submitted their returns which is unnecessarily delaying the filing of Sales Tax Returns as Service Input Tax is not available.
Our Members have informed that in certain cases, Taxpayers in some cases are unable to claim Service Input Tax in the Sales Tax Returns though the same is available under Annexure A.
Apart from above, there are other teething issues which are practically creating issues for the Taxpayers and Members of KTBA alike which are including but not limited to withholding tax on Service Tax showing as payable, Service Input Tax entries once deleted are not uploaded again and deferment of Service Input Tax, etc.
In view of above, the KTBA highlighted the following for your kind perusal and ready action:
Till the time this new system is fully functional; KTBA suggest to use both old as well as new system for claim of Service Input Tax to allow taxpayers to claim genuine Service Tax paid by them;
Old system of claim of Service Input Tax should be phased out in gradually instead of sudden disallowance;
Once the system is fully functional, KTBA suggests providing an option to claim Service Input Tax manually, which for any reason is not available up by the system, through manual entry with the option to upload the Service Tax Invoice not uploaded automatically. Such entry should then be checked and if found otherwise be routed through S. No. 7 (a) (b) (c) of the Sales Tax Return;
Ensure invoice wise entry by all Taxpayers ensuring entry against NTN / STRN of each Taxpayer in order not only to streamline the process but to proper claim of Input Tax both Federal and Provincial;
Claim of Service Input Tax be allowed instead of marking the same is “input tax not claimable”;
Field relating to Withholding tax on provincial sales tax should be removed from the Federal Sales Tax return; and
Feature of re-uploading of Service Input Tax be made available.
Although, KTBA feels that use of IT based technology/digitalization of records is the only way to resolve the multi-faceted complex issues vis-à-vis to address the issues of flying / fake input tax; however, sudden implementation of new scheme in the midst of MOU signed by the Federation and the Provinces to develop one Sales Tax Return is likely to create chaos and disorder for the Taxpayers.
In view of above submissions, KTBA feels that appropriate measures including but not limited to extension of date for the Tax Period of March 2021 for filing of Sales Tax Return and resolution of above highlighted issued be addressed forthwith to ease the pressure of the Taxpayers and Members of KTBA alike.
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KTBA to discuss tax profile update problems with FBR chairman
KARACHI: Karachi Tax Bar Association (KTBA) to take up problems faced by taxpayers at a meeting with the chairman of the Federal Board of Revenue (FBR), according to a communication received on Thursday.
In the communication to its members, the KTBA said it was well aware about many issues faced by the members while updating taxpayers’ profile, which is mandatory under Section 114A of the Income Tax Ordinance, 2001.
The KTBA advised its members to send the nature of problems they faced while updating taxpayers’ profiles on the IRIS portal.
The tax bar also advised the members to send their issues by March 25, 2021 to enable the KTBA to take up the issues with the FBR chairman for resolution.
Updating the taxpayer profile has been made mandatory through insertion of Section 114A to the Income Tax Ordinance, 2001 through Finance Act, 2020.
The last date for updating the profile was December 31, 2020. However, it was extended to March 31, 2021.
The FBR through various statements has made it clear that those who failed to update the profile would be excluded from the Active Taxpayers List (ATL).
The FBR has also imposed monetary penalty for failure in updating the profile. Under the Income Tax Ordinance, 2001 an amount of Rs2500 per day with minimum penalty of Rs10,000.
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Zeeshan Merchant elected KTBA president for second consecutive term
KARACHI: Muhammad Zeeshan Merchant has been elected as president of Karachi Tax Bar Association (KTBA) for the second consecutive time in the elections of the bar held on Thursday.
Merchant secured 401 votes for the slot of president. The other candidate Muhammad Imtiaz Zubairi could get only 141 votes.
It is pertinent to mention that it was the first time in the past 20 years that the KTBA members were casting their votes for all the slots.
Merchant has been elected as the president of the KTBA for the second consecutive term for the year 2021. He already served on the same portfolio for the year 2020.
He was contesting for the presidentship of the KTBA from the platform of United Panel. All the candidates of the United Panel have been elected with a big margin.
Muhammad Memood Bikiya has been elected vice president.
Syed Faiq Raza Rizvi, Shiraz Khan and Haris Tufail have been elected for the slot of honorary general secretary, librarian and honorary joint secretary, respectively.
The successful members of the executive committee are included: Asim Rizwani Sheikh, Abdul Wahab, Irfan Ghafoor, Muhammad Mustafa Rahim, Raeel Fatima, Syed Ejaz Ahmed Jafry, Saud ul Hasan and Atif Nawaz.
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FBR criticized for restricting servicing of tax notices through electronic means
KARACHI: Karachi Tax Bar Association (KTBA) has criticized the tax authorities for restricting the service of tax notices to electronic means.
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