Karachi, December 9, 2023 – The Federal Board of Revenue (FBR) has unveiled updated Sales Tax Rules for the tax year 2024, introducing a comprehensive framework for obtaining sales tax registration.
(more…)Tag: Sales Tax Rules 2006
-
Rules amended for sales tax de-registration
ISLAMABAD: The Federal Board of Revenue (FBR) has amended rules related to sales tax de-registration of a person or a company.
The FBR issued SRO 51(I)/2022 dated January 13, 2022 to amend Sales Tax Rules, 2006. Rule 11 of the Sales Tax Rules, 2006 deals with de-registration.
Under this rule, sub-rule (1) every registered person who ceases to carry on his business or whose supplies become exempt from tax, or who ceases to remain registered shall apply to the Commissioner Inland Revenue having jurisdiction for cancellation of his registration, and the Commissioner, on such application or on its own initiative, may issue order of de-registration or cancellation of the registration of such person from such date as may be specified, but not later than ninety days from the date of such applicant or the date all the dues outstanding against such person are deposited by him, whichever is later and such person shall caused to be de-registered through computerized system accordingly.
READ MORE: Sales Tax Act, 1990 updated till June 30, 2021
The FBR made amendment in sub-rule 2 of Rule 11. The sub-rule 2 explains that The Commissioner, upon completion of any audit proceedings or inquiry which may have been initiated consequent upon the application of the registered person for de-registration, shall complete the proceedings or inquiry within ninety days from the date of application and direct the applicant to discharge any outstanding liability which may have been raised therein by filing a final return under section 28 of the Sales Tax Act, 1990:
Provided that the person applying for de-registration shall not be de-registered unless he provides record for the purpose of audit or inquiry.
READ MORE: Apex court suspends order in tax notices to overseas assets
Through the SRO the FBR inserted sub-rule 2A and 2B to the sub-rule 2.
According to sub-rule 2A: “After receipt of the application for de-registration by the Commissioner Inland Revenue having jurisdiction, the obligation of the registered person to file monthly sales tax return under Section 26 of the Sales Tax Act, 1990 shall remain suspended, until he is de-registered or his application is rejected, as the case may be.”
The sub-rule 2B explains: “Where the Commissioner Inland Revenue desires to conduct audit or inquiry of the applicant to determine his liability, he shall require the applicant, in writing, to provide the requisite records. On receipts of the complete requisite records, entry to this effect shall be made in the computerized system, which shall automatically de-register the applicant on expiry of ninety days thereof, subject to provision of sub-rule (4).”
READ MORE: Retail price of sugar may be abolished for sales tax
The sub-rule (4) explains that the obligations and liabilities of the person whose registration is cancelled under sub-rule (1) relating to the period when he conducted business as a registered person shall not be affected by the fact that his registration has been cancelled or that he has ceased to be a registered person.
-
FBR amends rules for filing, processing of refund claims
ISLAMABAD: Federal Board of Revenue (FBR) on Thursday amended Sales Tax Rules, 2006 for process and claims of refunds by commercial exporters.
In this regard the FBR issued SRO 1172(I)/2020 to make changes in the Sales Tax Rules, 2006 regarding filing and processing of refund claims.
Following rules have been amended:
Rule 28. Filing and processing of refund claims.−(1) For all the refund claims under section 10 and 8B of the Act, for the tax period July, 2019 and onwards, the data provided in the monthly return shall be treated as data in support of refund claim and no separate electronic data shall be required. The amount specified in column 29 of the return, as prescribed in the form STR-7, shall be considered as amount claimed for the purposes of claim under section 10 of the Act, once the return has been submitted along with all prescribed annexures thereof:
Provided that, in case of claims arising from zero-rated supplies including exports, the claimant shall be able to submit his return without Annex H and the same may be filed separately at any time but not later than one hundred and twenty days of submission of the return without Annex-H. The date of submission of Annex-H shall be considered as the date of filing of refund claim. In other cases of refund, the date of submission of form STR-7A shall be considered as date of submission of refund claim and the same shall be filed within one hundred and twenty days of submission of relevant return:
Provided further that in case of a commercial exporter, the claim shall be filed in the aforesaid manner within one hundred and twenty days, either after submission of the return without Annex-H, or after the date of issuance of BCA, whichever is later:
Provided also that the period of one hundred and twenty days, as aforesaid, may be extended for a period not more than sixty days, by the Commissioner having jurisdiction, if the claimant so requests, thereby providing reasons justifying the delay in submission of claim:
Following new proviso has been added through the SRO:
“Provided also that if a claimant is registered as commercial exporter and exporting same state of goods, the period of one hundred and eighty days shall be reckoned from date of filing of return or the date of issuance of BCA, whichever is later.”
(2) The registered person claiming refund in the aforesaid manner shall maintain and keep all the paper documents relating to the refund claim, such as invoices, credit notes, debit notes, goods declarations, bank credit advice, banking instruments etc. in his office and may not submit the same along with the refund to the concerned Regional Tax Office or Large Taxpayers’ Unit. The same shall be presented to the said offices if so required by the officer-in-charge for processing of the refund claim or post-refund scrutiny.
Rule 39D. Filing and Processing of refund claims.−The data provided in the monthly return shall be treated as data in support of refund claim and no separate electronic data shall be required to be provided. The amount specified in column 29 of the return, as prescribed in the form STR-7, shall be considered as amount claimed, once the return has been submitted along with all prescribed annexes thereof:
The first proviso has been amended through the SRO 1172(I)/2020:
Provided that the claimant may submit his return without Annex-H and the same may be filed separately at any time but not later than one hundred and twenty days or as the case may be not later than one hundred and eighty days for commercial exporters of submission of the return without Annex-H. The date of submission of Annex – H shall be considered as the date of filing of refund claims.
Provided further that the period of one hundred and twenty days, as aforesaid, may be extended for a period not exceeding sixty days, by the Commissioner having jurisdiction, for reasons to be recorded in writing on the basis of an application made by the claimant.
-
Exemption to Greenfield Industry: FBR amends sales tax rules
ISLAMABAD: Federal Board of Revenue (FBR) has notified rules for processing application to avail sales tax exemption on greenfield industry.
The FBR issued SRO 777(I)/2020 to amend Sales Tax Rules 2006 and said that a registered person applying for approval of its industrial undertaking as “Greenfield Industry”, as defined in sub-clause (12A) of section 2 and for exemption under Serial No.150 of the Table –I of Sixth schedule to the Sales Tax Act 1990, shall make an application electronically to the Commissioner Inland Revenue having jurisdiction in the form prescribed in Annexure-I along with documents prescribed in Annexure-II of this Chapter.
The registered person shall also submit a hard copy of the prescribed application to the Commissioner Inland Revenue for the purposes of approval under sub-clause (12A) of section 2 and Serial No.150 of Table-I of Sixth Schedule to the Sales Tax Act, 1990 along with all the documents required under this Chapter.
Processing of applications by the Commissioner
(1) On receipt of an application under rule 158B, the Commissioner Inland Revenue may make such inquiries or call for such further information or documents as deemed necessary.
(2) After scrutiny of the application and the documents annexed thereto, the Commissioner Inland Revenue shall, forward the application to the Engineering Development Board, Government of Pakistan hereinafter referred to as “EDB” in this Chapter, for seeking its expert opinion as to whether the process or technology being employed by the said industrial undertaking is or is not already under use in Pakistan.
(3) Upon receipt of application forwarded by Commissioner Inland Revenue, the EDB shall process the same within the time stipulated by him and communicate its expert opinion / findings with regard to the query raised in sub-rule (2) tothe Commissioner Inland Revenue.
Approval of the application:
(1)After completion of all the formalities, the Commissioner Inland Revenue may, through an order in writing, approve the industrial undertaking for the purposes of sub-clause (12A) of Section 2 of the Act.
(2) The Commissioner Inland Revenue may, after recording the reasons in writing, refuse to grant approval for the purposes of sub-clause (12A) of Section 2 of the Act.
Finalization of Applications. The Commissioner Inland Revenue shall finalize the applications filed under Rule 158B within fifteen days of its receipt.
Appeal against decision of a Commissioner Inland Revenue. Any registered person dissatisfied with the decision of the Commissioner Inland Revenue under Rule 158D may prefer an appeal within sixty days of the receipt of the order to the Appellate Tribunal Inland Revenue under section 46 of the Act.
Procedure for generation and transmission of exemption certificate in the WeBOC. — (1)In case of grant of approval as “Greenfield Industry”, the exemption certificate shall be generated automatically by the IRIS on the basis of the approval as Greenfield industry granted by the Commissioner Inland Revenue.
The exemption certificate shall be automatically transmitted from IRIS to WeBOC as per existing procedure.
Procedure for availing sales tax exemption on import of plant and machinery:
(1) The registered person shall upload a copy of the order of approval as Greenfield Industry already issued by the Commissioner Inland Revenue in WeBOC at the time of preparations of Goods Declaration for the imported plant and machinery.
(2) The registered person shall claim in the Goods Declaration the exemption from sales tax on the imported plant and machinery as per Serial No. 150 of Table-1 of the Sixth Schedule to the Sales Tax Act 1990.
-
FBR exempts various properties from attachment for tax recovery
ISLAMABAD: Federal Board of Revenue (FBR) has exempted various properties from attachment for recovery from tax defaulters.
The FBR issued SRO 353(I)/2020 through which the tax officials have been restrained from attaching certain movable properties of a defaulter for recovery of due taxes.
According to the notification, the FBR officials may not attach assets for recovery, which included the necessary wearing apparel, cooking vessels, beds and bedding of the defaulters, his wife and children, and such personal ornaments, as, in accordance with religious usage, cannot be parted with by any women.
The tax official further barred from attaching assets for recovery, which included tools of artisans, and where the defaulter is an agriculturist, his implements of husbandry and such cattle and seed grain as may be necessary to enable him to earn his livelihood.
The FBR also explained the assets, which cannot be attached by the tax officials for recovery. This will include houses and other buildings (with the materials and the sites and the land immediately appurtenant) belonging to an agriculturist and occupied him.
The FBR said that the tax officials may also not attach included: books of account; a mere right to sue for damages; and any right of personal service.
The amendment to sales tax rules also prohibited the tax officials to attach all compulsory deposits and other sums in or derived from fund to which the Provident Fund Act, 1925, for the time being applies in so far as they are declared by the Act not to be liable to attachment.
-
FBR orders food outlets to display tax amount
ISLAMABAD: Federal Board of Revenue (FBR) has made it mandatory for food outlets to display tax amount along with retail price in menus.
The FBR on Wednesday issued SRO 353(I)/2020 to make it mandatory for all the restaurants, bakeries, caterers and sweetmeat shops supplying prepared foods, foodstuff and sweetmeat to show prices and amount of tax separately on menu cards for menu board displayed in their outlets for the end consumers.
The FBR has made this requirement for tier-I retailers, who are required to integrate their point of sales with the FBR’s online system.
The FBR also made amendment through notification and made it mandatory for all the retailers to show prices and amount of tax separately on the price tags attached with finished fabric and locally manufactured finished articles of textile and textile made-ups leathers and artificial leather.
The FBR made these changes in order to ensure revenue generation from the retail sector. The FBR recently allowed input tax adjustment to Tier-1 retailers in order to attract more retailers into this segment.
-
Sales tax officers authorized to attach immovable property of defaulters
KARACHI: Federal Board of Revenue (FBR) has authorized officers of Inland Revenue to attach immovable property of a sales tax defaulter for recovery of amount.
According to Rule 112 of Sales Tax Rules, 2006, attachment of the immovable property of the defaulter shall be made, by the recovery officer, by an order prohibiting the defaulter from transferring or subjecting the property to a charge in any manner and prohibiting all persons from taking any benefit under such transfer or charge.
In order to attach immovable property, a copy of the order of attachment shall be served on the defaulter.
The FBR said that the order of attachment shall be proclaimed on or adjacent to the property attached by affixing a copy of order of attachment at a conspicuous place and a copy of the same shall also be affixed at the notice board in the office of the Recovery Officer.
Sale and proclamation of sale
(l) The Recovery Officer may direct that any immovable property, which has been attached, or such portion thereof, as may be necessary to satisfy the demand note, shall be sold if the amount due is not otherwise recoverable.
(2) Where an immovable property is ordered to be sold, the Recovery Officer shall cause a proclamation to be made in the same manner as provided in rule104.
Contents of proclamation of sale
(1) A proclamation of sale of immovable property shall be drawn after proclamation of attachment and shall specify therein the time and place of sale and also specify—
(a) the location of property to be sold;
(b) as fairly and accurately as possible, the revenue or rent, if any, assessed upon the property or any part thereof; and
(c) the Government due for the recovery of which the sale is ordered.
(2) The proclamation may also specify any other thing which the Recovery Officer considers material for a purchaser to know in order to judge the nature and value of the property.
No sale of immovable property shall, without the consent in writing of the defaulter, take place until after the expiration of thirty days from the date on which copy of the proclamation of sale was affixed on the property or in the office of the recovery officer, whichever is later.
-
Method for determination of input sales tax
KARACHI: Sales tax rules have defined method for determination of input tax claimed by registered persons.
According to rule 25 of Sales Tax Rules 2006, input tax paid on raw materials relating wholly to the taxable supplies shall be admissible under the law.
Input tax paid on raw materials relating wholly to exempt supplies shall not be admissible.
The amount of input tax incurred for making both exempt and taxable supplies shall be apportioned according to the following formula, namely:–
Residual input tax credit on taxable supplies =
Value of taxable supplies
—————————————————- x Residual input tax
(Value of taxable + exempt supplies)Monthly adjustment of input tax claimed by a registered person under this Chapter shall be treated as provisional adjustment and at the end of each financial year, the registered person shall make final adjustment on the basis of taxable and exempt supplies made during the course of that year.
Any input tax adjustment claimed wrongfully on account of incorrect application of formula set out in sub-rule (3) shall be punishable under the respective provisions of law irrespective of the fact that the claim was provisional.
Federal Board of Revenue (FBR) said that this shall apply to the registered persons who make taxable and exempt supplies simultaneously.
-
FBR amends sales tax rules to implement automated registration system
ISLAMABAD: Federal Board of Revenue (FBR) has amended Sales Tax Rules 2006 to implement automated sales tax registration system.
The FBR issued SRO 698(I)/2019 to amend Rule 5 of Sales Tax Rules, 2016. The amendment has been made in Rule 5 for sub-rule (2) to (9), the following shall be substituted, namely:
“(2) The applicant having NTN or income tax registration shall, using his login credentials, upload following information and documents-
(a) bank account certificate issued by the bank in the name of the business;
(b) registration or consumer number with the gas and electricity supplier;
(c) particulars of all branches in case of multiple branches at various locations;
(d) GPS-tagged photographs of the business premises; and
(e) in case of manufacturer, also the GPS-tagged photographs of machinery and industrial electricity or gas meter installed.
(3) On furnishing above documents, the system shall register the applicant for sales tax.
(4) After registration, the applicant or his authorized person shall visit e-Sahulat Centre of NADRA within a month for bio-metric verification. In case of failure to visit or failure of verification, the registered person’s name shall be taken off the sales tax Active Taxpayer List.
(5) In case of manufacturer, the Board may require post-verification through field offices or a third party authorized by the Board.
In case, the field office, during scrutiny after the registration, finds that any document provided is non-genuine or fake or wrong, it may request through the system, to provide the missing document, in fifteen days, failing which the registered person shall be taken off from the sales Active Taxpayer List, subject to approval of the Member (IR-Operations), FBR.”
The automated sales tax registration will be applicable from July 01, 2019.