In a bid to streamline tax procedures and ensure compliance with recent legislative changes, the Karachi Tax Bar Association (KTBA) has called upon the Federal Board of Revenue (FBR) to promptly update the online sales tax return form.
The KTBA contends that the current form does not align with the amendments introduced through the Finance Act, 2021, to the Sales Tax Act, 1990.
In a letter dated August 13, 2021, addressed to Asim Ahmad, Chairman of the FBR, the KTBA highlighted the discrepancy between the online sales tax return and the amended provisions in the Sales Tax Act. The association noted that, as of July 2021, the Finance Act, 2021, had excluded listed companies from the scope of Section 8B of the Sales Tax Act, 1990.
Section 8B, as outlined in the Sales Tax Act, 1990, reads: “(1) Notwithstanding anything contained in this Act, in relation to a tax period, a registered person other than public limited companies listed on the Pakistan Stock Exchange shall not be allowed to adjust input tax in excess of ninety per cent of the output tax for that tax period.”
The amendment, effective from July 2021, necessitates a modification in the sales tax return to accommodate the changes in the treatment of input tax adjustment for the listed companies. The KTBA urged Chairman Asim Ahmad to issue immediate directives for the update of the sales tax return form in accordance with the amendments introduced through the Finance Act, 2021.
Furthermore, the tax bar drew attention to the persisting practice of bulk sale declarations by entities such as banks, insurance companies, and port terminal operators. This practice, according to the KTBA, hampers taxpayers from claiming their input tax adjustments effectively.
To address this concern, the tax bar called on the FBR to intervene and instruct all relevant entities, including banks, insurance companies, port terminal operators, and other bulk sellers, to discontinue the practice of bulk sale input declarations concerning registered persons in the sales tax return.
The KTBA’s communication emphasizes the importance of aligning tax procedures with current legal frameworks to facilitate smooth operations for taxpayers and enhance transparency in the taxation system. The association anticipates that the FBR’s prompt attention to these matters will contribute to a more efficient and compliant taxation regime in the country.
As businesses navigate the complexities of taxation, the collaboration between tax professionals and regulatory bodies becomes crucial to ensuring that the evolving economic landscape is met with responsive and effective tax policies. The KTBA remains vigilant in its pursuit of an updated and synchronized tax system that serves the interests of both businesses and the broader economy.
