The Central Board of Revenue (CBR) has issued procedure for the payphone/cellular phone, calling card companies and other telecommunication service providers to claim input tax adjustment on account of PTCL bills.
The CBR on Tuesday issued sales tax circular 3 of 2005 to clarify the issue for the collectors of sales tax and telecommunication service providers.
The CBR has communicated to these telecom service providers that the utility bills are adjustable during the month in which the bills are paid for the purpose of input tax adjustment.
According to the circular, a number of companies providing the telecommunication services have approached the Board for obtaining clarification regarding SRO 1004(I)/2005 of September 23, 2005.
These companies opined that since PTCL bills are received by them on 15th day of the following month and are payable by 24th day of the following month, it is not possible for them to make adjustment of input tax on account of PTCL bills by 21st day of the following month by which date they are required to pay the federal excise duty (FED) on their prepaid telecommunication services under SRO 1004(I)/2005.
The Board has clarified that for the purpose of input tax adjustment, utility bills are adjustable during the month in which the bills are paid.
Therefore, for calculating their net tax liability for a tax period, the persons rendering or providing telecommunication services are required to make input tax adjustment on account of PTCL charges on the basis of the bills paid during the same tax period.
In this way, such persons shall have ample time at their disposal to calculate their net tax liability and make payment of federal excise duty in respect of the prepaid telecommunication services provided during a month, by 21st day of the following month.
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