The prima facie distinction of tax payment receipt will automatically generate notices for new taxpayers for registration and may be sent to them along with the NTN application form. Unattended notices or applications may be used to verify the Withholding Tax agent data by obtaining a copy of invoice or cash memo for further action. Special procedure may be adopted in case of mobile, telephone, electricity and gas.
The burden of filling various tax payment receipts may be acceptable to taxpayers when the Central Board of Revenue is willing to consider the requirement of monthly tax compliance forms. After implementing the new forms, existing Withholding Tax forms shall only be required in two cases.
Firstly, where the tax is deducted but is not deposited and secondly, where the tax is not deducted either because of the fact that transaction is not covered under any Withholding Tax section or is exempt.
At the time of amended or revised assessment, the figure of advance tax is easily traceable and verifiable. The assessing authority needs to cross check this figure against the tax deposited by or deducted/collected from such taxpayer during the tax year.
In case of difference, the taxpayer is required to submit a summary in electronic format containing the date of tax receipt and bank code embossed on tax receipt apart from detail of tax collected through mobile, electricity, gas and telephone, in line with any special procedure, without requiring the submission of original tax receipts.
Such cross verification will unearth the errors into the system and may be used to rectify the program errors. The tax collector will be required to input the assessed tax into the system. The system will spread the assessed tax against tax receipt of advance tax and generate the refund for the rest. However, the system will generate the error whereby a final tax is intended to be garbed in a normal tax return.
This will effectively close all such open tax receipts for avoidance of subsequent refund by marking as "allowed for refund" and "adjusted against assessment order number...." with a distinctive batch mark into the system. Consequently, individual original taxpayer's copies of tax receipts will either be stamped or pasted with a system generated sticker. Such batch mark needs to be filled with the cheque or pay order number of refund amount and the tax will never be open for any subsequent refund claim.
REFUND - STA, 1990 Sales Tax Rules, 2006 [STR, 2006] is the primary focal point in this regard as it lays down the detailed procedure. The system under the STR, 2006 is very much streamlined currently except some practical difficulties. The reason for highlighting practical difficulties is based on Resoluto jure concedentis, resolvitur jus concessum - when the right of the grantor has been extinguished, the right granted is extinguished.
As we know that once the specified matters are ambiguous then the collectorates exercise their own judgement. Such judgements vary from person to person owing to the fact that how keen he or she is in allowing the refund after taking the utmost due care.
On the other hand, taxpayers are dependent upon tax accountants, tax consultants and past experiences of other taxpayers. They do not understand Res inter alios judicatae nullum aliis praejudicium faciunt - matters adjudged in the lawsuits of others do not prejudice those who were not parties to them and view such judgmental power as Res nullius naturaliter fit primi occupantis a thing that has no owner naturally belongs to the first taker.
EXISTING STRUCTURE The rules relating to refund do not encompass the concept of multiple adjustment advices, hence, do not define the detailed procedure in relation thereto and the statement of tax paid inputs does not encompass the concept of all inputs. The existing RCPS system' stock portion also posses some practical difficulties.
As we know that there are two types of stocks, one on which input is claimed and the other one is in respect of which either input is not allowed or is exempt. The apparent purpose seems RCPS system's stock module is to check whether the same material is used in either production or sold in same condition in relation to which input is allowed. However, the concept of WIP seems excessive.
SWOT ANALYSIS However, such an excessive data entry is cumbersome for most of the taxpayers.. Creation of such nexus is sometimes tantamount to opening of business secret while the same is necessary for refund purposes from the tax collectors perspective.
There is a dire need to create a balance between these factors, that is, such nexus should not tantamount to opening of business secret while on the other hand should serve the purpose of tax machinery for allowing tax refund.
In this regard, it is suggested that tax laws may be so amended to incorporate reliance over existing stock records of the taxpayers clearly segregating the stocks, one on which input is claimed and the stocks on which either input is not allowed or is exempt apart from the fact that same material is used in either production or sold in same condition - raw material and finished goods.
As an alternative measure, the details of input and output along with tax return may be collected through RCPS system where the apparent outcome is refund. The RCPS system needs to be amended in a manner that while incorporating the input a field may be incorporated to update stock record.
The reason for incorporation of such field is that every item is not a stock in respect of which input is claimed. Similarly, the output entry can also be used to update finished goods record.
CONCLUSION Refund is a word which generated harsh debate in almost every area whether it is the relationship between taxpayer and tax collectors, print or electronic media. Such debates, columns, letters to the editors or articles revolve around the sanctity of right of refund to taxpayers instead of digging out the root causes.
It has been a long time that Central Board of Revenue entered into an era of providing facilities to the taxpayers of developing country which are similar to facilities provided in developed countries. The only problem lies in the effective use of such facilities and necessary upgradation in knowledge based system.
Taxpayers understand and may be ready to bear subject to the condition that Central Board of Revenue is ready to incorporate the concept of continual process development through experience adjustment according to the legal aspect but not at the cost of frustration to the effected.
(Concluded)
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