Solvent extractors allowed 100 percent input tax adjustment

The Federal Board of Revenue has allowed solvent extracting units to claim 100 percent input tax adjustment levied on their purchases. The board has amended SRO. 647(I)/2007 through a notification issued here on Wednesday.
According to the FBR, the notification has been issued to facilitate solvent extracting units whereby they will be able to adjust 100 percent input tax paid on their purchases.
As per section 8B of the Sales Tax Act, 1990, a taxpayer can adjust 90 percent of input tax paid on his purchases against his output tax. As the value addition in solvent extraction units is not high enough, such a provision was resulting into refunds.
To save solvent extraction units from cash flow problems, they have been allowed to adjust 100 percent input tax paid on their purchases, the board added. The Section 8B was introduced in budget 2007-2008 to deal with the issue of excessive input tax adjustments by certain taxpayers without any check.
Through this amendment, input tax adjustment during a tax period cannot exceed 90 percent of the output tax. A proper mechanism has been provided for the companies to obtain input tax adjustment beyond 90 percent at the end of their financial year by submitting a certificate from their auditors.