FBR clarifies on treatment of closing stock
- LCCI stated that in the case of importers, tax collected at the import stage during TY-19 had become final tax at the time of collection, therefore the income from the disposal of such closing stock shouldn't be included in taxable income for the TY-20 as it would result in double taxation.
The Federal Board of Revenue (FBR) has issued a clarification regarding the treatment of closing stock at the time of change of taxation regime from final to the minimum tax.
The Lahore Chamber of Commerce and Industry in its letter to FBR had sought clarification in this regard.
LCCI stated that in the case of importers, tax collected at the import stage during TY-19 had become final tax at the time of collection, therefore the income from the disposal of such closing stock shouldn't be included in taxable income for the TY-20 as it would result in double taxation.
FBR has informed that the turnover resulting from the disposal of closing stock already declared under Final Tax Regime in the previous tax year should not make part of next year’s turnover as it would be tantamount to double taxation.
FBR said that such turnover should not be declared in the column ‘subject to NTR, for TY 2020. In order to avoid misuse or mis-declaration, field formations are required to conduct desk audits of all such cases for TY, 2020, and cross-match turnover with relevant Sales Tax declarations.
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