ISLAMABAD: Tax experts have urged the Federal Board of Revenue (FBR) to correct the errors and omissions of earlier enactments/ notifications through the upcoming Finance Bill 2023.
Tax experts stated that invariably in every Finance Act, there are multiple amendments made to correct the drafting errors and omissions of earlier enactments and these lapses by the Policy Wing of the FBR usually create uncertainty and lead to avoidable litigation.
Tax experts have urged the FBR to improve its track record in the forthcoming budget.
When contacted, Shahid Jami, a Lahore-based tax professional explained with an illustration that when an amendment is intended in any section or schedule of the taxing statute any corresponding amendment required elsewhere is overlooked.
He explained that in 2021 the milk and many other products were made taxable for the levy of sales tax if sold retail in packing under a brand name or trademark. But the key expression of “retail packing” used in Table II of the Sixth Schedule was not defined in section 2 of the Sales Tax Act 1990 containing definitions of such key expressions used in the Act. Obviously, retail packing would mean packing meant for the general body of consumers for their consumption. But it should have been defined especially when related expressions of “retail price” and “retailer” stood defined. He urged that the needful is done in this Finance Bill.
Jami explained that similarly at times an amendment in the Act warrants a corresponding amendment in the relevant SRO but the same is also overlooked. For example through Finance Act 2021 in section 159(1)( c) of the Income Tax Ordinance 2001 the words of “ section 100C “ were substituted with the words of “this Ordinance” but the corresponding amendment in SRO.715(I)/2020 has not been made in Rule 40D(2)(a).
Jami further explained that though FBR in its letter dated 19 April 2023 addressed to the FTO has admitted the anomaly and has also enclosed the draft amending SRO yet the same has not been issued in spite of elapse of almost 40 days after admission. He urged that like in developed countries and even India, the FBR should publish the draft of proposed amendments seeking comments from taxpayers and experts.
Copyright Business Recorder, 2023
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