Tax system digitalisation: PTBA says concerned at certain provisions of new SRO

KARACHI: The Pakistan Tax Bar Association (PTBA) has raised concerns over certain provisions of the recently issued SRO 350/(I)/2024, which aims to digitalize the taxation system.

While acknowledging the importance of digitalization and appreciating the Federal Board of Revenue’s efforts, the Bar has highlighted several issues that, if not addressed, could jeopardize economic activity and ultimately impact tax revenue collection.

In a letter sent to the chairman of FBR, the PTBA has suggested amendments to the SRO to enable compliant taxpayers to adhere to the provisions smoothly and hassle-free.

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One of the key concerns raised by the Bar pertains to the requirement for individuals, associations of persons, and companies with a single shareholder or member (other than manufacturers) to file a Balance Sheet indicating their business capital and corresponding assets in the bank within 30 days.

The PTBA also urged that since taxpayers already file Balance Sheets along with their income tax returns, the assessing officer should access the condition from the existing Balance Sheet, and if it is not available, issue an electronic notice to file the Balance Sheet within the stipulated time.

Another point of contention is Rule 18, which requires taxpayers whose turnover exceeds five times their capital to obtain permission from the Commissioner through IRIS. The Bar argued that businesses often rely on various modes of financing, such as credit facilities, bank loans, advances from suppliers, and personal loans, which are integral to their operations and can lead to higher turnover relative to capital. They have suggested amending this rule to acknowledge and accept these reasons for increased turnover, ensuring that taxpayers are not penalized for legitimate business growth.

Furthermore, the Bar has raised concerns over the new proviso added in Rule 30(3), which mandates prior approval from the Commissioner for issuing credit notes. Considering the specified dates for filing sales tax returns, the Bar has proposed that the Commissioner issue the approval for issuing credit notes within seven days from the date of the request.

Keeping this in view, the PTBA has requested the board to make appropriate amendments to the SRO, allowing compliant taxpayers to fully adhere to the provisions and ensure a smooth implementation of the digitalization process.

Copyright Business Recorder, 2024