The Federal Board of Revenue (FBR) has decided to use Computerised Risk-Based Evaluation of Sales Tax (CREST) system to ensure filing of withholding statements by sales tax registered persons and enforce return filing by non-filers of income tax and sales tax returns.
Sources told Business Recorder here on Monday that in one of the decisions taken in last conference of Chief Commissioners, it has been decided to cross match the sales tax purchases with the income tax statements filed by sales tax registered persons. Due to amendment in Finance Act 2013 in Section 153, now every sales tax registered person has been declared withholding agent.
It has been found in the CREST that the sales tax registered persons, showing purchases in their sales tax returns are not filing withholding statements. Now the Board has instructed to ascertain how much tax they have withheld and does it matches the purchases in the sales tax returns. By enforcing this measure, Regional Tax Office (RTO) Lahore collected Rs 1100 million withholding tax during first quarter of 2013-14. Now it has been decided to extend this electronic application of CREST for all Large Taxpayer Units (LTUs) and Regional Tax Offices (RTOs).
Through enforcement of filing of withholding statements by sales tax registered persons, the Board expects to collect around Rs 10 billion in the second quarter of 2013-14. It has also been decided that the people who are not filing the income tax and sales tax returns, notices should be send to them enforcing to file returns. These notices would initially be sent through CREST electronically and in case of default cases would be decided through formal orders. In case of non-compliance, formal order would be issued against such defaulters.
It is worth mentioning that the FBR's computerised system for cross-matching and analysis of sales tax returns, known as CREST (Computerised Risk Evaluation for Sales Tax) recently helped in the detection and recovery of evaded tax in the textile sector. The system is being enhanced and rolled-out to other sectors. In order to avoid any legal challenge CREST has been defined in Section 2(5AC) of the Sales Tax Act, 1990. Purchases in respect of which any discrepancy is indicated by CREST, or where the input tax is not verifiable in the supply chain, have been made ineligible for input tax adjustment by insertion of a new clause (caa) in section 8(1) of the Sales Tax Act, 1990. The term 'supply chain' has also been defined in section 2(33A) of the Act.
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