Federal Board of Revenue (FBR) is contemplating to take special measures to ensure the issuance of electronic invoicing to avoid the risk of claiming inadmissible input by the unscrupulous elements; it was learnt here on Friday.
According to sources, this proposal, which was forwarded by the newly established Large Taxpayers Unit (LTU)-II, was under consideration during budget making exercise.
Sources said that LTU-II was of the view that the use of electronic invoicing should be promoted in compliance with chapter XIV of the sales tax Rules 2006 to reduce the risk of claiming inadmissible input tax.
Sources said that FBR was considering evolving a mechanism where invoices issued by the suppliers would be transmitted electronically to the buyers and FBR simultaneously. They further said that sales tax return would also be updated on real time basis and this process would also be helpful for companies which have a large consumer volume.
Moreover, sources said that LTU-II had also emphasized the board to increase the rate of further tax from 1 per cent to 5 per cent. The large revenue generating arm of the FBR in its budget proposal stated that one per cent further tax was imposed in 2013 to incentivise non-compliant manufacturers, wholesalers and retailers to get registration which was increased to 2 per cent through Finance Act 2015.
However, this rate of 2 per cent is so low that they prefer to pay it instead of getting registered, resulting the desired objective is not being achieved. Therefore, the LTU-II has proposed to enhance the rate of further tax to 5 per cent. Consequently, this increase will also enhance registration and tax compliance.
The LTU-II further said that there was no provision to impose penalty if no sales tax was withheld wherever it was necessary. Therefore, it has been suggested the board to make necessary amendment in section 33 of Sales Tax Act 1990 to impose penalty for not withholding sales tax.
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