Punjab Revenue Authority has withdrawn from holding meeting with the Federal Board of Revenue as it is not willing to accommodate PRA's stance with regard to matters pertaining to cross adjustment and reconciliation of Federal and Provincial Sales Tax. The PRA spokesperson said on Wednesday that a delegation from Punjab Revenue Authority (PRA) attended a meeting at Federal Board of Revenue (FBR) Headquarters on Wednesday at the invitation of FBR to finalize cross input tax adjustments.
The meeting came in the backdrop of a previous meeting held between the Federal Finance Minister and provincial delegates held on Monday wherein it had been decided that a meeting would be held with Sindh Revenue Board (SRB) on August 24, 2016 to discuss and decide the parameters for cross-adjustment and reconciliation of the Federal and Provincial Sales Tax. In accordance with MoU dated March 13, 2014, FBR and PRA were periodically required to work out and settle their revenue accounts arising due to cross input tax adjustments.
The spokesperson pointed out that since April 2015, PRA has undertaken several meetings with respect to cross- adjustment and reconciliation of inputs. FBR had previously agreed to pay an amount of Rs 6.28 billion to PRA on account of cross-adjustments till April 2015. Lately, FBR and SRB have been holding negotiations with each other on the issue of cross-adjustments between the two entities. Both have sought to introduce certain parameters including matching of NTN of buyers and suppliers, invoice number, invoice date, GD number, GD date, sales tax amount etc. PRA is of the considered opinion that in the MoU signed by FBR with PRA, any payment from one tax administration to another was to be based on a quarterly statement.
This statement showing the net effect of cross-adjustments was to be worked out from the data from each tax administration showing the "amount of sales tax adjusted" (emphasis added) by persons working under their respective law against goods/services received from persons working under the other law.
There was no mention of any additional parameters. PRAL, which was the custodian of the entire data on behalf of both FBR and PRA, did not introduce any parametric checks in the system either, to block input adjustments, which did not satisfy the parameters. For these reasons, PRA took up the stance that any parameters as being suggested by FBR for reconciliation exercise with PRA could only be introduced through modification in the existing MoU with immediate effect and any previous adjustments could not be subjected to such parameters. "Since the Federal Board of Revenue was not willing to accommodate PRA's stance, the delegation of PRA on the directions of Finance Department, Punjab, withdrew from the meeting in protest", the spokesperson concluded.
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