The corporate sector, including private/public limited companies, is bound legally to disclose their books of accounts to the sales tax officials for ascertaining their correct tax liabilities from new fiscal (2006-07).
Official sources told Business Recorder on Wednesday that a registered person is required to maintain the record pertaining to his purchases and supplies made during a tax period under section 22 of the Sales Tax Act, 1990.
Although majority of them, particularly the private/public limited companies, body corporate, LOB, AOP etc do maintain the "double entry accounts", yet they do not allow access to the sales tax officer to such records owing to the restriction imposed by the law.
The section 22 of the Sales Tax Act has been amended through the Finance Bill to incorporate 'Double Entry Sales Tax Accounts' in the list of records, required to be maintained by a registered person, thereunder. Experts say that the government has empowered the sales tax officials to access the account books of the registered persons.
Previously, only basic documents like purchase/sale registers (summary of purchase and sale) were the prescribed record under the Sales Tax Act. Now, section 22 has been amended so that the taxpayers should maintain the 'double entry sales tax accounts' and the department would be able to get more information about the business transactions made by the registered persons. Initially, the decision would be applicable to corporate sector, the sources maintained.
The experts added that it would be difficult for the small businessmen to maintain double entry books of accounts as compared to multinational companies.