Taxpayers are facing hardship in adjusting Federal Excise Duty (FED) and Special Excise Duty (SED) admissible under section VI of Sales Tax Act 1990, owing to separate and improperly defined laws.
Sources told Business Recorder on Saturday that FED is adjustable only if the registered person holds a valid proof that he has paid the price of goods purchased by him, including FED, and received the price of goods sold by him, including FED, through banking channels.
They said that the condition of payment and receipt is creating a lot of problems for the taxpayers in adjusting FED. However, SED is adjustable on payment basis.
They said that both FED and SED should be made adjustable on accrual basis as per section VII of Sales Tax Act 1990. Furthermore, they said, duty adjustment should not be made subject to receipt of sale proceeds and related duty.
Sources said that FED, paid on excisable goods which are used directly as input goods for the manufacture of dutiable goods, is adjustable against the final liability.
On the other hand, SED, paid on industrial inputs, is adjustable against SED chargeable on goods manufactured therefrom. They said that the term industrial input has not been specified under the law, and is causing immense losses to the national kitty. They said that in the absence of any definition of industrial inputs, taxpayers are construing everything consumed for the business activity like spare parts, printing, stores, equipment, etc, to adjust their inputs, providing huge losses to national exchequer. They urged the concerned authorities to define it in the law, saying that the term industrial inputs should be defined in the law to avoid litigation on this account.