Taxpayers have raised several questions for removing discrepancies in sales and purchase data in their sales tax returns filed electronically during 2008-09. The representatives and tax lawyers of taxpayers and corporate entities told Business Recorder on Friday that registered units have received intimation letters through FBR electronic system for correction of data.
It has been found that e-mail does not provide any mechanism to electronically edit the data for removing discrepancies. On further analysis it was found that it has not been indicated as to who shall check whether the action being taken by the taxpayer is backed with supporting data. In certain cases, taxpayers have to hire consultant to handle their electronic filing of returns. A cursory look at "UK HMC&R web site" will indicate that new IT applications are available for at least two years before it is actually launched.
Another analyst said that the Board or Pakistan Revenue Automation Limited (PRAL) which has done this exercise should have taken certain steps for proper implementation of the scheme. Firstly, it should be analysed that the discrepancy is not due to wrong feeding or capturing of data. Secondly, the sectors exempted from invoice summary statement should be excluded from these notices. Thirdly, there should be some tutorial in place to rectify errors by the taxpayers. Fourthly, it seemed that the Board has been involved in operational issues, instead of collectorates.
Tax experts claimed that 60,000 discrepancies report seemed to have been detected without any sample studies. It is expected that FBR new management shall evaluate the IT initiatives and will further ensure that these are launched after proper testing of systems. In certain cases, taxpayers opined that when they contacted the local office of sales tax they were unable to remove those discrepancies.
One of the experts questioned when the system has found fictitious purchases and sales, why such person should be allowed to file another return. Interestingly, the FBR has not benefited from the sales and purchases reconciliation's system (CREST). The system has been found fit for launching in all the RTOs/LTUs. However, Sales Tax Department has not yet taken any step to implement this system, sources added.
When contacted, FBR officials said that taxpayers have not been asked to edit returns, but they have been allowed to file revised returns, electronically, for which they should not seek further approval of the collectors. These were only intimation messages and revised returns have to be submitted along with the amended annexures. The sample testing was dully done by trial of a few cases.
During return analysis, it was found that sometimes buyers had provided wrong information. The cross-matching of data also found that names of buyers and sellers were not available in a few cases. In other cases, sellers had submitted wrong data, which needed to be verified. In other cases, suppliers disclosed that they had not sold items to the declared persons.
It was further found that intimation letters issued through FBR electronic system for correction of discrepancies would act as an effective deterrent for compliance by the taxpayers in the supply chain. The FBR is legally empowered to suspend the sales tax registration in case of fictitious data, but the exercise would help in monitoring of the supply chain. The FBR is taking necessary steps in view of detection's of discrepancies for improving compliance by the taxpayers, they added.