A large number of the 60,000 sales tax notices issued by Federal Board of Revenue (FBR) regarding the discrepancies in returns, are based on incorrect selection of data, and improper criteria set by tax authorities for cross verification of input/output tax.
This was stated by Senior Vice President Karachi Chamber of Commerce and Industry (KCCI), Muhammad Jawed Bilwani in a letter addressed to FRB Chairman Sohail Ahmed Bilwani said that on receipt of these notices to KCCI members he consulted the sales tax advisor of the chamber, and on review of certain notices it was revealed that these notices had been issued where even no illegality was found.
For instance, under section 7 of the Sales Tax Act, a taxpayer can claim/declare input tax within six months. However notices were issued to both the same buyer and seller asking way input tax was not reflected in buyer's and seller's account on the same month.
Likewise for PTCL charges, FED in sales tax mode is applicable, whereas notices were issued to taxpayers that input tax claimed on PTCL bills were not shown by PTCL on their column of sales tax from which it was very obvious that PTCL has to show their output tax in FED column and consumers declare in the same in sales tax column, which could not be cross matched. Same is the issue of debit and credit note entries, he added.
While appreciating computerisation and automation of sales tax record he emphasised that while doing such an exercise all aspects and possible outcome should be kept in view to avoid undue hassles for the business community.
Bilwani suggested that instead of directly enabling revised return option, taxpayers should be allowed to clarify the minor working problems. Bilwani further suggested that at first stage only notices to those suppliers be issued where no amount of sales tax was declared by them and any claimant has claimed input tax on it. This will definitely be more result-oriented and effective exercise, he opined.