In lieu of filing of separate sales tax returns due to change of rate of sales tax under section 26 of the Sales Tax Act, the Federal Board of Revenue (FBR) has allowed taxpayers to separately mention the details of sales and purchase in the annexure of the sales tax returns.
The FBR on Tuesday issued instructions to Large Taxpayer Units (LTUs) and Regional Tax Offices (RTOs) on the e-filing of returns under section 26 of the Sales Tax Act, 1990 for the tax period of March 2011. Sources said that the sales tax on certain sectors has been enforced after promulgation of Presidential Ordinance and Statutory Regulatory Orders (SROs) last month. According to sub section 2 of section 26, in case of any change in the rate of sales tax during the month, the taxpayers are required to file separate returns.
The board in lieu of filing separate return has issued instructions to the field formations that the taxpayers are required to mention separate details in annexure appended with sales tax return which is considered as separate return. While commenting on the provisions of separate return and recently issued circular Arshad Shehzad, a leading Karachi-based sales tax expert told this scribe that provision of filing separate return pertains to old aged sales tax regime, where neither the board was equipped with latest technology and e-filing nor the sales tax returns were prescribed in detailed.
He apprehended that most of the business community has already filed their sales tax return or almost completed return filing process and these 11th hour changes/instructions will not serve the purpose of taxpayer's facilitation, which is the main objective of the board. On the other hand, such kind of new changes will cause undue hardship and add confusion in filing of returns. Giving example he informed that board had abolished such condition in the past vide circular 1/2007, which was more appropriate measure. If the Board follows the same procedure and waiver off such condition, it would facilitate the taxpayers liable to file two different sales tax returns due to different tax rates, Shehzad added.
According to the FBR instructions issued to the Chief Commissioners of Large Taxpayer Units (LTUs) and Regional Tax Offices (RTOs) here on Tuesday, under SRO231(1)/2011 of March 15, 2011 there has been change in the rate of sales tax during the tax period March 2011. Under section 26(2) of the Sales Tax Act, 1990, a registered person is required to file a separate return in respect of each portion of tax period, March, 2011, showing the application of different rates or tax.
The FBR has prescribed a new procedure/method to fulfil the provisions of section 26(2)of Sales Tax Act, 1090, for the tax period March-2011. The details and summary information provided by the registered persons in the annexure of sales tax and federal excise returns will be considered separate returns as required under section 26(2) of Sales Tax Act, 1990, if information provided in the Annexure is shown separately with separate rates of Sales Tax/SED in separate line of information in the buyer/supplier wise summary of the relevant annexure," the FBR procedure added.