ISLAMABAD: The Federal Board of Revenue (FBR) has issued a clarification on the sales tax return filing problems being faced by business community under the controversial SRO 350(I)/ 2024.

Through this clarification, the FBR has addressed four key issues of sales tax return filing under SRO 350(me) / 2024.

The FRB has resolved these “issues arising vis-à-vis compliance of SRO 350(I)/ 2024 – Intimation Regarding”.

Under this clarification, the FBR has resolved fours issues; i.e., (i) Auto-deletion of purchase invoices; (ii) non-filing of returns by SNGPL/ SSGCL; (iii); non-submission of provisional sales tax return and (iv); return filing by distributors or wholesalers or retailers.

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Business community has objected that the new provision inserted under rule 18(3) of the Rules through SRO 350 of 2024 dated 07 March 2024.

After the amendment, the sales tax return submitted by a buyer would be treated as a provisional return until the respective seller also files his return for the same tax period up to last date of the month.

Where the seller fails to, the IRIS computes the sales tax liability of the buyer after deleting those invoices from Annexure “A” issued by the non filer supplier. It has been observed that the FBR portal restricts any adjustment in any of the annexure including that in the Annexure A & F to the provisional return.

After the end of month, the un-submitted purchase invoices are automatically removed from Annex-A. Consequently the value of purchases and its input tax adjustment are automatically reduced in Annexure F, as well, it added.

The FBR’s clarification said that refer to UO Note of Information Technology Wing, dated July 8, 2024 on the subject. The issues raised have been examined, which are addressed.

As for the sales tax return getting locked after the last day of the month in which the due date of filing of return falls, and submission is barred unless the re-computed sales tax liability is paid, after auto-deletion of the purchase invoices and input tax on account of failure to file return by the respective suppliers, it is submitted that it is not the problem arising from the SRO 350.(I)/ 2024 but on the contrary is a solution to check fake input tax creation and transmission, intended to be stopped by the said SRO, FBR said.

If the system is auto-deleting the invoices with the corresponding input tax, then it is working correctly. Auto-deletion and re-computed liability shall remain in place even if supplier files return after the last day of the month, FBR clarified.

Resolving the second major issue, the FBR said that as for the returns held provisional for non-filing of returns by SNGPL and SSGCL with respect to invoices issued by them for the same month, it is submitted that FBR Operations Wing on June 4, 2024 relaxed the second proviso to rule 18 (3) of the Sales Tax Rules, 2006 introduced vide said SRO so that returns should not be held provisional merely because of invoices of SNGPL and SSGCL for non-filing of their returns for the same month. It is further requested that this relaxation maybe treated to have been made retrospectively.

The FBR has further clarified that as for the non-submission of provisional sales tax return due to negative figure in Annexure-F resulting from auto-deletion of purchase invoices and input tax, it is submitted that as the consumption in Annexure-F is filled out manually by the registered person; therefore, it is requested that the Annexure-F may be held “editable” for filling out changed figure of consumption, after auto-deletion of purchase invoices and the input tax.

Addressing the last issue, the FBR has concluded as for non-submission of return by distributors or wholesalers or retailers, dealing with third Schedule items, it is requested that registered persons’ return for a tax period, claiming input tax on invoices issued by a manufacturer of third schedule items may not be held provisional merely because such manufacturer has not filed return for the same tax period in relaxation of the second proviso to rule 18 (1) of the STR, 2006.

However, condition of the said proviso shall remain applicable in respect of invoices by registered persons other than the said manufacturer, FBR added.

Copyright Business Recorder, 2024