Karachi Tax Bar Association (KTBA) has expressed resentment over the bar imposed on newly-uploaded sales tax returns for claiming input tax on purchases during preceding six months. In a letter sent to the chairman FBR, KTBA cited registered persons, who had not claimed input tax within relevant tax period, had right to claim such input tax in the return for any of the succeeding six tax periods. However, the newly-uploaded sales tax return is not allowing input tax on purchases which are of dated preceding months.
It said although section 10(1) of the Sales Tax Act 1990 allowed excess input tax against output tax on supplies (other than exports and zero rated supplies) to carry forward to the next tax period and was treated as input tax for that period, newly uploaded sales tax return is not permitting to do the same, creating problems for the taxpayers.
KTBA termed the restriction imposed through web-portal not to allow input tax on services provided by persons who are not registered with FBR as unjust and against the spirit of memorandum of understanding signed between the FBR and provincial tax authorities. In addition, the rate of sales tax on services rendered in Sindh has been reduced from 16 percent to 15 percent from July 1, 2014. However, this sales tax return is still showing old rate of sales tax - 16 percent.
Consequently, it urged the board to allow input tax on services which are acquired from those service providers who are registered with provincial sales tax authorities but not with the FBR. It said input tax adjustment in respect of sales tax paid through Bill of Additional Duties (BOAD) related to consignments cleared through one customs and in some cases manual entries is neither being automatically uploaded in the sales tax return not these can be entered manually by the taxpayers. Moreover, KTBA said such restriction is creating problems not only for taxpayers but also the FBR which is processing refund claims.
Keeping these problems in view, KTBA has requested the board to issue necessary directions to the relevant authorities to resolve the issue besides extending the date of filing sales tax return for July 2014 by 15 days from the date of resolution of above issues.