The Federal Board of Revenue (FBR) has directed Chief Commissioners Inland Revenue (IR) to allow input tax adjustment to registered persons on supply of sugar to unregistered wholesalers and dealers. Sources told Business Recorder here on Thursday that the FBR has issued instructions to the field formations, ie, Chief Commissioners IR and Commissioners IR for implementation of the budgetary measure introduced in budget 2018-19.
Under SRO.488(1)/2004, dated 12.06.2004, a registered person is not entitled for adjustment of input tax in respect of goods listed in the said SRO if they are supplied to unregistered persons. Clause (ba) was inserted in SRO 488(1)/2004, dated 12.06.2004 through SRO 315(1)/2005, dated 15.04.2005 where under no input tax adjustment was available to a registered person in respect of sugar supplied to unregistered wholesalers and dealers. The SRO 315(I)2005, dated 15.04.2005, however, was held in abeyance by the Board immediately after its issuance, FBR said.
The FBR added that the amendments have been made in SRO 488(I)/2004, dated 12.06.2004 vide SRO 825(I)/2018, dated 29.06.2018. Clause (ba) has been omitted from SRO 488(I)/2004, dated 12.06.2004 and shall be deemed always to have been so made; meaning thereby that input tax adjustment shall be admissible to a registered person in respect of supply of sugar to unregistered wholesalers and dealers. However, this omission is subject to the condition that no refund or adjustment of sales tax recovered under omitted clause (ba) shall be admissible.