KARACHI: Exporters claiming input tax adjustment against sales tax on services deducted by the Sindh Revenue Board (SRB) are facing hardships in filing their monthly sales tax returns with the Federal Board of Revenue (FBR).Under the new NFC award and 18th Amendment, sales tax on services had been put under the domain of provinces. Sindh began to collect sales tax on services from the current fiscal year while other federating units have left the job with the FBR.
While the registered persons have to file their sales tax returns every month, exporters have to claim refunds against input tax invoices of suppliers or services received in sales tax returns.
However, the FBR has started rejecting all such sales tax returns wherein exporters have submitted claims against input tax on services which are now being collected by the provincial government. Dawn
Muzzamil Hussain, former chairman, Pakistan Towel Manufacturers Association (TMA), told that the FBR had issued notices to exporters who have submitted their sales tax returns claiming input tax against services provided by freight forwarders.
Though such claims, he said, are very nominal, these have to be adjusted to meet the legal requirement of filing of returns under the Sales Tax Act 1990.
The FBR pointed out that online verification of tax profile through the web portal of an exporter disclosed refund or input tax adjustment claims, but it was not in the supplier or service providers' returns, therefore, the claim was declared inadmissible.
The FBR directed the taxpayer to clarify discrepancies in sales tax returns along with supportive documents in terms of Section 7, 8, 23, 26 and 73 of the Sales Tax Act, 1990.
In case a taxpayer fails to convince the FBR with regard to adjustment against input tax, it would be presumed that the claim had been wrongly made and will not be admissible under the provisions of the Sales Tax Act, 1990 and Rules, the FBR notice maintained.
The FBR warned of legal action against such taxpayers, viz-a-viz recovery of sales tax dues, levy of default surcharge and penalty.
Muzzamil Hussain said that to verify such petty claims through documents to meet the sales tax returns legal requirements is a sheer wastage of time and exporters could not afford wastage of time on issues not created by them.
He further said that it was next to impossible to present all books of account to FBR's field officers for audit and verification purposes and also prepare bank accounts and other details of accounts just to remove small discrepancy not created by an exporter.
Exporters claiming input tax adjustment against sales tax on services deducted by the Sindh Revenue Board (SRB) are facing hardships.—File Photo.