FBR to Extend National Sales Tax Return Application to AJ&K

After the successful launch of its digitized National Sales Tax Return last month, the Federal Board of Revenue (FBR) has achieved another milestone by signing a Memorandum of Understanding (MoU) with the Central Board of Revenue (CBR), AJ&K to extend its application to the territorial jurisdiction of AJ&K.

Dr. Ashfaq Ahmad Tunio, Member (IT), FBR, and Shakeel Qadir Khan, Chief Secretary/Chairman CBR (AJ&K), signed the MoU at FBR Headquarters on Friday. The ceremony was witnessed by Chairman FBR/Secretary Revenue Division, Dr. Muhammad Ashfaq Ahmed, and Commissioner Inland Revenue (AJ&K), Zafar Mahmood Khan.

In his welcome note, Chairman FBR, Dr. Ashfaq Ahmed congratulated the FBR team for successfully launching the National Sales Tax Return in AJ&K. He also thanked Chairman CBR (AJ&K) for the signing of a historic MoU which promised a paradigm shift in the way sales tax returns were filed by taxpayers of AJ&K.

He termed the MoU signing a watershed initiative and a big leap forward to maximize automation and facilitation to taxpayers who would be able to electronically file their returns for sales tax and FED.

In his remarks, Shakil Qadir Khan expressed gratitude to FBR for integrating the AJ&K economy with the Federation of Pakistan. This will usher in a new era for ensuring ease of doing business for the residents of AJ&K as well as the 1.5 million Kashmiri diaspora settled in the UK, Europe, and other developed countries, he concluded.

It is pertinent to share that there are about 63,500 registered taxpayers in AJ&K, out of which 1,002 are also registered for sales tax and 40 are registered with WeBOC. The National Sales Tax Return will facilitate all those taxpayers who are engaged in sales taxable activities.

The need for a National Sales Tax Return was felt long ago. Yet recently, FBR signed agreements with the provincial authorities to work together and prepare this return for the facilitation of taxpayers. Previously, a taxpayer had to get registered and file sales tax returns in each of the areas where he was supplying goods or services.

Thus, someone operating in all four provinces and AJ&K had to file six different returns each month to the different revenue authorities. This caused great hardship and increased compliance costs for the taxpayers. Likewise, it was also a very tedious and cumbersome task which often led to errors and disputes. The National Sales Tax Return has eliminated many of these issues.

The salient features of the National Sales Tax Return include entering the sales data by the taxpayers only once, instead of multiple times. Furthermore, the system acts as a single repository for all domestic transactions and invoice management. Similarly, the system automatically apportions input tax, prepares the return, and works out the tax payable to each of the relevant authorities.

This automation eliminates repeated tedious data entry, manual calculations, and errors. The new system is based on the IRIS platform, which already has many built-in functionalities. For example, notices, assessment orders, refunds, exemptions, and legal management systems are already incorporated. The IRIS platform has proved to be very robust over time and is being further improved. The new system has linkages with POS transactions as well as Track & Trace system.

The benefits of National Sales Tax Return include simplification of tax filing procedures, thus, helping taxpayers to save time, effort and facilitating taxpayers to promote ease of doing business and reducing compliance costs. It minimizes data entry and addresses the common issue of data and calculation errors. It is easily manageable and officers of all the revenue authorities will be able to make a better-informed decision regarding tax matters of the taxpayers. Moreover, It will also enable tax collectors to maximize revenue potential and tax compliance without audits. It will encourage the harmonization of tax procedures, definitions, and principles between the federal government and the provinces.

Senior officers of FBR including Member PR, Shahnaz Maqbool, Member (IR Policy), Afaque Ahmed Qureshi, Chief PR/Director Media, Asad Tahir Jappa, Chief (Reforms), Khalid Jameel, and officers of CBR(AJ & K) were also present in the ceremony.