The Fertilizer Manufacturers of Pakistan Advisory Council (FMPAC), in a letter to the Federal Board of Revenue (FBR) Chairman, has shown concerns over show-cause notices issued by FBR to the industry players for disallowance of input tax for sales to unregistered persons.
According to FMPAC Executive Director Brig Sher Shah Malik (Retd), post promulgation of the Tax Laws (Second Amendment) Ordinance 2019, input GST was disallowed on sales made to unregistered persons exceeding Rs. 10 million in a month and Rs. 100 million in a financial year, adding significant exposure to the fertilizer industry.
After due deliberation, FBR issued a notification (SRO 1337) in December 2020, whereby exemption would be granted, subject to the provision of dealers’ information, including bank accounts to FBR.
The industry has submitted all information pertaining to the dealers except for the dealers whose bank accounts are terminated or are one-off customers. During various meetings, the industry was given an understanding about the exemption being granted in this case after compliance with SRO 1337.
Brig Shah said that it is very disturbing that companies have started receiving show-cause notices for disallowance of input tax for sales to unregistered persons despite the submission of the aforementioned information and a favourable report from the concerned field formations.
FMPAC has requested the FBR chairman to educate the field formations on the grant of exemption from input tax inadmissibility and expenditure disallowance on sales to unregistered dealers whose information has been furnished in compliance with the SRO. FMPAC has also requested to withdraw the notices.
The letter added that the fertilizer industry appreciates the efforts of FBR towards documentation of the economy and ease of doing business.
