Federal Tax Ombudsman (FTO) has detected errors in the sales tax and federal excise return forms resulting in inaccurate calculation of the sales tax refunds/adjustments.
The FTO order issued on Friday directed the Member Information Technology and Pakistan Revenue Automation Limited (PRAL) to make necessary amendments in sales tax return form and add a calculation field for difference between paid amount and payable amount as “excess payment” in last empty column of return. The excess payment if any, shall be available for adjustment in subsequent tax period.
The complaint was filed in terms of Section 10(1) of the Federal Tax Ombudsman Ordinance, 2000 (FTO Ordinance) against non-provision in the sales tax return to take care of the excess amount of sales tax paid inadvertently.
Briefly, as per complainant, it has been observed that if any sales tax payment is paid in excess of the liability determined in the sales tax return, the excess amount is not shown as a refundable amount in the same return (similar to what happens in the income tax return). Similarly, the excess payment is not shown as an adjustment in the subsequent period. Furthermore, there is no mechanism to correct the computerized payment receipt (CPR) amount if any excess amount is paid.
The system automatically calculates tax payment liabilities in part (c) of return after adjustment of available credit in part (a) as per rules and regulations. Present return form provides breakup of input tax credit in the form of adjustment against output tax liability, excess amount available for carry forward against unconsumed stocks and credit part available for refund against export/zero rate consumption.
However, as per the complainant there are instances of inadvertent excess payment when a taxpayer makes payment in bank through the CPR in a process to settle the tax liability calculated by the automated system but meanwhile the tax liability in system is reduced either due to extra credit availability on account of compliance by his suppliers or buyers (ATL inclusion).
Whereas, the return form will not show this excess payment neither the CPR amount paid can be changed or sub divided. Hence this amount will not be available to adjust or claim. Thus, the taxpayer will be helpless even to prove and claim refund under section 66 as overpaid inadvertence or error or misconstruction case. FBR’s failure to develop a system which should facilitate the common taxpayers in making tax compliance is tantamount to maladministration, FTO order said.
