Pakistan Tax Bar Association (PTBA) has requested the Chairman Federal Board of Revenue (FBR) to amend SRO No.350(I)/2024 for the corporate sector as present SRO will jeopardize the economic activity and impact tax collection.
In a letter to FBR Chairman on Thursday, PTBA said it acknowledges and understands the importance of digitalization of taxation system and also appreciates the efforts put in by FBR for the improvement of system and its smooth transition to digitalization. In this background, the bar has reviewed SRO No. 350(i)/2024 issued on March 07, 2024.
In this connection, the bar is of the view that few fundamentals have not been considered while issuing the said SRO and feels that if these will not be addressed, it will jeopardize the economic activity which will ultimately impact collection of the tax revenue.
Therefore, the bar highlighted concerns/observations for perusal and consideration so that prompt and appropriate action may be taken to make this effort meaningful and effective.
(i) Regarding requirement for filing of Balance Sheet in case of an Individual, Association of persons, and a company having only one shareholder or member other than the manufacturer indicating the amount of business capital with corresponding assets in the batik within 30 days from the date of requirements.
PTBA said that currently, all taxpayers have to file balance sheet along with their income tax, returns, therefore, assessing officer can easily access the condition from the balance sheet from on its own and if it is not available with the return then he may issue the electronic notice to file the balance sheet within the time stipulated above.
(ii) As per rule 18, the taxpayer has to take permission from the Commissioner through IRIS whose turnover is more than five times of the Capital. In this respect, as per the normal practice of the businesses that there are different mode of business activities which includes but no limited to credit facilities from the parties, bank loans, advance received from suppliers, personal loans etc. these modes are vary from business to business and are integral part of the entire business activity which may be considered while imposing the bar related to turnover of the business.
Therefore, this rule may need to be amended and if the Balance Sheet reflects any of the reason mention above for the increase in turnover, the same may be acknowledged and accepted by the tax officer and the taxpayer may not be penalized for the increase of the business activity which culminate into high turnover but it also increases the incidence of tax.
(iii) As per new proviso added in rule (30) in sub-rule (3) that the credit note under this sub-rule shall only be issued with the prior approval of the Commissioner, in this respect as the sales tax filing returns date has been specified in the law, therefore, it is suggested that the Commissioner may be issued the approval for the issuance of the credit note within 7 days from the date of the request.
In view of the suggestions, PTBA said FBR Chairman should make appropriate amendments in the said SRO to enable compliant taxpayers to fully abide with the provision of the said amendment and to move forward in the implementation process smoothly and hassle free.