Incorrect declarations: FBR restricts input adjustment of wholesalers, dealers

ISLAMABAD: The Federal Board of Revenue (FBR) has restricted input adjustment of wholesalers, dealers and distributors to the extent of HS codes of the items, which they are actually purchasing from April 1, 2022.

The FBR has investigated that the importers, wholesalers, and distributors who are engaged in the business of buying and selling of same state of goods are fraudulently declaring sales of goods irrespective of their business purchases in violation of provisions of law. The FBR has issued a Sales Tax General Order (STGO) 13, here on Friday.

The Sales Tax Act, 1990 mandates a taxpayer registered with the FBR to correctly make declaration of purchases and supplies in the monthly sales tax return as filed under section 26 of the Sales Tax Act, 1990.

FBR assures retailers: Issue of input tax adjustment to be resolved soon

This essentially being a self-assessment based system warrants high standards of responsibility and integrity on part of the GST filers.

However, the analysis of the data available in the system has led to conclude that the facilities/benefits provided through automated sales tax return are being misused by the importers, wholesalers, distributors who are engaged in business of buying and selling of same state of goods but are fraudulently declaring sales of goods irrespective of their business purchases in violation of provisions of law.

In order to ensure certainty, transparency across-the-board, it has been decided that sales of goods by importers wholesalers, dealers and distributors under HS code as declared in Annex-C of the sales tax return shall be allowed on the basis of goods under the said HS code as declared in Annex-A and Annex-B of sales tax return by these taxpayers. The board has placed restriction of input adjustment w.e.f. April 1, 2022 to electronically allow input only against HS code of goods sold.

All other input tax may automatically be disallowed by the system from next sales tax return.

Copyright Business Recorder, 2022