The Federal Board of Revenue has decided to remove ambiguities in the Sales Tax Act, 1990 for specifying a clear procedure on determination of sales tax liability and filing of returns. Sources told Business Recorder on Thursday that there are certain provisions in the Act, which are clashing with each other.
Some collectors have pointed out conflicting language of section 7 and section 26 of the Act. The Board has directed the Sales Tax Budget Wing to examine these sections to remove anomaly regarding issuance of revised sales tax returns.
One of the major anomalies related to provisions dealing in filing of sales tax returns. The section 7 of the Act deals with the determination of tax liability and section 26 covers the filing of sales tax returns. Sources said sales tax returns have to be filed under section 26 of the Act and legally these filing are not covered under section 7. Similarly, the FBR has empowered the sales tax officials under section 26 to devise and amend the returns.
Collectors are facing problems in dealing with the return-related issues while determining the sales tax liability of taxpayers under section 7 of the Act. It is not clear whether the mode and manner of payment of sales tax submitted with the returns is covered under section 7 or section 26 of the Sales Tax Act.
The board had also issued standing orders to the collectors to specify section 26 while issuance of orders pertaining to returns. In this regard, the FBR will amend the Sales Tax Act to streamline both the sections of the Act to facilitate taxpayers.
According to section 26, taxpayer may adjust input tax paid on the purchases in the immediate 12 preceding tax periods from the output tax subject to the condition that the taxpayer specifies the reasons for such delayed input tax adjustment in the revised sales tax return for such period or in the return for the immediately succeeding tax period.
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