Digital certificates for ST return e-filers: FBR examining PRAL proposal

The Federal Board of Revenue (FBR) is examining a proposal of the Pakistan Revenue Automation Limited (PRAL) to make it mandatory for the e-filers of sales tax returns to obtain digital certificates from an independent entity to provide maximum security to the electronically filed data by the registered persons.
Sources told Business Recorder here on Monday that the PRAL has strongly supported the proposal of obtaining digital certificates by the registered persons engaged in electronic filing of returns, which would facilitate the taxpayers. It would not only ensure security to the information of the taxpayers filed through the returns electronically, but also the taxpayer cannot deny the contents of the returns due to signing of the digital signatures.
Moreover, digital IDs provide an electronic means of verifying taxpayer's identity. The digital IDs provide a more complete security solution, assuring the identity of all parties involved in a transaction. According to the proposal of the PRAL, which is the IT arm of the FBR, the mandatory use of digital certificates for e-filing of sales tax returns will provide the following benefits:
First, stronger security would be available because the user of the system will require the physical presence of the digital certificate file on his machine. Second, non-repudiation, because in case the taxpayer denies that the contents of the return, as available with FBR, are not what he submitted, then this can be confirmed by the independent entity providing the digital certificate.
It may be noted that digital signatures are already fully implemented on e-FBR portal but on optional basis. They are mandatory even now when e-payments are involved. Therefore, from a technical point of view, PRAL is fully ready for implementation of digital signatures on mandatory basis. "We, therefore, endorse the proposal that digital signatures should be made mandatory for all sales tax returns e-filing. However, since now we have more than 80,000 e-filers of sales tax returns it will be prudent to follow a phased approach in the implementation of this proposal," PRAL said.
Under the phased approach for issuance of digital certificates, in the first month digital signatures should be made mandatory for the top 1500 e-filers by value of the average tax deposited with the return in the last six months. Subsequently, this number can be extended, based on the results of the first month implementation and over a reasonable period of time, say, six months. Hundred percent implementation of the system can be achieved for the population of approximately 80,000 e-filers. The FBR can ramp up or ramp down the expansion plan based upon the ground situation.
The PRAL added: "It is our understanding that the contract for digital signatures between FBR and NIFT is already in place and the rates for various slabs have already been agreed upon. The NIFT's proposal for charging Rs 650 per digital certificate per year, exclusive of excise duty, for the present volumes, therefore, appears reasonable".
It is also proposed that a memorandum should be signed which defines the precise responsibilities of NIFT and the counterpart responsibilities of FBR/PRAL, PRAL added.
When contacted, a tax expert said that the sales tax registered persons must obtain the digital certificates, which would ensure 100 percent security to the information provided by the taxpayers through electronic means.