The Securities and Exchange Commission of Pakistan (SECP) has proposed the Federal Board of Revenue (FBR) to exempt the listed companies from procedure for adjustment of input tax against the output tax and allow 100 percent of adjustment/refund of input tax in the same month.
The SECP has termed this budget proposal as one of the most important measure to encourage listing of corporate units. The FBR has to allow 100 percent Input Tax Adjustment to listed Companies through amendment in the section-8B of Sales Tax Act, 1990.
The SECP said that the Finance Act 2007 introduced a new scheme and procedure for adjustment or refund of input tax. In relation to a tax period (ie a month), a registered person shall not be allowed to adjust or refund tax in excess of 90 percent of the output tax for that tax period (ie month). In other words at least 10 percent of the output tax for that month must be paid by the registered person.
For incentive for the corporate to get listed, it is proposed to exempt the listed companies from such procedure for adjustment of input tax against the output tax and allow 100 percent of adjustment/refund of input tax in the same month. This will also be a relief in respect of the cash flow management of the companies.
The proposed amendment in the section-8B of Sales Tax Act, 1990 says, "1) Notwithstanding anything contained in this Act, in relation to a tax period, a registered person (other than a company listed on any recognised stock exchange of the Pakistan) shall not be allowed to adjust input tax in excess of 90 percent of the output tax for that tax period."
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