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ISLAMABAD: Provinces will take up the issue of the delay in the implementation of the single sales tax return system by the Federal Board of Revenue (FBR) at the forum of the National Tax Council (NTC).

Sources told Business Recorder Saturday that it was decided in the NTC that the project of National Sales Tax Return would first be implemented in Punjab. After Punjab, it would be implemented in Sindh and other provinces.

So far, the FBR and the Pakistan Revenue Automation Limited (PRAL) have not implemented the said project in Punjab in the first phase.

Moreover, the deficiencies in the execution of the single sales tax return project have not been removed despite repeated requests from the provinces. Till now Punjab has not implemented the said national return for sales tax registered taxpayers as per the decision of the NTC.

The provincial revenue authorities/boards would discuss the critical issue of the National Sales Tax Return in the next meeting of the NTC.

The importance of a single return is evident from the fact that the provinces would have access to the data of taxpayers of other providers for cross-matching of information, building a database of service providers on a national level and checking tax frauds.

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The provinces are very keen to implement the said project due to the benefits associated with it in terms of data and information about the taxpayers.

The NTC had given the deadline of August 31, 2020 for the formal launching of a single sales tax return system for the taxpayers registered with the FBR and provincial revenue authorities.

According to the sources, the provincial revenue authorities and boards have continued to request to their taxpayers/service providers to file provincial sales tax returns. So far, the FBR has not fully implemented the National Sales Tax Return.

On January 7, 2022, former finance minister Shaukat Tarin launched the National Sales Tax Return for all federal and provincial sales taxpayers with the resolve that it would promote standardisation of taxability and tax rates and automatic input credit and refunds.

The FBR claimed that the launch of National Sales Tax Return will minimise data entry, eliminate fake/flying invoicing and will encourage harmonisation of tax procedures, definitions, and principles between the federal government and the provinces.

Taxpayers were required to file separate sales tax returns every month to each of the different collecting authorities where they conducted business, which was causing them hardship and increased compliance costs.

However, the messages of the provincial revenue authorities and boards to the service providers operating in their respective jurisdictions indicate that the FBR has yet not been able to enforce the said single return.

According to a message of the Sindh Revenue Board (SRB) to the taxpayers, the FBR has developed a National Sales Tax Return which is in the process of implementation. As agreed by the FBR, this return is only applicable to the FBR registered persons at this stage. The FBR is in the process of consultation with the provinces for an extension of the National Sales Tax Return to the provinces.

In view of the above, in order to avoid any problem, all persons registered with the SRB have been requested to continue filing their Sindh sales tax returns in the form SST-03 on the SRB portal in accordance with the provisions of the Sindh Sales Tax on Services Act, 2011, and the rules made thereunder.

The SRB said that it will advise SRB-registered persons when Single National Sales tax Return is fully developed by FBR/ PRAL in consultation with the provinces and after proper user acceptance tests are carried out.

Any departure from the above advice may entail contravention proceedings by officers of SRB for non-filing of the prescribed return with SRB, which may lead to the imposition of penalty and other related consequences, the SRB added.

According to the Punjab Revenue Authority (PRA)’s message to the taxpayers, the FBR has developed a National Sales Tax Return which is in the process of implementation. As agreed by the FBR, this return is only applicable to the FBR registered persons at this stage.

The FBR is in the process of consultation with the provinces for an extension of the National Sales Tax Return to the provinces.

In view of the above, in order to avoid any problem, all persons registered with PRA are requested to continue filing their Punjab sales tax returns in the form on the PRA portal in accordance with the provisions of the Punjab Sales Tax on Services Act, 2012, and the rules made thereunder.

The PRA said that it will advise PRA-registered persons when Single National Sales Tax Return is fully developed by FBR/PRAL in consultation with the provinces and after proper user acceptance tests are carried out.

Any departure from the above advice may entail contravention proceedings by officers of PRA for non-filing of the prescribed return with PRA, which may lead to the imposition of a penalty and other related consequences, it added.

Copyright Business Recorder, 2023

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