Sales tax returns: KTBA seeks e-filing deadline extension

KARACHI: Karachi Tax Bar Association (KTBA) has requested the Federal Board of Revenue (FBR) to extend the date of e-filing of sales tax returns, due to challenges from SRO 350(I)/ 2024.

In a letter sent to member IR operations, the KTBA said that following a high-level meeting on August 20, 2024 between KTBA and FBR officials, the urgent calls have been made for system adjustments and filing deadline extensions.

The new regulation, introduced on March 7, 2024, has created a domino effect in the e-filing system. Registered persons are unable to submit their returns unless their suppliers have fully discharged their own tax liabilities and submitted their returns. This interdependency has led to a backlog of un-filed returns and potential loss of input tax carry-forward for many businesses.

Taxpayers report encountering error messages such as “Row 29 cannot be greater than Row 28” when attempting to file, particularly affecting those with export-related refundable claims. As a result, many returns remain in a “draft” state, leaving filers in limbo.

The consequences of these issues are severe. Numerous taxpayers have been unable to file returns for consecutive periods, leading to their status being changed to “non-active” on the IRIS portal. This has triggered additional sales tax charges of 4% under Section 3(1A) of the Sales Tax Act, 1990, further burdening affected businesses.

Therefore, the KTBA has asked for an extension of the e-filing deadline under Section 26AB of the Act along with the implementation of measures to maintain taxpayers’ “Active” status despite filing difficulties. Furthermore, KTBA also stressed upon ensuring initial return submissions are marked as final on IRIS and enabling adjustments to specific sections of the sales tax return form.

Copyright Business Recorder, 2024