Online Sales Tax return format: KTBA says concerned at recent changes

KARACHI: Karachi Tax Bar Association (KTBA) has raised concerns over recent changes to the online Sales Tax Return format implemented by the Federal Board of Revenue (FBR) in November 2024, highlighting significant operational challenges that are impacting tax compliance procedures.

In a letter addressed to Aisha Farooq, Director General of Withholding Taxes at FBR, KTBA identified two major issues that are creating hurdles in accurate tax declarations.

The primary concern revolves around the removal of the Voluntary Disallowance option for input tax, previously available in Column No. 7 of the Sales Tax Return.

FBR issues updated Sales Tax rules

Under this system, registered persons must now individually select and report reasons for each invoice in Annexure A or Goods Declaration in Annexure B - a process described as particularly cumbersome for businesses handling thousands of transactions.

Another significant issue highlighted is the elimination of the option to disallow additional sales tax paid against minimum value addition at the import stage.

This modification has reportedly created anomalies in tax adjustments and poses compliance challenges for businesses.

To address these concerns, KTBA have proposed two key solutions: either restore Column No. 7 in the Sales Tax Return with evidence attachment options, or introduce a new feature allowing bulk selection of invoices with similar disallowance reasons.

Additionally, it has suggested modifying Annexure-B to include provisions for handling minimum value addition tax paid at the import stage. It argued that these modifications would significantly improve the efficiency of the tax filing process and ensure better compliance with statutory requirements. The FBR has yet to respond to these recommendations.

Copyright Business Recorder, 2025