ISLAMABAD: The Federal Board of Revenue (FBR) has introduced numerous changes in the sales tax return filing procedure, resulting in a significant slowdown in return submissions across the country.
The board has already extended the deadlines for filing sales tax returns for both February 2025 and March 2025; however, technical issues remain unaddressed.
Arshad Shehzad, a leading Karachi-based sales tax expert, explained that recent updates from the FBR require taxpayers to provide more technical information in an effort to implement a more effective system of checks and controls.
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Unfortunately, this increase in complexity has led to a near halt in sales tax return filings across the country.
One of the initial changes involves reporting an eight-digit H.S. code along with the quantity of goods sold in Annex C of the sales tax return. The purpose of this change is to establish an electronic check and balance system for accurately reporting purchases and sales.
While this initiative aims to combat issues related to fake invoices and reduce tax leakages, the practical challenges of its implementation appear to have been overlooked by the board. Accurately reporting the correct H.S. code requires technical knowledge, making compliance difficult for ordinary taxpayers and businesses.
Additionally, there is growing concern among taxpayers that any mistakes, oversights, or omissions could lead to penalties, generating reluctance and skepticism within the community.
Consequently, policymakers at the FBR need to address the concerns of genuine taxpayers and provide more practical solutions to simplify the compliance process, Arshad Shehzad said.
Furthermore, the FBR has introduced additional annexures related to production and stock data. However, these requirements seem to have been implemented hastily, without thorough consideration of their practical applications.
In these statements, the system automatically retrieves the sales value and subtracts it from the available stock value. However, from an accounting perspective, it should subtract the cost of goods sold to accurately calculate the closing balance. This basic omission can lead to incorrect applications and further contribute to the slowdown in sales tax return filings nationwide.
The FBR policymakers should also reconsider the necessity of requiring monthly stock details from taxpayers. Implementing a quarterly, biannual, or even annual requirement for filing these strategically important statements could ease some of the burden on taxpayers, while still allowing the FBR to achieve its objectives in a more simplified manner, Shehzad added.
Copyright Business Recorder, 2025
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