Modification in e-filing: five zero-rated sectors taxpayers facing problem

The registered taxpayers of the five zero-rated sectors are facing practical problems in filing of sales tax returns due to modification in electronic filing of returns for these sectors under SRO283(I)2011. Tax experts told Business Recorder here on Wednesday that the registered taxpayers of the zero-rated sectors are facing problems in filing of sales tax returns, electronically due to omission for adjustment provision of admissible input tax under SRO283(I)2011.
The complaints in filing sales tax return are related to adjustment of admissible input tax from reduced amount of output tax received from certain taxpayers. They said taxpayers had filed sales tax return of last month smoothly and did not face any problem in adjustment of their admissible amount of input tax against liability of output tax, therefore it seems that FBR this month (June) has made some modification in electronic filing of sales tax return and omit provision for adjustment of admissible input tax from reduced amount of output tax. The modification has created uncertainty and confusion among taxpayers of these sectors.
When contacted, Arshad Shehzad, a leading Karachi-based tax expert explained that the board in consultation with the trade and industry has worked out modalities to impose sales tax on domestic consumption of five exports oriented sectors vide notification 283(I)/2011 having reduce rates of 6% and 4% upon sales to unregistered sector by the supply chain.
The miscellaneous condition 'ii' of the said SRO disallow adjustment of input tax against liability of 6% or 4%. However, later on trade and industry has take up the matter with the board to clarify, whether the intention of the legislation is to disallow the corresponding input tax pertains against supply of 6% or 4% or other admissible input tax is also not adjustable against this liability.
The board vide their clarification dated 11th April 2011 para II, has categorically clarified that input only to proportionate to zero rated supplies is admissible and refund against reduced rate supplies are not admissible, however where the tax amounts received on 6% or 4% rates fall below the refund amount, the same may be excluded from the refund.
Considering clarification of the board, In his opinion, the taxpayers may made adjustment of their admissible input tax from their liability of reduced rate and if any such technical modification is made in electronic return to restrict adjustment of input tax to ensure direct payment against tax liability of reduced rate, it would be contradictory to the boards clarification and intention of the legislature.
Since the return filing of last tax period is due, it becomes an important issue. The concerned authorities need to address the problem on top priority to avoid uncertainty and to ensure timely filing of sales tax return, Arshad Shehzad added.