New sales tax return for July 2015 has disallowed the adjustment of two percent extra tax from total input tax, putting excessive financial burden on the taxpayers, it is learnt on Friday. According to sources, two per cent extra tax, which was treated as part of output tax and charged under Sales Tax Special Procedure Rule 2007, chapter XIII, rule 58S, was adjustable from input tax along with 17 percent output tax.
Moreover, sources said that the tax department had classified this additional tax in sales tax return for computation of total output tax along with entry number 13A and 14A till June 2015. However, the Federal Board of Revenue (FBR) through its latest E-sales tax return has omitted the provision of serial number 12 that restricted two percent extra tax adjustment. Following the said amendment, taxpayers are now being compelled to pay this additional tax from their pockets.
Sources termed it unjustified, saying that this could only be legitimated after necessary amendment in section 7 of the Sales Tax Act 1990. Besides that it is also required amendment in sales tax return form STR-7 which is now missing in the recent notification 484(I)/2015, dated June 30, 2015. Needless to mention, this two per cent additional tax is introduced vide notification 525(I)/2008 on June 11, 2008 for electric home appliances including television, refrigerators, freezers, air conditioners, electric ovens, microwave ovens, washing machines, spin dryers, and DVD/CD players of all types.
Later, in 2013, the board through notification number, 896(I)/2013 included further items including foam or spring mattresses and other foam products, auto-parts and accessories, lubricating oils, brake fluids, transmission fluid, and other vehicular fluids and maintenance products, tyres and tubes, storage batteries, arms and ammunitions, paints, distempers, enamels, pigments, colours, varnishes, gums, resins, dyes, glazes, thinners, blacks, cellulose lacquers and polishes sold in retail packing, tiles , biscuits, confectionery, chocolates, toffees and candies. These items were earlier included in the Third Schedule vide Finance Act 2013 and later transferred in Chapter XIII of the Sale Tax Special Procedure Rule 2007.