The Federal Board of Revenue (FBR) has directed large taxpayer units (LTUs) and regional tax offices (RTOs) to conduct desk audit of all sales tax returns, where decrease in input tax adjustment has been observed in returns filed by sales tax registered persons. According to the FBR's instructions issued to the chief commissioners of LTUs/RTOs here on Thursday, FBR Member (IR Operations) informed last Chief Commissioner Conference abut the developments in the issues relating to the an extremely important aspect of "Input Tax Adjustment" in sales tax returns.
He stated that due to 'Strive,' a software, input tax claims had reduced by almost Rs 120 billion in sales tax returns from July to November 2016 as compared to the corresponding period of the previous year. However, the reduction in claim of input tax had not been translated into enhancement in revenue due to the fact that the registered persons had started suppressing their output/supplies.
It was, therefore, decided that all the RTOs/LTUs shall conduct desk audit of sales tax returns, where decrease in input tax adjustment has been noticed/observed and take all possible actions as envisaged under the law including audit under section 25, section 38 or action under section 40B of the Sales Tax Act, 1990 in such cases on priority to probe the reasons, the FBR's instructions added.
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