ISLAMABAD: Experts and industrialists have raised eyebrows over the Federal Board of Revenue decision to charge one percent ‘further tax’ on supplies of textile and leather finished goods to unregistered persons including government departments, having Free Tax Numbers (FTNs).
They termed the board’s recent clarification as legally unjust, citing that further 1 percent tax on the government departments having FTNs was against the prescribed rules governing this regime.
Experts were of the view that through notification 648(i)/2013 dated July 9, 2013, the FBR had excluded direct supply of goods to the end consumer. They argued that if any government department purchased items for internal consumption such as towels, uniforms, gloves, shoes etc it assumed the status of end consumer of such goods and enjoyed exclusion already extended by the board hence application of further tax did not make any sense.
They pointed out that further tax was basically required to be charged to unregistered entities as they were bound to be registered under Sales Tax Act, 1990 in terms of section 2(25). Similarly, the entities which have been provided with free tax numbers are basically legal entities which are not required to be registered and therefore did not fall in the ambit of further tax.
