LAHORE: Federal Tax Ombudsman (FTO) Asif Mehmood Jah noted the FBR failure to develop effective and robust mechanism to capture due amount of sales tax at the import stage resulting in enormous loss of government revenue.
However, Director General Post Clearance Audit (PCA) Seema Raza Bukhari and her team comprising Director Khalil Yousufani, Additional Director Sheeraz Ahmad, Deputy Director Saima Butt and made substantial detections of revenue loss of recoveries to the tune of Rs286.632 million, the same appears of be tip of the iceberg, keeping in view the enormity of the task and limited human resource, at the disposal of DG Post Clearance Audit. The efforts of DG PCA are appreciated in this regard.
FTO asked FBR to ensure that a fool proof, effective and dynamic and functional module is developed in close coordination and active engagement of DG Reforms and Automation and Inland Revenue.
FTO advised FBR to ensure that DG PCA to constitute a dedicated team under supervision of Additional Director at each regional Directorate for in depth audit and submit monthly progress report of detections made and tax collected.
FTO advised Chairman FBR to provide additional staff to DG PCA in consultation with Director General PCA, Islamabad.
The Finance Bill 2019 brought the ‘Commercial Importer’ of goods listed in Third Schedule in the Retail Price Regime. Earlier Commercial Importers were included in such regime from 2003 till 2005. It means that the Commercial Import of goods listed in Third Schedule shall charge sales tax on Retail Price fixed by them, inclusive of all duties, charges and taxes (other than sales tax) at which any particular brand or variety of any article should be sold to the general body of consumers.
The commercial imports of taxable goods (subject to certain exclusions) is also liable to minimum Value Addition Tax (VAT) at the rate of 3% ad valorem which is allowed to be adjusted against output tax but no refund will be allowed for such VAT amount.
However, such amount would be carried forward in subsequent periods for adjustment. It is pertinent to mention that imposition of 3% minimum VAT on Commercial Import of goods listed in Third Schedule will result in revenue stuck-up in the hands of FBR as it could not be adjusted against output tax and the commercial importers are not allowed to claim refund of such VAT amount.
It appears to be an anomaly and commercial importer of goods listed in Third Schedule should be declared immune from 3% minimum VAT.
