MULTAN: Multan Tax Bar Association (MTBA), affiliated with the Pakistan Tax Bar Association (PTBA) has raised a critical concern with the Federal Board of Revenue (FBR) regarding a major flaw in the sales tax return process that is causing significant difficulties for taxpayers and tax practitioners.
In a formal letter addressed to the Chairman FBR, Finance Secretary of MTBA, Furqan Khan Badozai, highlighted the issue, emphasizing that the sales tax return form lacks a provision in Annexure-B to disallow input tax paid under Section 7A of the Sales Tax Act, 1990. This omission has resulted in inaccurate tax filings and unnecessary complications for taxpayers.
MTBA President Shabbir Fakharudin and General Secretary echoed these concerns, urging the FBR to take immediate action to rectify the issue.
They pointed out that the introduction of an invoice-wise or Goods Declaration (GD)-wise classification feature in the IRIS Sales Tax Return system, implemented in November 2024, was intended to differentiate non-creditable input tax.
However, its implementation has inadvertently restricted taxpayers from properly disallowing the minimum value addition tax (VAT) paid at the import stage due to the missing provision in Annexure-B.
Previously, taxpayers could manually input the disallowed input tax amount at Serial No. 7 of the Sales Tax Return. However, the recent system modifications have removed this option, leading to automatic and sometimes incorrect tax liability calculations. Senior Tax Advisor MTBA, Niaz Ahmad Khan, warned that this issue could result in taxpayers unintentionally filing incorrect returns, leading to potential revenue discrepancies.
To address this problem, MTBA has formally requested the FBR to introduce the necessary provision in Annexure-B of the Sales Tax Return.
This adjustment would enable taxpayers to correctly account for the minimum value addition tax and ensure compliance with tax regulations.
The association stressed that an immediate resolution is imperative to prevent revenue losses and unnecessary legal complications for taxpayers.
In addition to its advocacy efforts, the MTBA has also announced a two-day seminar in Multan, aiming to educate tax practitioners and business professionals about the latest tax regulations and challenges. A comprehensive plan has been chalked out to ensure the success of this event, further reinforcing the association’s commitment to addressing pressing tax-related issues.
The MTBA urged the FBR to act swiftly on this matter to uphold transparency and efficiency in the tax system, ensuring that businesses can operate without unnecessary financial burdens.
