KARACHI: The Karachi Chamber of Commerce and Industry (KCCI) has voiced strong criticism against the Federal Board of Revenue (FBR) for its recent move to declare numerous taxpayers as inactive. This action comes despite the FBR having officially announced an extension for filing sales tax returns for the months of February and March 2025.
KCCI President Muhammad Jawed Bilwani expressed his profound concern over what he described as a significant administrative lapse on the part of the Inland Revenue Service (IRS). He stressed that this sudden classification of compliant taxpayers as “non-active” is not only unjust but also detrimental to the business community, especially considering that the delay in filing was a direct consequence of officially granted extensions.
“Disappointing and Damaging” Inconsistency
“It is highly disappointing that despite the FBR’s own extension of the filing deadline, numerous compliant taxpayers are being unfairly penalized for circumstances entirely beyond their control,” stated Bilwani. “Such a glaring inconsistency in the enforcement of tax regulations is causing immense distress among businesses and is actively eroding the already fragile trust in the country’s tax system.”
System Overwhelmed by Complex New Requirements
According to the KCCI, the FBR’s recent decisions strongly suggest that the current tax infrastructure is operating under immense pressure. The chamber highlighted that the recent introduction of complex new requirements in sales tax returns – including mandatory eight-digit Harmonized System (H.S.) codes, strict unit measurements, and the addition of new annexures such as ‘H-1’, ‘J’, and ‘C-1’ – has overwhelmed both the electronic system and the taxpayers attempting to comply.
Challenges for Local Manufacturers
Bilwani specifically pointed out that these abrupt changes disproportionately impact local manufacturers, many of whom are struggling to accurately identify and apply the correct H.S. codes to their diverse range of products. “While imported goods come with clear Goods Declarations that include these codes, domestic producers are often left to make educated guesses,” he explained. “The fact that the same product can be listed under different H.S. codes by various suppliers only exacerbates the existing confusion and inconsistencies.”
