ISLAMABAD: Federal Board of Revenue (FBR) Chairman Nisar Muhammad Khan and Khyber Pakhtunkhwa Revenue Authority (KPRA) Director General Muhammad Yousaf Afraidi have signed a memorandum of understanding (MoU).
Under the MoU, both the federal and provincial governments have been authorised to allow sales tax input adjustment. The taxpayers, who file sales tax returns in FBR and KPRA, have been given facility of mutual input adjustment. Sources said that through this MoU, the taxpayers could buy essential items on discounted price.
The market rates of essential things would be prominently decreased under the provincial (15 per cent) and the federal government’s (17 per cent) mutual adjustment of sales tax. The decision taken during the meeting and under the MoU would be implemented with immediate effect.
Member Inland Revenue Policy Rehmatullah Wazir Khan, Chief Sales Tax Policy Zulfiqar Hussain Khan, Chief Sales Tax Automation Abdul Hameed Memon, Secretary Raza Ashfaq Sheikh, Secretary Sales Tax Zaheer Qureshi and KPRA’s Fazal Ameen Shah were also present in the MoU signing ceremony held at FBR headquarters.
The federal revenue authority has already signed the MoU with other provinces on input tax adjustment. As a result of cross-adjustment of input tax, there are certain situations, where the federation has to give refund on the behalf of provinces, whereas provinces will do the same in case of federation.
Under Finance Act 2016, the government had disallowed facility of input tax adjustment. The facility was later restored by the government, sources added. The FBR had also sought authorisation from provincial revenue authorities and boards to have full access to their monthly returns data with the objective of preventing cross-jurisdiction input tax frauds and false declarations through verification of input tax claims. In the past, the FBR had circulated the draft of the ‘Authorisation of Data Sharing’ with the provincial authorities/Board.
