KARACHI: The Karachi Tax Bar Association (KTBA) has urged the Federal Board of Revenue (FBR) that sales tax should be charged at the time of delivery instead of advance payment basis.
The KTBA, in its budget proposals 2017-18, said that sales tax is chargeable on the earlier of supply of goods or advance received for supply of goods.
Sales tax on advance was withdrawn by Finance Act 2007 but was restored through the Finance Act, 2013. The KTBA urged that in order to avoid hardship and hassle for registered persons, the bar recommended that sales tax on advances should be withdrawn and sales tax should be charged on the basis of actual delivery of goods.
By this amendment, there would be no loss to the revenue except slight timing difference in deposit of sales tax. The KTBA further stated that extra tax levied on certain specified goods is not allowed as input tax.
It further asked the FBR that the time period for claiming input tax should be increased to 12 months from existing limit of six months.
The KTBA said that section 7(1) of Sales Tax Act, 1990 allows input tax adjustment up to 6 months (from the month in which invoice was issued). This time limit was previously up to 12 months. Resultantly, a registered person is not able to claim input tax if the invoice is received by him after six months.
The Bar recommended that time limit of 6 months should be increased to 12 months so that the registered person will not be deprived off his legitimate input tax without causing any loss of revenue to the government.
The KTBA further stated that presently excess input tax has to be carried forward for consecutive twelve months’ period before it can be claimed as refund by filing a refund application.
To facilitate registered persons, the bar proposed that the time limit of twelve months for carry forward of excess input tax should be reduced to six months.
