FBR urges traders to deposit 1% GST

LAHORE: The Federal Board of Revenue (FBR) is pressing businessmen for the recovery of one percent sales tax imposed after the second week of June by parliament.


Businessmen registered with the sales tax department are facing issues in recovering the additional one percent sales tax levied on suppliers or services from June 13. In a few cases some purchasers have agreed to pay 17 percent sales tax.


However, some suppliers claim that the FBR’s automated e-filling system has no provision to accept the additional tax. “Since e-filing is mandatory for sales tax returns, we tried to deposit the 17 percent sales tax which was received in our sales tax e-filling for June,” said Naseer Ahmad, a sales tax registered supplier from Islamabad, adding that the e-filing system only contained a provision for 16 percent sales tax on the deadline for filling sales tax returns for June.


He went on to add that after several attempts the additional one percent sales tax was deposited under the head of extra tax.


“Even after compliance, I received a recovery notice for the one percent additional tax amounting to over Rs19,972 as it was not deposited as sales tax. The tax collector never bothered to ask as to why extra tax of Rs19,972 was paid,” Ahmad said, adding that FBR system refused to accept 17 percent sales tax.


Sales tax registered suppliers have appealed to the government to collect additional one percent sales tax levied from the parties that purchased materials or services.


“We are forced withholding agents for the collection of sales tax from the parties whom we provide services or goods” said Nabi Malik a supplier of medical equipment. The Supreme Court declared the collection of one percent additional sales tax illegal when the government increased the sales tax from 16 percent to 17 percent from June 13, 2013 without approval from parliament. He said subsequently the government managed to get the approval of additional sales tax from parliament with retrospective effect from June13.


Malik said that the PPRA rules make it mandatory for all government departments to follow the procurement procedure of inviting bids by advertising through media. Bidders are given sufficient time to submit their respective bids for a fair competition.


As such all orders placed on or before June 13 by government departments were initiated much before June 13 and funds were sanctioned accordingly by the competitive authorities for procurement at prices subject to 16 percent GST as per the laws prevailing at that time under Sales Tax Act 1990.


After the Supreme Court declared the one percent increase in general sales tax (GST) introduced as part of the budget 2013-14 null and void, both the suppliers and the purchasing departments concluded their transactions on sales tax that was levied on that date, Malik said, adding that the payments were also released accordingly.


“Instead of targeting suppliers, the FBR should ask the purchasers to deposit the additional one percent as they are the ones from whom this tax is charged,” he said, adding that the addresses of all purchasers have been provided in each sales tax return.


He went on to explain that the suppliers had already received their payments from the purchasers on legal billing based on the 16 percent sales tax levied at that time.


“The FBR could order those purchasers that paid one percent less sales tax to pay it now,” he said, adding that it would be impossible for suppliers to recover the money from purchasers.


Further, he censured the FBR for failing to update the e-filing system. “How can the FBR harass the sales tax registered businessmen when the collectors system fails to accept 17 percent sales tax on deadline date for June returns?”

Source: The NEWS