PTBA expresses
worries regarding unlawful limitations in the
The Pakistan Tax Bar Association
(PTBA) has brought to attention a series of illicit limitations in the national
sales tax return process, causing significant hardships for taxpayers trying to
fulfill their obligations.
In an official letter to the Chairman
of the Federal Board of Revenue (FBR), the PTBA expressed concerns regarding
the implementation of unauthorized automated restrictions within the National
Sales Tax Return module, known as the IRIS e-portal. While the module was
initially designed to assist taxpayers and streamline data automation, certain
system-based checks and restrictions were introduced without proper authority,
resulting in unwarranted complexities and difficulties for taxpayers.
The PTBA raised several issues that
require immediate attention and resolution:
1. Automatic Disallowance of Input Tax Credit:
The PTBA argued that the automated
disallowance of input tax credit, as per Section 7(2) read with Section 8(1) of
the Sales Tax Act, 1990, is unlawful. This process involves coercive actions
against taxpayers and should involve prior human deliberation, adhering to the
principle of Audi Alteram Partem. It should not solely depend on an automated
system but require the involvement of the concerned Commissioner Inland Revenue
as the appropriate authority under the law.
2. Missing Export and Import Goods Declarations:
The system's failure to upload export
and import goods declarations in the National Sales Tax Return causes serious
issues for exporters and importers. It leads to delayed filing of returns and
may cause discrepancies between sales tax and income tax declarations,
potentially resulting in unnecessary legal disputes.
3. Issues with Annexure-H Filing:
Taxpayers have been unable to file
Annexure-H for the last two months due to unnecessary and unlawful value
addition checks. This hinders exporters and taxpayers from claiming legitimate
refunds.
4. Repeated Disallowance of Input Tax Credit:
The system reportedly continues to
disallow specific input tax credits in subsequent months even after they have
been disallowed in a previous month. This is considered double jeopardy and
emphasizes the need for more thoughtful and human-involved actions.
5. Restrictions on Tax Periods’ Order:
The National Sales Tax Return Module
restricts the order in which tax periods can be filed, causing complications for
taxpayers who are waiting for input taxes from their suppliers for a particular
month but need to file subsequent months’ returns. The PTBA argues that each
tax period should be treated independently for ease of compliance.
6. Inclusion of Irrelevant Data:
The module includes unnecessary data
that taxpayers have no concern over, leading to inadvertent claims and
potential coercive actions.
7. Lack of Explanation for Discrepancies:
The system often displays input tax
credit disallowed without providing any report or reason, contrary to the
principle of confronting the taxpayer with discrepancies for explanation.
8. Outdated Challan Generation System:
The current challan generation system
for both income tax and sales tax is slow and time-consuming. The PTBA urges
the implementation of challan generation within the IRIS e-portal to save
precious time and enhance taxpayer facilitation.
9. Restrictions on Credit Notes by Sellers:
The system imposes restrictions on
sellers from entering credit notes, affecting their sales tax liability for a
particular month and potentially subjecting them to penalties due to delays
caused by purchasers.
In light of these concerns, the PTBA
has requested the Chairman of the Federal Board of Revenue to personally
address these issues and take appropriate measures to remove all unlawful
restrictions and checks from the National Sales Tax Return module of the IRIS
e-portal. The objective is to restore the intended purpose of the system and
ensure smooth and fair taxation procedures for all taxpayers.
