KARACHI: Tax practitioners on Tuesday suggested Federal Board of Revenue (FBR) to allow sales tax refunds on local sales just like exports to broaden the export base beyond the five traditional sectors.”Apart from five export-oriented sectors, conditional facility for expeditious processing of sales tax refunds through Fully Automated Sales Tax E-Refund (FASTER) system has been given to exporters-cum-manufacturers,” said Karachi Tax Bar Association (KTBA) in a letter sent to the chairman FBR.
“However, as per Income Tax Circular No 10 of 2008 dated August 27, 2008, the term exporter-cum-manufacturers means those manufacturers whose exports during the preceding year were more than 80 percent.”
To promote diversification of exports instead of relying solely on five export-oriented sectors, the tax bar advised the FBR to issue necessary clarification/make necessary amendment to the effect that exporter-cum-manufacturers include all manufactures engaged in local as well export sales.
The KTBA informed the FBR that input tax on fixed assets was adjusted against the minimum sales tax liability under section 8B of the Sales Tax Act, 1990 only in case where other normal input tax [on goods/services] was less than 90 percent of the output tax. “However, in case any unadjusted/ unutilised input tax relating to fixed assets is carried forward to subsequent months then the same is treated at par with normal input tax and not as input tax on fixed assets,” the bar said in its communication to FBR.