FPCCI demands carry forward input tax adjustment
August 14, 2012
KARACHI: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has urged tax authorities to allow taxpayers to adjust their accumulated carry forward amount of input tax. In a statement issued on Monday, President FPCCI Haji Fazal Kadir Khan Sherani said that after harmonisation of sales tax rate in the Finance Act 2012 the higher rate regime was eliminated, which was generally welcomed. “However, it has been observed that persons having accumulated carry forward amount in their sales tax returns pertaining to previous higher sales tax regime were not provided any relief for its adjustment,” added Sherani.
Previously such taxpayers were excluded from the applicability of section 8B of Sales Tax Act vide S.R.O 647(I) 2007 dated June 27, 2007 but after doing away with the higher sales tax rates regime in the recent budget, carry forward cannot be adjusted since the condition of 8B is now applicable on them.
“Consequently such tax payers would be unnecessarily burdened to pay 10 percent sales tax despite their accumulated carry forward amounts, pertaining to higher tax rates (up to 22 percent) regime, available to them,” said Sherani.
The FPCCI chief said that the apex trade body in its meeting held under the chairmanship of Chairman FPCCI Working Group on the Federal Budget Zakariya Usman reviewed the whole scenario and after due diligence unanimously proposed that the taxpayers who were paying higher input tax before budget should be allowed to adjust the carry forward amount till such time their input tax is completely adjusted, and as such a new category under SRO 647(I)/2007 be inserted for persons having accumulated amount of higher rate of input tax as on June 2, 2012.
Sherani also said that refund of carry forward is not the solution at the present time when the government has proposed a staggering tax collecting target of Rs2.84 trillion for the present fiscal year.
“Refund of unadjusted carry forward amount shall increase the cost of compliance of taxpayers consequently leading to corruption and palm greasing,” he added.
Previously such taxpayers were excluded from the applicability of section 8B of Sales Tax Act vide S.R.O 647(I) 2007 dated June 27, 2007 but after doing away with the higher sales tax rates regime in the recent budget, carry forward cannot be adjusted since the condition of 8B is now applicable on them.
“Consequently such tax payers would be unnecessarily burdened to pay 10 percent sales tax despite their accumulated carry forward amounts, pertaining to higher tax rates (up to 22 percent) regime, available to them,” said Sherani.
The FPCCI chief said that the apex trade body in its meeting held under the chairmanship of Chairman FPCCI Working Group on the Federal Budget Zakariya Usman reviewed the whole scenario and after due diligence unanimously proposed that the taxpayers who were paying higher input tax before budget should be allowed to adjust the carry forward amount till such time their input tax is completely adjusted, and as such a new category under SRO 647(I)/2007 be inserted for persons having accumulated amount of higher rate of input tax as on June 2, 2012.
Sherani also said that refund of carry forward is not the solution at the present time when the government has proposed a staggering tax collecting target of Rs2.84 trillion for the present fiscal year.
“Refund of unadjusted carry forward amount shall increase the cost of compliance of taxpayers consequently leading to corruption and palm greasing,” he added.
