FBR, KTBA resolve issuance of exemption certificate issue

KARACHI: The Federal Board of Revenue (FBR) and the Karachi Tax Bar Association (KTBA) have resolved the issue of applying for exemption certificate against imported goods through Integrated Risk Information System (IRIS) – an online software of the revenue authority.
In a communication circulated to members on Friday, the KTBA said a videoconference was held recently at the Large Taxpayers Unit (LTU) Karachi to discuss threadbare uploading of the request for exemption certificate, as the process of exemption certificate has been halted for around two months.
The meeting was attended by Rana Ahmed, Member (IT), FBR, Shahid Hussain Asad, Member (Policy) FBR and Muhammad Ashraf Khan, Member (IR Operations). The KTBA was represented by its President Syed Wasimuddin Hashmi and vice presidents Muhammad Zubair and Muhammad Aleem.
Pakistan Tax Bar Association former president Abdul Qadir Memon and former KTBA president Haider Ali Patel also attended the meeting.
The meeting resolved that the application for exemption from advance tax under Section 148 of the Income Tax Ordinance, 2001 would be filed on the basis of quantity to be imported by the taxpayer for the tax year under the SRO 717(I)/2014, on which the issuance of certificate or objection raised should be made within five days.
It also resolved that the letters of credit (LCs) opened after the issuance of exemption certificate would be facilitated through the Customs clearance software WeBOC without taking further permission from the authorities till the exempted quantity is exhausted or the exemption certificate is expired.
The issuance certificate for Section 153 of the Income Tax Ordinance, 2001 regarding withholding tax for payments of goods, services and contracts was also resolved.
At present, for the issuance of exemption certificate for withholding tax detailed list of buyers is mandatory to be provided by the person applying for exemption.
The meeting resolved that the taxpayers would provide the information and the exemption certificate would be issued in five days.
The taxpayers; however, in this case are allowed to amend the name of buyers even after providing the list.
Related to this section another issue was discussed, under which the LTU Karachi had held up the issuance of exemption certificates following the orders of the Federal Tax Ombudsman (FTO), declaring SRO for granting exemption under this section as illegal.
The FBR on the same day of the meeting issued a clarification regarding the FTO orders, stating: “Any provision of law, including any clause of schedule to the ordinance, does not become redundant and inapplicable merely on the decision of the FTO, as there is presumption of validity of any enactment, which has been held by the superior courts, including the Supreme Court of Pakistan.”
It also said: “The department [FBR] has filed a representation before the President of Pakistan against the FTO order. As the matter is being challenged and has not attained finality; therefore, issues of exemption from tax will be dealt with in accordance with the existing provisions of law.”
The meeting agreed that all the certificates would be issued with the validity of six months only irrespective of the fact that the payment of advance tax has been paid or deducted for the entire tax year.
Tax practitioners have urged the authorities to take onboard the stakeholders before making changes to the online software.