Tax ordinance anomalies identified

KARACHI: Tax practitioners have identified lacunas in the recently promulgated Tax Laws (Second Amendment) Ordinance, 2019 and urged the tax authorities to rectify the anomalies.

In a letter to FBR Chairman Syed Shabbar Zaidi on Monday, the Karachi Tax Bar Association (KTBA) pointed out several anomalies in the ordinance regarding amendments brought into income and sales tax laws.

The KTBA said sub-section 4 has been added to section 73 of the Sales Tax Act, 1990, under which sales to an unregistered person by a registered manufacturer cannot be made for more than Rs10 million in a month and Rs100 million in a year, failing which input tax will be disallowed proportionately.

“Considering the implication of the phrase of “unregistered person” [ie, singular term] used in drafting of the law, instead of the phrase “unregistered persons [plural term], it implies that the restriction is applicable on sales to a single unregistered person instead of cumulative sales to all unregistered person(s),” the tax bar said.

To ensure that the intent of law is not suffered by any legal infirmity due to any unintended or inadvertent drafting, the clarification must be issued in this respect on an immediate basis, it added.