Tax bar questions FBR’s wisdom in deleting adjustment column

KARACHI: Tax practitioners on Monday called out the Federal Board of Revenue (FBR) decision to delete “adjustment of tax refund” column in the fiscal year 2022 return, and highlighted other issues that needed to be dealt with.

“This (deletion of tax adjustment column) is a dilemma and unjustified,” Karachi Tax Bar Association (KTBA) President Syed Rehan Hasan Jafari said at a seminar about Finance Act, 2022.

The main issue which has been dealt with was the undue disallowance of adjustment of available refund in tax returns, for which all respective offices of the chief commissioners were issued instructions. The chief commissioners were ordered that a process of verification has to be adopted first for the adjustment of available refunds in the tax returns.

Jafari also highlighted Section 7E of the Income Tax Ordinance, 2001 which also needs to be addressed in detail for clarification. “Main objective is to address the grievances and day to day irritants faced by our members of PTBA in respect of the genuine taxpayers and the bar always try to resolve it at all levels with the mutual understanding according to facts and law on the subject.”

Historically, he noted the KTBA was a significant defender of alleged notices and unlawful practices pertaining to taxation matters. He noted that good governance entails the existence of efficient and accountable institutions and asked FBR to decrease the trust deficit between the tax collector and the taxpayer by facilitating genuine taxpayers of the country

Zeeshan Merchant, former president of the KTBA in his presentation said that retailers other than Tier-1 retailers were taxed through monthly electricity bills and after paying sales tax on electricity bills, other retailers were not obliged to get themselves registered under the Act.

The Finance Bill, revamped the scheme of taxation for other retailers and it was proposed to bring them under the fixed tax regime whereby only one monthly tax was required to be paid in lieu of income tax and sales tax.

However, post Finance Act, the trader’s bodies all over Pakistan opposed this amendment and consequently, the government had to roll back the entire scheme of fixed tax imposed on retailers along with the 100 percent increase in rate in case of non-ATL (income tax) with the caveat that after September 2022, this proposal would be reviewed again.

He suggested KTBA should also take-up the matter regarding levy of further tax and extra tax on service providers such as tax consultants, lawyers and doctors etc, who otherwise were not obliged to get registered under the Act with the FBR.