Registered taxpayers have reportedly faced significant difficulties in filing sales tax returns, with the process effectively grinding to a halt for many. The disruption is attributed to multiple amendments introduced by the Federal Board of Revenue (FBR) over the past two months, leading to widespread confusion and technical issues.
Tax experts have voiced concerns, that the FBR needs to take immediate steps to address a “panic-like situation” within the business community. According to these experts, a large number of sales taxpayers have been unable to file their returns for the February and March tax periods due to technical amendments and bottlenecks created by tax officials.
Instead of simplifying the process, the FBR’s recent changes have further complicated the filing procedure for sales taxpayers. Experts urge the FBR to resolve these issues promptly to restore the smooth filing of sales tax returns by registered individuals and businesses.
Recent Amendments and Filing Extension
Amidst the filing challenges, the FBR recently announced an extension for the submission of Sales Tax and Federal Excise Returns for the tax period of March 2025, setting the new deadline as April 25, 2025.
The difficulties stem partly from modifications introduced by the FBR to the sales/purchase annexures used for filing monthly returns.
Detailed information reveals that the FBR recently mandated the reporting of an 8-digit H.S (Harmonized System) code along with the Unit of Measurement (U.O.M). Initially, these requirements were not formally incorporated into the sales tax rules. However, the FBR has now introduced corresponding amendments in the sales tax rules to provide legal backing for these new reporting obligations.
Furthermore, alongside other modifications, the FBR also introduced a new Annexure C-1. This new requirement mandates taxpayers to provide details of payment proofs and banking instruments used in transactions. This change aligns with Section 73 of the sales tax rules, which stipulates that all payments exceeding Rs. 50,000 must be conducted through a proper banking channel.
Experts Warn of Increasing Complexity
Commenting on the raft of amendments, tax experts highlighted that sales tax return filing is becoming increasingly complex and detailed. They criticized the government’s approach of introducing new requirements frequently without adequately considering the practical problems faced by taxpayers, the associated compliance costs, and the growing hassle for a tax base that is already considered narrow and heavily burdened.
