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CBR simplifies sales tax rules

ISLAMABAD (September 13 2006): To simplify the sales tax documentation for leading sectors, the Central Board of Revenue (CBR) has withdrawn the condition of filing of 'sales tax invoice summary statement' by hotels; restaurants; CNG stations; retailers; courier services, persons engaged exclusively in sale/purchase from unregistered persons and those engaged exclusively in import-cum-export and are making no local purchases/supplies.

The Board issued Sales Tax Circular 06/2006 on Tuesday to facilitate seven major industrial sectors. According to the Circular, the CBR under SRO 559(I)/2006 of June 5, 2006 has prescribed monthly invoice summary statements for purchases and sale required to be filed by all registered persons engaged in import or supply of taxable goods, except persons engaged in the manufacture or supply of goods relating to nine zero-rated sectors.

The zero-rated sectors included cotton yarn, blended yarn or manmade yarn, textile fabrics, made-ups, garments and articles of apparel; leather and articles thereof, including footwear; carpets of all sorts; surgical goods; sports goods; milk, yogurt, cheese and flavoured milk; pens, ball pens and pencils including colour pencils; trucks with gvw exceeding 5 tonnes and compost (non-chemical fertiliser).

The main objective of obtaining the monthly invoice summary is to put in place a system of automated verification of inputs for issuance of adjustment advices/refunds, the CBR said.

Having reviewed the system in detail, the Board has excluded the following sectors from the purview of filing the summary statement to facilitate the taxpayers: Hotels/restaurants; CNG stations; retailers; persons engaged exclusively in sale and purchase from unregistered persons; persons engaged exclusively in import-cum-export and making no local purchases/supplies and courier services.

Now, the above-mentioned sectors would not be required to furnish summary of their purchases and sales made during a tax period, including debit and credit notes issued, by the 15th of the month following the said tax period, to the collector of sales tax having jurisdiction.

It is important to mention that the basic aim behind submission of the statement was to verify the claims regarding input tax adjustment and refunds. In order to promote compliance of submission of sale/purchase invoice summary statement, specific provision was inserted in section 33 of the Sales Tax Act, 1990, through Finance Bill 2006-2007 imposing penalty of Rs 25,000 for non-submission of the statement.

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