KARACHI (October 14 2003): The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has suggested a number of substitutions to Sections 73 and 7 of the Sales Tax Act 1990, which caused difficulties to the business community.
The FPCCI desired that to remove the difficulties faced by the business community, Sections 73 and 7 of the Sales Tax Act, 1990 be substituted by the following:
SECTION 73: Certain transactions not admissible:
— Notwithstanding anything contained in this act or any other law for the time being in force, payment of transaction amount, excluding utility bills for a transaction in respect of supplies and/against letter of credit, exceeding value of Rs 50,000 shall be made by a crossed cheque or by a bank draft or a pay order or any other banking instrument, showing transfer of the amount of sales tax in favour of supplier or Collector of Sales Tax, as the case may be, from the specified bank account of the buyer.
— The buyer shall not be entitled to claim input tax credit, adjustment or deduction, or refund, repayment of drawback or zero rating of tax under this act if the payment of the amount of sales tax is made otherwise than in the manner herein prescribed provided that payment of sales tax in case of transaction on credit is so made within 180 days of issuance of tax invoice.
SECTION 7: Determination of tax liability:
— For the purpose of determining his tax liability in respect of taxable supplies made during a tax period, a registered person shall be entitled to deduct input tax paid during the tax period for the purpose of taxable supplies made, or to be made, by him for the output tax that is due from him in respect of that tax period and to make such other adjustment as are specified in Section 9 or otherwise as applicable and as allowed by Sales Tax Department and Central Board of Revenue (CBR) on the merits of due consideration of the case.
— Provided that the tax payer may adjust input tax paid on the purchase in the immediate three preceding tax periods from the output tax subject to the condition that the tax payer specifies the reasons for such delayed input tax adjustment in the revised sales tax return for such period or in the return of the immediately succeeding tax period.
EXPLANATION: The expression “paid” used in this section means payment in the manner laid down in the Section.
The FPCCI has sent the material to the member, Sales Tax, Central Board of Revenue, in response to his proposed texts sent by the CBR on the same subject.