FTO finds error in sales and excise tax reporting form leading to incorrect calculation.
Federal Tax Inspector (FTO) found error in sales and excise tax reporting form resulting in incorrect sales tax refund/adjustment calculation.
The FTO Order issued on Friday asked IT members and Pakistan Revenue Automation Ltd (PRAL) to make the necessary changes to the sales tax declaration form and add a field calculate the difference between the amount paid and the amount payable as “overpaid” in the last blank. return column. The overpaid amount, if any, will be adjusted in the next tax period. Complaint brought under section 10(1) of the 2000 Federal Tax Ombudsman Order (FTO Order) for failure to provide on the sales tax return to demonstrate that the excess sales tax amount was unintentionally pay.
In summary, according to the Claimant, it is found that if the sales tax payment is paid in excess of the obligation identified on the sales tax return, the excess is not shown as the amount refund in the same statement (same as what happens on tax returns).Similarly, the overpayment does not appear as an adjustment in the next period. Additionally, there is no mechanism to correct the Computerized Payment Receipt (CPR) amount if the excess is paid. The system automatically calculates the tax liability for part (c) of the return after adjusting the available credit for part (a) as required. The current reporting form provides a breakdown of the input tax credit as a production tax adjustment, the excess amount available to carry over to unconsumed inventory, and the portion of the credit available for a consumption refund /export.
However, according to the Complainant, there are cases of unintentional overpayment when taxpayers make bank payments through CPR as part of the process of paying tax due automatically calculated by the system, but meanwhile the tax payable in the system is reduced due to the availability of additional credit due to supplier or buyer compliance (including ATL). While the refund form will not show this overpayment and the CPR amount paid cannot be changed or split. Therefore, this amount cannot be adjusted or claimed.
As a result, the taxpayer would be powerless even to prove and claim a Section 66 refund was due to negligence or error or misinterpretation. The FTO order says it is wrongful for the FBR to develop a system to help ordinary taxpayers comply with their tax obligations.