FBR’s New Sales Tax Filing Procedure Causes Delays

ISLAMABAD: Recent modifications implemented by the Federal Board of Revenue (FBR) in the sales tax return filing process have considerably slowed down the rate of submissions across the country.

Although the FBR has already granted extensions for the filing of sales tax returns for February 2025 and March 2025, unresolved technical challenges persist.

Arshad Shehzad, a prominent sales tax consultant based in Karachi, stated that the FBR’s latest revisions necessitate taxpayers to furnish more specialized data as part of an effort to introduce a more robust system of monitoring and regulation.

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This increased intricacy has unfortunately resulted in an almost complete standstill in sales tax return filings nationwide.

One of the primary alterations involves the inclusion of an eight-digit Harmonized System (H.S.) code along with the quantity of goods sold in Annex C of the sales tax return. This adjustment is intended to create an electronic mechanism for verifying the precision of reported purchases and sales.

While the goal of this initiative is to address problems pertaining to fraudulent invoices and decrease tax revenue losses, the practical obstacles associated with its implementation appear to have been disregarded by the FBR. Accurately documenting the correct H.S. code demands specialized expertise, rendering compliance onerous for average taxpayers and enterprises.

Furthermore, there is increasing apprehension among taxpayers that any errors, oversights, or omissions may result in penalties, fostering hesitation and doubt within the community.

Consequently, Arshad Shehzad suggests that FBR policymakers must tackle the worries of legitimate taxpayers and deliver more feasible solutions to streamline the compliance procedure.

Moreover, the FBR has presented supplementary annexes pertaining to production and inventory data. Nevertheless, these mandates appear to have been enforced hastily, without sufficient deliberation of their real-world applications.

Within these declarations, the system automatically extracts the sales value and deducts it from the existing stock value. However, from an accounting standpoint, the cost of goods sold should be subtracted to precisely ascertain the closing balance. This fundamental omission can give rise to erroneous applications and further exacerbate the slowdown in sales tax return filings throughout the country.

Shehzad also proposed that FBR policymakers should reassess the need for taxpayers to submit monthly stock details. Permitting the submission of these strategically vital statements on a quarterly, biannual, or even annual basis could alleviate some of the burden on taxpayers, while still enabling the FBR to accomplish its objectives in a more simplified manner.