KARACHI, July 29: The Central Board of Revenue will seek proposals from tax bars with regard to incorporating suitable amendment to rules and regulation governing e-intermediaries, as the current section 52A(5) of Sales Tax Act is too harsh and damaging to tax consultants.

This was stated by Shahid Ahmed, member sales tax CBR, at the concluding session of a workshop on sales tax organised by the Income Tax Bar Association, Karachi (ITBAK) here on Saturday.

Responding to a point raised by ITBAK President Ali Rahim, the member sales tax has agreed that liabilities attached with sales tax e-intermediaries are harsh, therefore, new rules are being framed for which the CBR will seek proposals from the tax bars.

Mr Ahmed said the CBR had fixed high penalty for non-filing of sales tax returns because it hurt others in claiming input tax, therefore, the spirit behind high penalty was to ensure that sales tax returns were filed timely and regularly. Against this, he said penalty for income tax was very low which meant that in case a taxpayer did not file return he hurt no body other than his own interest.

The collectors sales tax did not agree with a point raised by the ITBAK president that by empowering the collector of sales tax for the revision of return will breed corruption and said that on the contrary it was a calculated decision taken by the CBR to give this responsibility to the collector only because corruption normally ran at the lower level of staff members.

Referring to refund claims, Mr Ahmed said without submission of required documents and fixing of time, the refund process could not be streamlined. However, he said an audit tray was being prepared for registered persons where transactions would be monitored of those having a turnover of over Rs5 million per annum.

He said the documentation was gradually taking care of all shortfalls and day by day loopholes were being closed. Therefore, he stressed that there was greater need for the automation of systems so that larger number of taxpayers could use e-filing or electronic filing of their returns.

He said the registration with sales tax entitled a taxpayer to input adjustment, therefore, there was greater need to work in documented segment, which also allowed the CBR to be more flexible with taxpayers. The member sales tax said once entire revenue collections were made through electronic filing and a database was developed, no decision would be based on manual processing or input based outside the system.

Undoubtedly, Mr Ahmed said the documentation was going on at a faster pace but still there were a lot of loopholes in the income tax and sales tax collection system, but in due course they would be eliminated with further automation of the system. Therefore, he said technology should be used at all levels and putting or purchasing computers did not mean that “we have automated our systems”.

He said around 6,000-7,000 corporate clients (taxpayers) were today filing their returns electronically and hoped that with due course more taxpayers would take benefit from this technology. Mr Ahmed pointed out that due to higher documentation and use of automation, the CBR had managed to collect a record revenue of Rs712 billion last fiscal year and fixed a target of Rs835 billion, or 20 per cent higher, revenue collection for the current fiscal year.

Mr Ahmed did not agree that the sales tax collection did not achieve its target and said the collection of domestic sales tax achieved a growth of 20 per cent, whereas sales tax on imports grew by 18 per cent. However, he stressed upon the need that it was necessary that registered sales tax persons should submit their sales and purchase invoices so that verification could be made for making refunds.

Earlier in the day, four speakers spoke on different issues relating to sales tax. Mohammad Shoaib dealt at length on Sales Tax Rules, 2006. Syed Hammad Raza Zaidi spoke on provincial sales tax and federal excise duty on services collected as sales tax. Adnan Mufti read his paper on ‘sale tax schedules’ while Mehmood A Razzak spoke on ‘special procedures deviation from VAT mode’.