FBR advises eligible taxpayers update their profile to claim exclusion from adjustable input tax

KARACHI: The Federal Board of Revenue (FBR) has advised the taxpayers to update their online registration profile in the light of SRO 1190(I)/2019 to entitle them to claim exclusion from the purview of Adjustable Input Tax under Section 8B of the Sales Tax Act, 1990.

According to SRO 1190(I)/2019, persons registered in electrical energy sector; oil marketing companies and petroleum refineries; fertilizer manufacturers; distributors; gas distribution companies; telecommunication services; Pakistan Steel are excluded from the purview of Adjustable Input Tax.

Moreover, persons making zero-rated supplies including exports (provided that value of such supplies exceeds 50% of value of all taxable supplies in a tax period) are also excluded from the purview of Adjustable Input Tax.

Registered persons other than manufacturers making supplies of items covered under the Third Schedule of Sales Tax Act (provided that value of such supplies exceeds 80% of value of all taxable supplies in a tax period); and commercial importers are entitled to claim exclusion of Adjustable Input Tax.

Section 8B of Sales Tax Act provides that a registered person shall not be allowed to adjust tax in excess of 90% of the output tax in a tax period.

FBR in a letter to Pakistan Tax Bar Association, Sialkot, noted the Board has already issued necessary directions to all field offices that the cases of such taxpayers claiming that they are falling under the purview of SRO 1190(I)/2019 should be analyzed and if found as per law, such taxpayers should be advised to update their online registration profile in the light of SRO 1190(I)/2019 to entitle them to claim exclusion from the purview of Adjustable Input Tax under Section 8B of the Sales Tax Act, 1990.

Taxpayers can update their registration profiles by visiting at their concerned field office.

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