The Federal Board of Revenue has drafted a statutory regulatory order (SRO) to facilitate over 100,000 wholesalers across the country by allowing them 97 percent input tax adjustment, instead of existing 90 percent. Sources told Business Recorder here on Tuesday that the draft of the notification has been finalised and wholesalers would hear the good news after fulfilment of legal formalities for issuance of the necessary notification.
Through proposed amendment to the SRO564(I)/2012, the Board would allow 97 percent input tax adjustment to wholesalers. Since most of the wholesalers have not filed their sales tax returns for the tax period of June 2012 and wanted to change their status to distributors or other categories of taxpayers, the proposed amendment would facilitate the wholesalers' community in filing of their sales tax returns. The drafting of the SRO for the wholesalers is a very major development for the whole community, sources said.
Sources said that wholesalers had high turnover, but their actual profit margin was very low. The wholesalers cannot operate under the restrictive tax adjustment regime. The SRO564(I)/2012 has included 'wholesalers' in categories of taxpayers, who are not allowed to adjust input tax in excess of 90 percent of their output tax. This restriction has been imposed on the 'wholesalers' through issuance of the said SRO. Under SRO 564(I)/2012, amendment has been made in SRO 647(I)/2007 dated June 27, 2007 to exclude "wholesalers" from the said SRO.
Previously, 100 percent adjustment of input tax was allowed. Now, wholesalers are allowed to adjust only 90 percent of the input tax and provisions of Section 8B of the Sales Tax Act of 1990 would also be applied on them. Under Section 8B of the Act, a registered person shall not be allowed to adjust input tax in excess of 90 percent of the output tax for that tax period.—Agencies