Sources told Business Recorder on Monday that the issue came to light during analysis of revenue collection in the board-in-council meeting on September 6, 2007. Some FBR Members expressed fear that sales tax collection has included certain amount of FED, which needed to be investigated.
FBR Chairman directed the members to carefully look into the matter through sales tax and FED analysis during this period. In this regard, it would be analysed whether the amount collected under excise duty head had been shown in the sales tax collection. Different possibilities would be examined in detail to reach any conclusion.
Sources said that the board has issued combined sales tax and federal excise returns form. Under the single form, separate columns have been made for depositing sales tax and excise duty. Therefore, taxpayers have to deposit both sales tax and excise duty through one return form.
On the other hand, old sales tax return form did not specify the column for excise duty. There was a separate excise return form under previous arrangement.
In certain cases, it had been brought to the notice of FBR that taxpayers had deposited both sales tax and excise duty under the old sales tax forms. Despite the fact that the old format did not entertain excise amount, the FED was ironically deposited under the head of 'others'. Obviously, taxpayer is only interested in depositing the due amount of sales tax/excise duty.
This situation might have resulted in transferring some amount of excise duty collection under the head of sales tax. The reconciliation of sales tax/excise data and analysis of returns would further guide tax authorities on the issue.
Now, the FBR has issued instructions to the field formations to depute sales tax and excise officials at certain designated branches of National Bank of Pakistan (NBP) to assist the bank officials in collecting the forms under the new format. Sales tax officials at banks would ensure that no taxpayer should deposit the amount under the old return format.
During board-in-council meeting, it was noted that there was a shortfall of one billion rupees in FED collection from Large Taxpayer Unit (LTU), Karachi and Collectorate, Rawalpindi each during 2007-08. Tax authorities have directed Member Sales Tax to examine the matter, as overall FED collection has an important role after imposition of one percent special excise duty (SED) on the import and local supply stages.