Pakistan’s business community is facing a major hurdle due to a malfunction in the Federal Board of Revenue’s (FBR) portal. This glitch is denying input tax adjustments to registered sales tax persons, creating significant disruption.
Implementation of SRO 350 Creates Initial Confusion
The issue stems from the implementation of SRO 350 in March 2024. This statutory regulatory order mandated that all submitted sales tax returns be treated as provisional initially. However, the portal seems to be misinterpreting this rule.
Unexpected Portal Behavior Creates Administrative Chaos
The core problem lies in the portal’s functionality. It appears to be disallowing input tax claims for all vendors, regardless of their return submission status. This unexpected glitch has resulted in a cascade of administrative headaches for businesses. Companies are now scrambling to verify and re-verify the submission of returns by their suppliers in order to secure their input tax claims.
Glitch Casts Doubt on Effectiveness of Tajir Dost Scheme
Tax professionals suspect either a significant technical error or a self-imposed restriction by the FBR. The confusion caused by the provisional nature of returns, coupled with this glitch, has created uncertainty for businesses. It has also led to redundant follow-up processes between buyers and suppliers, further complicating the already tedious tax filing process.
This situation poses a serious challenge to the FBR’s objectives under the recently launched Tajir Dost Scheme. This scheme aims to integrate undocumented traders into the formal economy. The troubled handling of tax adjustments for existing businesses raises concerns about the effectiveness of the government’s strategy to widen the tax net.
Businesses Demand Resolution, FBR Remains Silent
Adding to the frustration is the reported lack of support from the FBR. Businesses facing these issues have received minimal aid or clarity on resolving them. This lack of communication has led to increased operational costs and hindered financial planning for numerous businesses.
Despite the ongoing turmoil, only about 200 traders have reportedly registered under the Tajir Dost Scheme since its inception last month. This lukewarm response can be attributed partly to the current complications experienced by those already within the system. This highlights a significant trust and efficiency gap in the administrative processes of the FBR.
The business community is calling for an urgent and transparent resolution to these issues. Clear communication and swift rectification of the portal’s functionalities are seen as crucial to restoring confidence among Pakistan’s taxed sector and to successfully integrate more traders into the formal economy.
As of now, the FBR has not issued an official response to the allegations of technical difficulties within the portal. The continuation of these problems could have long-term detrimental effects on the country’s tax administration and its relationship with the business community, potentially hampering economic growth and tax compliance initiatives in the future.
