If you are a Pakistani business owner or taxpayer, you may have faced the challenge of claiming input tax in a goods and services contract. In Pakistan, goods are taxed by the Federal Board of Revenue, while services are taxed in the destination province. When a project involves both goods and services and a contract is made between the Federal and a province, it can be challenging to understand how to claim input tax from one authority to another. In this article, we will guide you through the process of claiming input tax in a goods and services contract in Pakistan.
Integrated Invoices and CREST Online System
The invoices for goods and services contracts between the Federal and a province are integrated via the CREST online system. This means that invoices entered in the federal system that mention provincial taxes are also visible in the purchases section of the provincial portal and can be claimed in the relevant province.
Prerequisites for Claiming Input Tax
To claim input tax in a goods and services contract, you need to fulfill the following prerequisites:
- Sales Tax Invoices Availability: Sales tax invoices are available to be adjusted up to a period of six months. Make sure to claim your input tax within this timeframe to avoid losing the opportunity.
- Claiming Invoices: Invoices can be claimed only once, either in the Federal or Provincial database but not in both. Therefore, you need to choose the relevant authority to claim your input tax.
- Destination Province: At the time of entry of the invoice, the destination province (where the invoice will be claimed) must be mentioned. This is important to ensure that the input tax is claimed in the correct province.
- Attach a Copy of the Invoice: Lastly, a copy of the invoice shall be attached to the return. This is essential to support your claim for input tax.
In conclusion, claiming input tax in a goods and services contract in Pakistan may seem complicated, but it is achievable if you follow the prerequisites mentioned above. By understanding the process and ensuring that you fulfill all the requirements, you can claim input tax efficiently and timely. If you have any queries or concerns, it is always advisable to consult with a tax professional for guidance.