Update on Sales Tax Return Filing in IRIS

The Federal Board of Revenue (FBR) has introduced significant updates to the Sales Tax Return Filing process in the IRIS portal. These changes aim to improve transparency, compliance, and efficiency in the taxation system. Below is a detailed breakdown of the latest modifications:

Key Updates in Annexures

1. Annexure A

   Two new columns have been added:

   • Product Description – This will help taxpayers provide a detailed description of the goods.
   • Tax Reverse Charged u/s 4 – This ensures compliance with tax reversal mechanisms.
2. Annexure B

   The following columns have been added to improve input tax documentation:
   

   • Reason for Non-Creditable Input – To specify why certain inputs are non-creditable.
   • UOM (Unit of Measurement) – To standardize quantity measurement.
   • Rate – Ensuring accurate tax calculations.
   • Type – Clarification on the category of tax input.
   • Value Added Tax on Commercial Imports – For better tracking of VAT on imports.
3. Annexure C
   • Buyer Verification Status – Column has been introduced, allowing sellers to verify whether the buyer has confirmed the transaction, enhancing data integrity.
4. Annexure D

   Two new columns added:
   
   

   • Reason for Non-Creditable Input – To specify why certain inputs are non-creditable.
   • UOM (Unit of Measurement) – Ensuring consistency in reporting.
   • Quantity – To record the exact quantity of goods transacted.

Data Tab Updates

“Payable” Section:

Row 38 has been added under the “Payable” section, requiring users to “Select bank account for receipt of refund” when claiming refunds.

Pakistan’s Tax-to-GDP Ratio: A Cause for Concern

Pakistan’s current tax-to-GDP ratio stands at a mere 9% , significantly lower than the 16-18% achieved by regional countries like India and Bangladesh. This disparity highlights the urgent need for reform. Jawad argued that imposing taxes based on turnover has historically led to resistance among traders, disrupting established business operations. A fixed tax system, on the other hand, could mitigate these issues by offering predictability and reducing administrative complexities.

Mandatory Full HS Code Requirement

From now onwards, the full HS Code (8 digits) of a product must be selected while uploading invoices and filing sales tax returns on the IRIS portal. This ensures accurate classification of goods and minimizes discrepancies.

Impact of These Changes

Enhanced Compliance: The additional columns provide a more detailed breakdown of tax inputs and outputs, ensuring better regulatory adherence.

Improved Transparency: The Buyer Verification Status feature will help reduce fraudulent claims and mismatches in transactions.

Efficient Refund Processing: The bank account selection feature will facilitate smoother refund transactions.

Conclusion

These updates to the IRIS sales tax return filing process reflect FBR’s ongoing efforts to modernize the tax system and streamline operations for businesses and taxpayers. Tax filers are advised to adapt to these changes promptly to ensure compliance and avoid any issues during return submission.