Tax Relief for our Clients from lobbying
Previously our retail industry client was allowed to adjust input sales tax upto 90% of the output sales tax u/s 8B of the Sales tax Act 1990 [‘Act’] which led to a mandatory minimum payment of 10% of the output sales tax. Since the value addition of this industry is low, considerable amount of input sales tax remained unadjusted throughout the year which resulted in piling up of huge amount of sales tax refunds and cash flow glitches, and forced our client to face cumbersome refund application process each year.
INCREASED INPUT TAX ADJUSTMENT UPTO 95%
We pleaded the case of our client before tax authorities and after intense lobbying and discussions with tax officials including FBR Chairman, we were successful in obtaining relief for our client in the form of SRO 1190 dated October 2, 2019 through which FBR has increased the input sales tax adjustment limit from 90% to 95% of the sales tax output for our client’s industry. This change will result in a drastic decline in the amount of the minimum sales tax payments which our client was required to discharge throughout the year and help in better cash flow management.