Despite following the guidelines set out by the FBR in its SRO 1337 issued in December 2020, the Fertilizer Manufacturers of Pakistan Advisory Council (FMPAC) has expressed concern about show-cause notices received by industry players from the FBR for disallowance of input tax for sales to unregistered persons.
In a letter to FBR Chairman Sher Shah Malik, FMPAC Executive Director Sher Shah Malik said that the fertilizer sector appreciates FBR’s efforts to chronicle the economy and make conducting business easier.
Over 1,000 big fertilizer dealers have registered for GST, with nearly all of them having NTN, thanks to the industry’s collaboration and assistance. In the same vein, he continued, “we would like to call your attention to the following concern.”
Following the promulgation of the Tax Laws (Second Amendment) Ordinance 2019, input GST was disallowed on sales to unregistered persons exceeding Rs10 million in a month / Rs100 million in a financial year, creating significant exposure for the fertilizer industry, according to FMPAC Executive Director. After careful consideration, the FBR issued a notice (SRO 1337) in December 2020, granting an exemption in exchange for dealers’ information, such as bank account numbers, to the FBR. Except for a few bank accounts of terminated / one-off clients, the industry has given all information relevant to the dealers. The industry was informed about the exception being granted in this instance following compliance with SRO 1337 throughout numerous meetings.
Despite submitting the aforementioned information and a satisfactory report from the concerned field formation, enterprises have begun getting show-cause warnings for disallowance of input tax for sales to unregistered people, according to Sher Shah Malik.
FMPAC requested that the field formations be educated on the grant of exemption from input tax inadmissibility/expenditure disallowance on sales to unregistered dealers whose information has been furnished in compliance with the SRO and be directed to withdraw the notices, stating that the fertilizer industry is one of the best-documented and tax-compliant
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