By Abdul Ghani

The Federal Board of Revenue (FBR) has introduced a new online facility allowing steel manufacturers to report electricity units consumed during a tax month when the relevant power distribution company fails to report the consumption or files its sales tax return late, according to a document available with Wealth Pakistan.

The measure aims to resolve a tax-filing problem faced by steel melters and re-rollers, whose sales tax liability is linked to electricity consumption.

According to the document, steel melters, re-rollers, and composite units must file Annex-K with their sales tax returns for calculation of tax liability under the Thirteenth Schedule of the Sales Tax Act, 1990.

Normally, the system automatically picks up electricity units consumed by a steel-sector taxpayer after the relevant power distribution company (DISCO) files its Annex-C for the tax period.

However, the FBR has acknowledged that taxpayers face difficulties when DISCOs either fail to declare electricity supplied to them or file their returns late. As a result, electricity consumption does not appear in the taxpayer's system in time, making it difficult to calculate and file the correct sales tax liability.

To address the issue, the FBR has now developed an online interface through which the relevant Chief Commissioner Inland Revenue can approve thedeclaration of electricity consumption after verifying the taxpayer's electricity bills.

Under the new procedure, affected taxpayers will submit an application through the Iris online tax system, along with the required information and supporting documents, within the prescribed statutory period.

After verifying the electricity bills and other relevant records, the Chief Commissioner will approve the consumed units online.

Once approved, the electricity consumption will automatically appear in Annex-K of the taxpayer's sales tax return, allowing the business to calculate its correct sales tax liability and file the return.

The FBR has also instructed Chief Commissioners to ensure that such applications are decided within the statutory timelines.

The new mechanism is particularly important for steel melters and re-rollers because a delay by a power distribution company could previously create a compliance problem for a taxpayer even when the business possessed electricity bills showing its actual consumption. The facility therefore provides steel-sector taxpayers with a formal online route to correct missing electricity-consumption data instead of waiting for the DISCO's information to appear in the automated tax system.

The FBR has directed all its field formations to use the new facility and process such cases accordingly.

Credit: INP-WealthPk