ISLAMABAD: The Federal Board of Revenue (FBR) has introduced a new online facility enabling steel manufacturers to declare electricity units consumed during a tax month when the relevant power distribution company fails to report the consumption or submits its sales tax return late.
The measure is aimed at addressing sales tax filing difficulties faced by steel melters, re-rollers and composite units whose tax liability is linked to electricity consumption.
Under the existing mechanism, steel-sector taxpayers are required to file Annex-K with their sales tax returns to calculate their tax liability under the Thirteenth Schedule of the Sales Tax Act, 1990.
Normally, electricity consumption data is automatically transferred to a steel-sector taxpayer’s system after the relevant distribution company files Annex-C for the applicable tax period.
However, the FBR noted that problems arise when a distribution company fails to declare electricity supplied to a taxpayer or files its return after the due time. In such cases, the taxpayer’s electricity consumption may not appear in the system in time, making it difficult to calculate the correct sales tax liability and file the return.
To address the issue, the FBR has developed an online interface through which the relevant Chief Commissioner Inland Revenue can approve 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.
The Chief Commissioner will verify the electricity bills and relevant records before approving the consumed units online.
Once approved, the electricity consumption data will automatically appear in Annex-K of the taxpayer’s sales tax return, enabling the business to calculate its correct sales tax liability and submit the return.
The FBR has directed Chief Commissioners to ensure that applications are decided within the statutory timelines.
The new mechanism provides steel melters and re-rollers with a formal online route to address missing electricity-consumption data when delays or omissions by a distribution company previously affected their tax filing.
The FBR has also instructed its field formations to use the new facility and process such cases accordingly.