ISLAMABAD: The federal government has made it mandatory for cotton traders to register themselves with the sales tax department while cotton ginners have been advised to submit invoices and details of their supply of taxable cotton products.
As per new tax rules, the cotton traders are required to furnish details pertaining to purchases and related sales tax returns on a monthly basis. Those failing to submit the details of purchases and supplies within the stipulated time frame would not be entitled to input tax refund claims.
On the other hand, the Federal Board of Revenue (FBR) may take action against such violations in line with the rules specified in the Sales Tax Act.
According to a notification issued on Thursday, sales tax returns must be filed by the traders instead of cotton ginners. Consequently, sale and purchase of cotton by non-registered traders has been banned and they will not be able to make purchases from ginners.
According to the notification, the cotton ginners will have to issue invoices as per Section 23 of the Sales Tax Act 1990. The invoice must state, among other details, the value of cotton supplied to the traders and the applicable sales tax.
Registered traders would have to ensure that payment challans against their purchase invoices bear details of supplies, the name of supplier, registration number and related returns will be submitted to the FBR.
Traders who fail to make tax payments in time would no longer be entitled to the input tax refund claims of the FBR until clearance of their dues along with additional taxes and penalties as per Section 33 and 34 of the Sales Tax Act 1990.
(This news/article originally appeared in The Express Tribune on September 20th, 2019)