Referring to reports that the government is ready to withdraw the amendment introduced through the Finance Act 2016 of disallowing input tax adjustment against the provincial services, provided the provinces are ready to pay the due amount to the Federal Board of Revenue (FBR) on account of tax adjustments, the Punjab Revenue Authority (PRA) has said that it welcomes the initiative.
A spokesperson for the PRA said the initiative is in the best public interest. The PRA has always been an advocate for the facilitation of taxpayers and supportive of taxpayers’ due rights. However, it is clarified that the Punjab Province does not owe any amount to the FBR on account of input tax adjustment. Instead, as a stakeholder, the PRA has worked closely with the FBR in light of the MoU dated March 13, 2014 which was signed between the FBR, Finance Division and the PRA wherein it was agreed that both the FBR and PRA will periodically work out and settle their revenue accounts in light of their respective cross input tax adjustments. The spokesperson said that as per initial working up to April 2015, the FBR owes a huge amount to the Punjab province on account of input adjustment claims which run into billions of rupees, part of which has already been conceded as payable by the FBR to Punjab. PRA has been seeking immediate payment of the already conceded amount and has also requested the FBR to complete the remaining reconciliation process at the earliest.
The PRA has said that it hopes that the initiative taken by Federal Finance Minister Ishaq Dar and Advisor to Prime Minister on Revenue Haroon Akhtar Khan will definitely redraw the terms of understanding between the FBR and the provincial revenue authorities in the broader perspective of the VAT system keeping in view the taxpayers’ rights.