Sales Tax Instructions

Sales Tax Instructions, 2009
C. B. R.‘S LEAFLET NO.607/1/96, JUNE, 1996
CONCERNS ABOUT INCOME TAX ASSESSMENTS.
INCOME TAX IMMUNITY
In order to encourage correct declaration of sales by registered persons, the Government
has provided Income Tax immunity in the second Schedule of Income Tax Ordinance.
The aim of his immunity is to encourage taxpayers to avail this one time opportunity
correct declarations of their sales in their Sales Tax returns. On the basis of information
in the sales tax return filed by registered taxpayers after budget 1996-97, no income tax
case already finalized will be reopened merely because a taxpayer previously had not
declared his sales correctly or that he had suppressed his sales. Similarly no person will
be required to file an Income Tax Return on the basis for any of the earlier years.
The relevant extracts from the budget speech of the Minister of State for finance and the
legal amendments contained in the Finance Act, 1996 to implement this immunity are
reproduced below:--
EXTRACTS FROM BUDGET SPEECH
― With the introduction of sales tax of there of a general apprehension in the business
community that a correct declaration of the quantum of their sales might lead to problems
with their Income Tax assessments. In order to provide all businessmen an opportunity of
putting their house in order by declaring their sales correctly in the sales tax return in the
first year, it is proposed to provide an immunity from reopening of previous years‘
income tax assessments on the basis of sales declared in the sales tax returns this year.
This is a one-time concession. I hope the business community will fully utilize the chance
by declaring their correctly. Next year all the normal rules in income tax regarding such
cases, with all the consequences they entail, shall fully apply. This facility will also be
available to those factories which were not paying tax in the past.‖
AMMENDMENT IN THE SECOND SCHEDULE TO THE INCOME TAX
ORDINANCE, 1979 THROUGH THE FINANCE ACT, 1996
―(24) The provisions of section 56, 65 or section 66A shall not apply to a registered
person under the Sales Tax Act, 1990, deriving income under the head ―business or
profession‖, in respect of an assessment year prior to 1996-97, on account of suppression
or non declaration of sales detected on the basis of sales tax returns filed by such
persons‖.
GROSS PROFIT RATES
Some apprehensions have been expressed by the trade community about the application
of gross profit rates on the total turnover of sales at the whims of the assessing officer of
income tax department. These concerns are based on misunderstanding. Through an
amendment in section 32 of the Income Tax Ordinance, 1979, the Central Board of
Revenue is authorized to notify or prescribe the GP rates in respect of any trade, business
or profession for any assessment year(s). The opinion remains with the assessee to accept
the same or get assessed on merit.
Ever since the aforesaid amendment was enacted in 1993, the Central Board of Revenue
has been interacting with the trade and industry for their views/ suggestions regarding the
fixation of GP rates. No rates have been fixed till now on account of lack of response
from the business community.