Would Automobile Companies Avail This Tax Benefit?
Section 8B(1) of Sales Tax Act, 1990 provides restriction on input tax adjustment up to 90 pc of output tax for a tax period.
FBR issued SRO 1190(I)/2019 on 02.10.2019 and added two tables in it. Persons specified in Table 1 were entirely excluded from the purview of said restriction, which means they are allowed to adjust 100 pc input tax against output tax for a tax period. Persons in Table 2 were allowed input tax adjustment to the extent of only 95 pc instead of 90 pc.
The said SRO has been amended from time to time to include more persons under the SRO, be it Table 1 or Table 2. FBR on 21st January 2020 has further amended SRO 1190 through SRO 36(I)/2020 to include “AUTOMOBILE” companies in Table 2. Fun part is it places a condition to avail this 5% extra input tax adjustment. The automobile companies will have to enlist themselves or remain listed on Pakistan Stock Exchange till December 2020 if they want to avail this benefit.
Is cost of enlistment comparable to this benefit? This is a question which can only be answered in future when automobile companies take enlistment decision.
What are your thought on this?
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