Latest FBR Releases
Under the instructions of Chief Commissioner, Large Taxpayer Unit, Karachi (LTU) Ms. Yasmin Saud, a meeting was held with the representatives of banks, financial institutions and corporate taxpayers on 9th March, 2010 in order to discuss issues arising in connection with the levy of 16% Federal Excise Duty (FED) on services provided by banking and non-banking financial companies. Mr. Nasir Butt, Commissioner (Audit-II), LTU welcomed the participants.
From 1st July, 2009, the rate of FED on banking services has been enhanced from 10% to 16%, and it was converted to VAT mode. Thus, banks and financial institutions were allowed to adjust the FED and Sales Tax paid on their purchases of goods or services against their output tax liabilities. Likewise, registered clients of banks and financial companies also became entitled to adjust the amount of FED paid to banks or financial companies. However, to make such adjustment, registered persons need invoices issued by the banking companies, which is causing some problems. Presently banks are only issuing certificates on the specific request of their corporate clients, and these are not legally tax invoices. To bring this practice in line with the legal requirement, suggestions were taken from the stakeholders.
During the meeting, the representatives were encouraged to express their views and inform about the practical problems related to issuance of invoices. Officers of LTU discussed various options which could facilitate the taxpayers, and noted the proposals given by the participants. On the basis of this feedback, LTU will compile a report and make recommendations to FBR for formulating a uniform procedure for the issuance of invoices by banks and non-banking financial institutions for the facilitation of taxpayers.