Businesses suffer as new VAT form full of inconsistencies

The faulty format of new Value Added Tax (VAT) returns has forced many of the businesses to submit their return in the older version, people familiar with the situation said.

Officials of the National Board of Revenue (NBR) said the VAT authority scraped the old VAT return forms on June 19 last and it is not "legally acceptable" to submit returns in the invalid form.

In August and September, most of the VAT payers submitted their returns in the old form.

Officials said the field-level VAT offices also raised their objections to the inconsistencies in the new VAT return forms.

Following the objections, the NBR attempted to issue another new form addressing the faults.

The board would issue a gazette notification by cancelling the existing form and introducing new version, officials said.

Currently, some 32,000 businesses submit their VAT returns regularly out of 840,000 Business Identification Number (BIN) holders.

VAT officials said the NBR has introduced the new return forms to facilitate VAT payers to submit their returns online.

A senior VAT official said it is not legally acceptable to submit VAT returns in the old form.

"As the old form turned invalid with the introduction of new forms, the VAT payers have to submit their returns in the new version," he said.

He, however, did not make it clear whether the VAT payers need to submit returns afresh in the new form.

According to the VAT law-1991, tax payers are required to submit their returns within the 15th of every month.

Officials said the NBR has submitted any guidelines or instructions for filling out the VAT returns yet.

They said there are objections from the field-level VAT commissioners about the inconsistencies in the new VAT return form.

The new form allowed traders to remove their goods from factories despite not having balance in the current account, field-level VAT officials said.

The new form has no column for providing economic code number of the supplementary duty. There is also no space for stating the amount of VAT that businesses deposited through the treasury chalan.

The new forms also created the scope for adjusting VAT and Supplementary Duty with each other, making it contradictory for the VAT law. Tax officials said the VAT online project has framed a new form following suggestions from the field-level officials.

The effectiveness of the draft VAT return form will be tested with the participation of some large taxpayers including Unilever, British American Tobacco, Grameenphone and Hotel Westin.

[email protected]