KARACHI: A wave of confusion has engulfed Pakistan's trading community as the Federal Board of Revenue (FBR) grapples with the implementation of a contentious new tax regulation. The Pakistan Chemicals and Dyes Merchants Association (PCDMA) has criticized the FBR for the lack of clarity surrounding SRO 55 of 2025, which mandates that all traders, including importers and retailers, file detailed stock reports using the complex Annex H1 form starting March 2025.

Salim Valimuhammad, chairman of the PCDMA, expressed his frustration over the situation, accusing the FBR of failing to provide clear guidelines or official communication on the new rules. He noted that many traders submitted their March 2025 returns without including Annex H1 due to inadequate instructions from the FBR. This has resulted in a bureaucratic challenge, preventing businesses from declaring opening stock in their April returns.

In response to the confusion, traders have engaged in extensive discussions with the FBR. Following sustained pressure, the tax authority has allowed revised returns without requiring modifications to Annex A or C, or the need for commissioner approval. However, Valimuhammad highlighted that traders are still experiencing difficulties in filing their April 2025 sales tax returns, raising concerns about the impact of the FBR's communication issues on compliance.

The PCDMA is now advocating for a 60-to-90-day grace period for traders to submit Annex H1 after filing returns, a concession similar to the 120-day window available to manufacturer exporters. Valimuhammad urged the FBR to collaborate with trade bodies and establish clear deadlines and guidance to avert future complications.

As the trading community navigates the aftermath of this regulatory challenge, attention remains on the FBR's next steps in addressing the situation and restoring order to the tax filing process.