KARACHI: The Karachi Chamber of Commerce and Industry (KCCI) has raised significant concerns over the Inland Revenue Service's (IRS) classification of taxpayers as "non-active," despite extended deadlines for sales tax return filing by the Federal Board of Revenue (FBR) for February and March 2025.

Muhammad Jawed Bilwani, President of KCCI, pointed out that taxpayers are being unjustly labeled inactive due to filing delays, even though extensions were granted. "This is causing unnecessary difficulties for honest taxpayers who are already trying to comply with the ever-changing regulatory environment," he said.

Bilwani highlighted that the sales tax return filing system is under strain, partially due to recent abrupt changes. He stated, "The FBR's decision to extend the deadlines clearly reflects that the system is struggling to cope. Yet, instead of facilitating the taxpayers, they are being penalized, which is counterproductive."

Technical difficulties have also been noted, particularly with new mandatory requirements such as eight-digit Harmonized System (H.S.) codes and additional annexures like 'H-1', 'J', and 'C-1'. Local manufacturers, in particular, face challenges in identifying correct H.S. codes for their products, leading to confusion and inconsistency.

Bilwani suggested that the system should automatically assign appropriate H.S. codes to reduce confusion. He also criticized the limitation of unit measurements to kilograms, proposing that a dropdown menu should offer all standard units of measurement.

He cautioned against the abrupt implementation of new annexures, recommending a phased approach with educational support. Bilwani emphasized that the FBR should refrain from penalizing taxpayers for filing delays during periods with granted extensions, calling this practice legally inappropriate.

In conclusion, Bilwani urged the FBR to adopt a more pragmatic and taxpayer-friendly approach. "The current system creates undue hardship for compliant businesses. It is essential that reforms are introduced with proper planning, consultation, and support mechanisms to ensure fairness and ease of doing business," he said.