May 1, 2024 In a recent development that has caused widespread disruption among the business community, the Federal Board of Revenue (FBR) portal is currently denying input tax adjustments to registered sales tax persons, in the wake of the implementation of SRO 350. Issued on March 7, 2024, this statutory regulatory order declared that all sales tax returns submitted would initially be treated as provisional. However, by month-end, the portal is set to reassess and potentially disallow the input tax claims for vendors who have not submitted their sales tax returns. This systemic issue is leaving registered businesses in a bind, as the FBR’s sales tax return portal is reportedly disallowing the input tax across all registered entities in Pakistan, regardless of compliance status. This unexpected move has resulted in a cascade of administrative headaches, as businesses scramble to verify and reverify the submission of returns by their suppliers to secure their input tax claims. Tax professionals are pointing to what seems to be either a significant technical glitch or a self- imposed restriction by the FBR that is causing these disruptions. The provisional nature of the sales tax returns has not only created uncertainty but also a redundant cycle of follow-ups among buyers and suppliers, complicating an already tedious tax filing process. The situation poses a serious challenge for the FBR’s objectives under the recently launched Tajir Dost Scheme, aimed at integrating undocumented traders into the formal economy. The problematic handling of tax adjustments for already registered businesses raises concerns about the effectiveness of the government’s strategy to widen the tax net. “As long as these glitches persist, it is highly unlikely that traders outside the tax system will feel encouraged to register,” noted a senior tax…