Pkrevenue.com

Author: Mrs. Anjum Shahnawaz

  • ITO-2001 defines resident, non-resident persons

    ITO-2001 defines resident, non-resident persons

    ISLAMABAD: Income Tax Ordinance, 2001 has defined resident and non-resident Pakistan for the purpose of apply rate of income tax on domestic source of income.

    The Federal Board of Revenue (FBR) issued ITO 2001 (updated June 30, 2020) and differentiated residents and non-resident Pakistanis.

    Various sections of Income Tax Ordinance, 2001 explains the definition:

    Section 81. Resident and non-resident persons

    Sub-section (1): A person shall be a resident person for a tax year if the person is —

    (a) a resident individual, resident company or resident association of persons for the year; or

    (b) the Federal Government.

    Sub-section (2): A person shall be a non-resident person for a tax year if the person is not a resident person for that year.

    Section 82 – Resident individual: — An individual shall be a resident individual for a tax year if the individual —

    (a) is present in Pakistan for a period of, or periods amounting in aggregate to, one hundred and eighty-three days or more in the tax year;

    (ab) is present in Pakistan for a period of, or periods amounting in aggregate to, one hundred and twenty days or more in the tax year and, in the four years preceding the tax year, has been in Pakistan for a period of, or periods amounting in aggregate to, three hundred and sixty-five days or more; or

    (c) is an employee or official of the Federal Government or a Provincial Government posted abroad in the tax year.

    Section 83 – Resident company: A company shall be a resident company for a tax year if —

    (a) it is incorporated or formed by or under any law in force in Pakistan;

    (b) the control and management of the affairs of the company is situated wholly in Pakistan at any time in the year; or

    (c) it is a Provincial Government or Local Government in Pakistan.

    Section 84 – Resident association of persons: — An association of persons shall be a resident association of persons for a tax year if the control and management of the affairs of the association is situated wholly or partly in Pakistan at any time in the year.

  • PTBA urges form issuance for updating taxpayers’ profile

    PTBA urges form issuance for updating taxpayers’ profile

    ISLAMABAD: Pakistan Tax Bar Association (PTBA) has urged the Federal Board of Revenue (FBR) to launch form for mandatory profile update by registered taxpayers as compliance date is fast approaching.

    The PTBA on November 13, 2020 sent a letter to Muhammad Javed Ghani, Chairman, FBR, urging him to publicize prescribed form for updating business profile by taxpayers under section 114A of Income Tax Ordinance, 2001.

    “The PTBA had tried to highlight this issue on September 26, 2020 but unfortunately no action whatsoever has been taken by the FBR authorities in this regard,” the PTBA said.

    An important amendment was made through Finance Act, 2020 regarding updation of business profile by the taxpayers under section 114A of the Ordinance, 2001 but not specific prescribed form for the purpose is still introduced by the FBR.

    “It is very unfortunate for the PTBA that why said prescribed form is still not publicized by the concerned FBR authorities because it is also a time consuming work for the taxpayers / tax consultants and last date for updating the same is December 31, 2020 as per provisions of law.”

    The PTBA also highlighted the issue of calculation errors of minimum tax for tax year 2020.

    “The last date for submission of return has been notified as December 08, 2020 and till the settlement of issue regarding determination of minimum tax liability, the taxpayers would not be able to submit returns within due date, so action in this regard be taken at priority basis otherwise PTBA would have no other option but to ask for further extension for which the body of PTBA is not desirous.”

    The PTBA said the scheme of the Income Tax Ordinance, 2001 is based on universal self assessment. “Self assessment does not mean only assessment of income, rather assessment of tax liability is also not only the prerogative and right but also obligation of the taxpayer,” the PTBA said, adding that the relevant columns related to attributable taxable income against minimum tax liability which have been blocked in the portal be opened for the taxpayers to incorporate his/its own attributable income as the said option has been provided in the columns related to tax collections made under section 148 of the Income Tax Ordinance, 2001.

  • SBP directs banks to extend working hours for duty, tax collection

    SBP directs banks to extend working hours for duty, tax collection

    KARACHI: State Bank of Pakistan (SBP) on Sunday directed all banks to observe extended working hours to facilitate collection of duty and taxes on Monday November 30, 2020.

    A notification issued by the central bank, stated that in order to facilitate the collection of government receipts / duties / taxes, it has been decided that the field offices of SBP Banking Services Corporation (SBP-BSC) and authorized branches of National Bank of Pakistan (NBP) will observe extended banking hours till 9:00 PM on November 30, 2020 (Monday) for which purpose a special clearing has been arranged at 6:00 P.M. on the same day by the NIFT.

    All banks are, therefore, advised to keep their concerned branches open on November 30, 2020 (Monday) till such time that is necessary to facilitate the special clearing for Government transactions by the NIFT.

  • KTBA identifies flaws in online tax return filing

    KTBA identifies flaws in online tax return filing

    KARACHI: Karachi Tax Bar Association (KTBA) on Saturday said that it has detected calculation errors on the online return filing portal of the Federal Board of Revenue (FBR).

    In this regard the tax bar sent a letter to Dr. Muhammad Ashfaq, Member Inland Revenue (Operations), Federal Board of Revenue (FBR) apprising him that the issues were discussed with o November 17, 2020 but the problems were same unresolved till to date.

    It is pertinent to mention that the last date for filing income tax return is December 08, 2020. Such problems may adversely affect the total number of return filing.

    The tax bar in its latest letter to the Member IR Operations highlighted the same issues for early resolution for smooth return filing.

    The tax bar said that IRIS Portal was not correctly calculating the tax on Behbood Saving Certificate and others. It said that till today working of tax on yield from Behbood Saving Certificate or Pensioners Benefit Account and Shuhada Welfare Account is still incorrect where average rate of tax exceeds 10 percent of total income.

    The tax bar suggested that to show the yield as a separate block of income in order to avoid the calculation issues.

    The KTBA said that minimum tax calculation was also showing incorrect working. The tax bar suggested that for tax year 2020, there has been a paradigm shift in taxation of incomes previously taxed under final tax regime and now are being taxed at minimum.

    “Although, the law had been amended yet there are not instructions given by the FBR as to how to cater to these situations.”

    Working under these situations is showing incorrect tax amount which renders the return defective and there is need to correct the working, the tax bar added.

    The tax bar highlighted issue in tax deducted/paid under Section 233A by a stock exchange registered in Pakistan, and said they were unable to claim tax deducted/paid in case of sale/purchase of shares under section 233A of the ordinance as the same is not available in adjustable tax regime. The tax bar suggested to provide the column for the tax year 2020.

    Similarly, in case of tax deducted/paid under section 236W on purchase of immovable property, it said that they were unable to claim tax deducted/paid in respect of property purchased before June 30, 2019 and tax under section 236W of the Ordinance is paid subsequently i.e. during the tax year 2020; as the same is not available in description/heads of Final Tax Regime (FTR)/Minimum Tax Regime (MTR).

    Therefore, it is suggested to provide the column for the tax year 2020.

    The KTBA pointed out that through Finance Act, 2019, tax regime for various income entities was changed from FTR to Minimum Tax. Accordingly, entities following special tax year are required to file January-June under FTR and July – December under minimum tax. However, IRIS portal does not cater for such situation.

    “For the income stream having special tax year where taxation regime is changed from final tax to minimum tax, the IRIS portal should cater both regimes,” the KTBA suggested.

  • FBR obtains information of motor vehicle buyers

    FBR obtains information of motor vehicle buyers

    The Federal Board of Revenue (FBR) is taking significant steps to obtain detailed information about motor vehicle buyers from manufacturers.

    (more…)
  • Weekly Review: COVID results to move market

    Weekly Review: COVID results to move market

    KARACHI: The stock market likely to move with increase or decrease in number of cases during the next week.

    Market’s mood on Monday is contingent upon the the news flow over the weekend, analysts said.

    The lockdown effects need to be seen on the numbers, however, the cases & infection rates are still on the rising trend.

    Economic activity is low while the partial lockdown should reduce demand for USD to keep currency/FX reserves buoyant.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) gained 1.5 percent on week-on-week basis.

    Major events during the outgoing week were:

    – Monetary Policy Committee maintaining policy rate at 7 percent,

    – news that government is expected to hire advisers for Eurobond by early next week,

    – imposition of constraints on business hours across country on recommendation of NCOC amid rising Covid cases,

    – SBP’s forex reserves crossing $13 billion mark on arrival of government of Pakistan official inflows and

    – news that government intends to pay dues of 53 IPPs in shape of promissory notes in two or three installments.

    Foreigners continue to be sellers in the market, as during the week they sold equities worth $8.39 million. This selling was largely absorbed by companies, mutual funds and insurance sector as they net purchased equities worth $2.35 million, $1.39 million and $1.44 million respectively s of yesterday.

  • FBR notifies transfer, postings of customs officers

    FBR notifies transfer, postings of customs officers

    ISLAMABAD: Federal Board of Revenue (FBR) on Friday notified transfer and posting of officers of Pakistan Customs Service (PCS) in BS-17 to BS-19 with immediate effect and until further orders.

    The FBR notified transfers and postings of following officers:

    01. Shoukat Ali (Pakistan Customs Service/BS-19) has been transferred and posted as Additional Director, Directorate General of Input Output Coefficient Organization, Karachi from the post of Secretary, Federal Board of Revenue (Hq), Islamabad.

    02. Syed Fazal Samad (Pakistan Customs Service/BS-19) has been transferred and posted as Additional Collector, Model Customs Collectorate of Appraisement and Facilitation (West), Karachi from the post of Secretary, Federal Board of Revenue (Hq), Islamabad.

    03. Amanullah (Pakistan Customs Service/BS-18) has been transferred and posted as Secretary, (OPS) (Customs Wing) Federal Board of Revenue (Hq), Islamabad from the post of Deputy Collector, Model Customs Collectorate of Appraisement and Facilitation (East), Karachi

    04. Shams-ur-Rehman (Pakistan Customs Service/BS-18) has been transferred and posted as Additional Director (OPS), Strategic Exports Control, Ministry of Foreign Affairs, Islamabad, on Deputation from the post of Deputy Collector, Model Customs Collectorate of Appraisement and Facilitation, Quetta.

    05. Muhammad Omer Latif (Pakistan Customs Service/BS-17) has been transferred and posted as Second Secretary, (Customs Wing) Federal Board of Revenue (Hq), Islamabad from the post of Assistant Collector, Model Customs Collectorate of Port Muhammad Bin Qasim, Karachi.

    06. Muhammad Zahid Khan (Pakistan Customs Service/BS-17) has been transferred and posted as Assistant Collector, Model Customs Collectorate of Appraisement and Facilitation, Peshawar from the post of Assistant Director, Directorate of Transit Trade, Peshawar.

    The FBR said that the officers who are drawing performance allowance prior to issuance of this notification shall continue to draw this allowance on the new place of posting.

  • Return filing mandatory for Pakistanis having foreign assets

    Return filing mandatory for Pakistanis having foreign assets

    ISLAMABAD: Pakistanis having income and assets abroad are required to file annual income tax return under Section 114 of the Income Tax Ordinance, 2001.

    According to Section 114 of the Ordinance the return filing is mandatory for: “(x) is a resident person being an individual required to file foreign income and assets statement under section 116A.”

    The Section 116A of the Ordinance was introduced through Finance Act, 2018.

    According to this section every resident taxpayer being an individual having foreign income of not less than ten thousand United States dollars or having foreign assets with a value of not less than one hundred thousand United States dollars shall furnish a statement, hereinafter referred to as the foreign income and assets statement, in the prescribed form and verified in the prescribed manner giving particulars of—

    (a) the person’s total foreign assets and liabilities as on the last day of the tax year;

    (b) any foreign assets transferred by the person to any other person during the tax year and the consideration for the said transfer; and

    (c) complete particulars of foreign income, the expenditure derived during the tax year and the expenditure wholly and necessarily for the purposes of deriving the said income.

  • Resident Pakistanis not allowed investing in Naya Pakistan Certificates: FBR

    Resident Pakistanis not allowed investing in Naya Pakistan Certificates: FBR

    ISLAMABAD: Federal Board of Revenue (FBR) on Friday clarified that resident Pakistanis are not allowed to invest in Naya Pakistan Certificates (NPCs).

    The FBR issued clarification to a news appeared in a national daily. The FBR said that the only non-resident individuals can purchase Naya Pakistan Certificate, who maintain bank account abroad or foreign currency account maintained in Pakistan. “It is also clarified that such individuals are not required to file returns of income,” according to a statement issued by the FBR.

    However, the FBR clarification is contrary to the explanation of the ministry of finance and State Bank of Pakistan (SBP). In a joint press release issued by the ministry of finance and the SBP on November 12, 2020 clearly mentioned: “Resident Pakistanis who have declared their assets abroad can also invest in US denominated NPCs.”

    The FBR explained in details the legal provisions of Income Tax Ordinance, 2001 about the treatment of tax for non-resident.

    The FBR said that Naya Pakistan Certificate, a new instrument launched by the Government/ State Bank of Pakistan, qualifies as debt instrument in terms of Clause (5AA) of Part-II of the Second Schedule of the Income Tax Ordinance, 2001.

    Therefore, profit on debt on the Naya Pakistan Certificate is subject to tax at the rate of 10 percent which is final tax.

  • Rising coronavirus cases may impact revenue collection in second quarter

    Rising coronavirus cases may impact revenue collection in second quarter

    ISLAMABAD: The ministry of finance has said that the rising cases of coronavirus may slowdown economic activities and adversely impact revenue collection in second quarter (October – December) of the current fiscal year.

    (more…)