Author: Mrs. Anjum Shahnawaz

FBR may extend return filing date due to delayed issuance of forms

ISLAMABAD: Federal Board of Revenue (FBR) may extend the date for filing income tax returns and wealth statements for tax year 2019 due to delay in issuance of return forms and considering problems faced by taxpayers in filing returns.

The last date for filing annual income tax returns is September 30, 2019 for salaried persons, business individuals, Association of Persons (AOPs) and companies having special financial year.

The FBR uploaded the draft return form for tax year 2019 on August 23, 2019 through SRO 951(I)/2019 and then issue the final notification of Income Tax return 2019 of Individuals, Salaried Individuals & AOPs, September 02, 2019 through SRO 979 of 2019.

This shows lapse of statuary period of two months (62 days) and it was all due to the negligence of the FBR, Pakistan Tax Bar Association (PTBA) said in a letter sent to FBR chairman on September 27, 2019.

The PTBA said that on September 27, 2019 FBR issued manual income tax return form vide SRO 1160 of 2019 dated 27th September which is still not available on Excel format, so the small volume taxpayers could file their returns of income for the year 2019 within stipulated time.

The tax bars in the country have pointed out discrepancies due to which the filing of income tax returns was seriously affected:

i. Return / Statement of Final Taxation for Individuals, Salaried Individuals and AOPs is forcibly accompanied with Wealth Statement, which is a separate requirement under Section 116 of the Income Tax Ordinance, 2001;

ii. Non-residents are not able to file their income tax return without Wealth Statement and details of personal expense which is not binding upon them as per statue;

iii. Tax return of a Salaried Individual still lacking certain details of assets/liabilities in Wealth Statement which is not in accordance with section 116 of the Ordinance;

iv. There is a single field/ column for foreign income only contrary to the requirements of section 103(8) read with section 104 of the Ordinance that provides computation of foreign income/ loss and adjustment and carry forward of losses;

v. There is no option to declare foreign income with their respective heads of income and instead only figure sums it all which does not give the fair picture of the foreign income;

vi. Tax on income from Pensioners Benefit /Behbood Certificates account is not being properly worked out.

vii. IRIS system is not calculating accurate tax on the income above Rs. 1,200,000/- in certain cases.

The FBR may also extend the last date for filing the income tax returns as it had received small amount of returns by September 29, 2019 as against last year’s returns of around 2.5 million.

Tax experts said that if FBR could able to receive around 0.5 million returns by September 30, 2019 even then it would be shortfall of 2 million returns.

The experts believed that due to steps toward broadening of tax base by the FBR it is expected that more returns would be filed for tax year 2019.

They said that as per law and statutory time period for filing of income tax return is Ninety (90) days under section 118 of the Income Tax Ordinance, 2001 read with rule 34 of the Income Tax Rules, 2002 while on the contrary only (28) days have been given here between September 02 and September 30, 2019 for online filing and only (1) one working day available for manual filing.

September 30, 2019
Importer to pay KIBOR+3pc on timely payment failure

KARACHI: An importer in case of failure to pay import duty or other taxes within specified time then the importer shall be liable to pay surcharge at the rate of KIBOR + 3 percent on the due charges.

According to Customs Act, 1969 updated June 30, 2019 issued by Federal Board of Revenue (FBR), the KIBOR means Karachi Inter Bank Offered Rate prevalent on the first day of each quarter of the financial year.

According to the Customs Act, 1969, under Section 21A the FBR is allowed to defer collection of customs duty. However, where deferment of customs duties is allowed by the FBR, a surcharge not exceeding KIBOR plus three percent per annum shall also be payable on the deferred amount from such date and in the manner as the FBR may be rules prescribed.

Similarly, under Section 80 related to clearance of goods for home consumption, the act explained that where the owner fails to pay import duty and other charges within 10 days from the date on which the time same has been assessed under Section 80 or 80, he shall be liable to pay surcharge at the rate of KIBOR plus three percent on import duty and other charges payable on suchg goods.

Section 86 related to submission of post-dated cheque and indemnity bond, the FBR said:

When any such application has been made in respect of any goods, the owner of the goods to which it relates shall furnish an indemnity bond and post-dated cheque equivalent to the duty assessed under section 80 or section 81 or reassessed under section 109 on such goods,-

(a) to observe all the provisions of this Act and the rules in respect of such goods;

(b) to pay on or before a date specified in a notice of demand all duties, taxes, rent and charges payable in respect of such goods together with surcharge on the same from the date so specified at the rate of KIBOR plus three per cent per annum or such other rate as is for the time being fixed by the Board; and

(c) to discharge all penalties incurred for violation of the provisions of this Act and the rules in respect of such goods.

The Section 202A related to levy of surcharge, explained that notwithstanding anything contained in this Act and without prejudice to any other action that may be taken thereunder, if any person fails to pay the arrears within the prescribed time, he shall, in addition to the arrears, be liable to pay surcharge at the rate of KIBOR plus three per cent per annum, of the total amount of arrears.

September 30, 2019
FBR asks people to check transactions details, file income tax returns

KARACHI: Federal Board of Revenue (FBR) on Sunday urged people to file their annual returns on the basis of information, which is already possessed by the revenue authority.

The FBR said that it had information of those people who had made transactions and paid withholding taxes. These information are included: bank accounts, assets, foreign travels, payment for utility bills etc.

The revenue body advised people to check their transactions on information portal of the FBR and file their annual returns by mid-night of September 30, 2019 in order to avoid penal action.

The FBR officials said that the information had been obtained from withholding agents and fed into the main database of the revenue body.

They said that several transactions made by persons including immovable property purchase of certain covered area, motor vehicles above 1,000 CC etc are required to file annual income tax returns.

In case those persons, whose information already with the FBR, have failed to file their returns then the tax officials would initiate legal proceedings and mandatory return filing.

The FBR said that the persons who want to know their transactions on the FBR portal then they should visit the FBR website and create an account to login and fetch information.

The FBR warned people to file their income tax returns as the last date for tax year 2019 is September 30, 2019. Otherwise the FBR will take stern action against non-compliant persons.

September 29, 2019
PTBA advises return filing date extension; points out deficiencies

KARACHI: Pakistan Tax Bar Association (PTBA) has asked Federal Board of Revenue (FBR) to extend the last date for filing income tax returns up to December 31, 2019 as the return form still has many deficiencies.
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September 28, 2019
FPCCI suggests one month extension in income tax return filing

KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Saturday urged the government to extend the last date for filing income tax return up to October 31, 2019.

Engr. Daroo Khan Achakzai, President of the Federation of Pakistan Chambers of Commerce & Industry (FPCCI) has urged the Advisor to the Prime Minister on Finance Dr. Abdul Hafeez Shaikh, and Chairman of the Federal Board of Revenue (FBR) Syed Shabbar Zaidi to extend the deadline for filing of Income Tax Returns (ITR) from 30th September to 31st October, 2019.

The FPCCI Chief argued that a large number of business community members could not file their ITR mainly due to a variety of reasons such as uncertainty prevailing in the country because of changes in the taxation provisions of the Income Tax Ordinance 2011 ; slowdown of normal business activities; Election of FPCCI member trade bodies; interruption in on-line system of e-filing of ITR ; protracted rain etc.

“This will help the tax payers in discharging their tax liability well in time without penalty on the one hand and increase in government exchequer on the other hand”, he added.

September 28, 2019
Container scanning charges abolished: Ali Zaidi

KARACHI: Syed Ali Haider Zaidi, Minister for Maritime Affairs, on Saturday said the container scanning charges has been abolished in order to reduce the cost of the industry.

He was addressing the members of Federation of Pakistan Chambers of Commerce and Industry (FPCCI).

Zaidi said that the terminal operators had been scanning charging at $5 on each container handling. “The terminal operators were charging this amount from all the containers irrespective of scanning or no scanning,” he added.

The minister said the terminal had been stopped from charging this on those containers which were not scanned.

The minister also said that he had opposed to collect fuel freight charges on supplies to Karachi city. He said that all the petroleum products imported at Karachi ports and then supplied to other parts of the country.

Ali Zaidi said that he had openly opposed to this levy in order to facilitate people and the industry.

He said that land transfer of Port Qasim and KPT had been stopped till the audit of already allotted lands.

He disclosed that there was huge corruption in land allotments of port lands.

September 28, 2019
Weekly Review: Market likely to stay in positive territory on narrow trade deficit, stable forex reserves

KARACHI: The stock market may move in positive territory next week owing to narrow trade deficit and stable foreign exchange reserves.

Analysts at Arif Habib Limited said that the market to be positive during the coming week.

“With the trade deficit narrowing and foreign reserves stabilizing investor sentiment is likely to be positive,” they added.

KSE-100 index commenced on a negative note this week, with SBP forecasting the inflation to remain high for the next two years.

Moreover the ADB projected a slowdown in the economy which kept the sentiment weak. However, the recent improvement on the macro-economic front cushioned the dip and positive news flow from the US regarding the Kashmir issue uplifted sentiments on Friday. The index closed at 32,070 points (-40 points WoW).

Sector-wise negative contributions came from i) Commercial Banks (122 points), ii) Power Generation & Distribution (24 points), iii) Chemical (21 points), iv) Pharmaceuticals (14 points), and v) Automobile Parts & Accessories (13 points). Scrip-wise negative contributions were led by HBL (67 points), HUBC (56 points), UBL (29 points), SEARL (27 points) and NBP (23 points).

Foreign selling was witnessed this week clocking-in at USD 8.8 million compared to a net buy of USD 7.8 million last week. Selling was witnessed in Cement (USD 2.4 million) and Commercial Banks (USD 2.2 million).

On the domestic front, major selling was reported by Banks/DFIs (USD 6.7 million) and Broker Proprietary Trading (USD 6.2mn). Average Volumes settled at 108 million shares (down by 12 percent WoW) while average value traded clocked-in at USD 25 million (down by 24 percent WoW).

September 28, 2019
FBR explains benefits of timely filing income tax returns

ISLAMABAD: Federal Board of Revenue (FBR) has explained benefits of filing annual income tax returns for tax year 2019 by due date i.e. September 30, 2019.

The FBR in its ongoing campaign for encouraging people to file their income tax returns by due date highlighted advantages of filing by due date and also pointed out disadvantages of non-compliance.

The FBR said that for not filing the return by due date the person/company will be charged withholding tax at double rates; FBR will assess the applicable tax without serving any notice; legal action will be taken resulting into imprisonment of one to three years; fine will be charged on late submission of income tax return.

By filing the income tax returns by due date i.e. September 30, a person/company shall be enlisted to Active Taxpayers List (ATL). The following are the benefits of ATL enlistment:

— Almost half of the withholding tax as compared with the inactive taxpayers

— 5.5 percent tax on imports (raw material)

— 6 percent on imports (commercial)

— 15 percent tax on dividends

— 10 percent tax on bank and saving scheme profit worth up to Rs0.5 million and 15 percent on above Rs0.5 million

— 4.5 percent tax on sale of goods by persons except companies

— 10 percent tax on provision of services by persons except companies

— 7.5 percent tax on contracts executed by person except companies

— 15 percent tax on prize money of prize bonds

— 12 percent tax on commission

— Annual token fee of vehicles from Rs800 to Rs10,000

— Withholding tax on vehicle registration from Rs7,500 to Rs250,000

— No tax on cash withdrawal of more than Rs50,000 from banks

— No tax on bank transactions (cross cheque, pay order, demand draft etc.)

— One percent tax on purchase of property

— 10 percent tax on sale by auction

— Tax on mobile phone import from Rs70 to Rs200

— 10 percent tax deduction for payment against advertisement to non-resident person.

The FBR also highlighted drawback in shape of double rate of tax on following transactions in case of not filing return by due date:

— Almost double tax rate

— 11 percent tax on imports (raw material)

— 12 percent on imports (commercial)

— 30 percent tax on dividends

— 20 percent tax on bank and saving scheme profit worth up to Rs0.5 million and 30 percent on above Rs0.5 million

— 9 percent tax on sale of goods by persons except companies

— 20 percent tax on provision of services by persons except companies

— 15 percent tax on contracts executed by person except companies

— 30 percent tax on prize money of prize bonds

— 24 percent tax on commission

— Annual token fee of vehicles from Rs1600 to Rs20,000

— Withholding tax on vehicle registration from Rs15,000 to Rs500,000

— 0.6 percent tax on cash withdrawal of more than Rs50,000 from banks

— 0.6 percent tax on bank transactions (cross cheque, pay order, demand draft etc.)

— Two percent tax on purchase of property

— 20 percent tax on sale by auction

— Tax on mobile phone import from Rs140 to Rs400

— 20 percent tax deduction for payment against advertisement to non-resident person.

September 28, 2019
FBR attaches Benami properties worth Rs4 billion; issues 104 notices

ISLAMABAD: Federal Board of Revenue (FBR) on Friday said that it has attached Benami properties worth Rs4 billion in 15 cases.

“Properties having worth Rs. 4 billion including bank accounts, shares and land in 15 cases have already been attached.”

The FBR said that one out of the above mentioned 15 cases, involving 7,128 Kanals of land having worth of Rs. 700 million was attached. Reference in this case is pending for adjudication.

The FBR said that in pursuance of prime minister’s directive, FBR Anti Benami Zones have started a country wide exercise to gather information of Benami properties from Provincial Revenue/ Development Authorities, ICT Administration. Senior officers of these Authorities have been given a briefing on Benami laws along with guidelines for identification and reporting of all such properties.

FBR Anti Benami Directorate is currently investigating 79 Beneficial Owners having104 Benami properties, out of which 58 are located in Karachi, 18 in Lahore and 28 in Islamabad.

Summons have been issued to buyers and sellers of these properties, the FBR added.

September 28, 2019
Banks directed to adopt standard QR codes for payments in Pakistan

KARACHI: State Bank of Pakistan (SBP) has directed all commercial banks and other financial institutions to adopt EMVCo’s EMV QR Code Specifications for Payment Systems (QRCPS).

The SBP said that Quick Response (QR) Codes have been emerging as low cost payment acceptance alternative to Point of Sale (POS) terminals in Pakistan, especially for small merchants.

Although QR codes have been deployed in substantial numbers, the volume of transactions has not achieved desired levels primarily due to their lack of interoperability.

Therefore, as a first step towards achieving interoperability of Payment QR Codes in Pakistan, SBP after extensive stakeholder consultations has decided that henceforth all Institutions issuing and/or acquiring QR codes for payments in Pakistan shall adopt EMVCo’s EMV QR Code Specifications for Payment Systems (QRCPS).

Further, non-EMV QR Codes already deployed in Pakistan shall comply with this standard by 31st March, 2020.

The SBP said that institutions issuing/acquiring QR Codes shall also ensure:

Compliance with branding guidelines for QR Codes displayed at merchant locations (attached at Annexure-A).

Data related to issuance and usage of QR codes, as per Annexure-B, is submitted on quarterly basis to Payment Systems Department (PSD) within a fortnight of quarter end.

Compliance of SBP’s instructions, guidelines, rules and regulations on Consumer Protection and Dispute Resolution issued and amended from time to time.
Further, institutions acquiring QR Codes are also encouraged to:

Promote innovative uses of QR codes like invoice/challan based payments, branch based Inter-bank Fund Transfers (IBFT) etc.; and

Plan for achieving inter scheme interoperability in due course of time.

September 27, 2019