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  • Advance tax on sales to distributors, dealers and wholesalers

    Advance tax on sales to distributors, dealers and wholesalers

    KARACHI: Federal Board of Revenue (FBR) has made manufacturers responsible for collecting advance tax on sales to distributors, dealers and wholesalers.

    The tax has been imposed under Section 236G of Income Tax Ordinance, 2001.

    Section 236G: Advance tax on sales to distributors, dealers and wholesalers

    Sub-Section (1): Every manufacturer or commercial importer of electronics, sugar, cement, iron and steel products, fertilizer, motorcycles, pesticides, cigarettes, glass, textile, beverages, paint or foam sector, at the time of sale to distributors, dealers and wholesalers, shall collect advance tax at the rate specified in Division XIV of Part IV of the First Schedule, from the aforesaid person to whom such sales have been made.

    The rate of collection of tax under section 236G shall be as follows:-

    Category of SaleRate of Tax
     FilerNon-Filer
    Fertilizers0.7 percent1.4 percent
    Other than Fertilizers0.1 percent0.2 percent

    Sub-Section (2): Credit for tax collected under sub-section (1) shall be allowed in computing the tax due by the distributor, dealer or wholesaler on the taxable income for the tax year in which the tax was collected.

    Section 236H: Advance tax on sales to retailers

    Sub-Section (1): Every manufacturer, distributor, dealer, wholesaler or commercial importer of electronics, sugar, cement, iron and steel products, motorcycles, pesticides, cigarettes, glass, textile, beverages, paint or foam sector, at the time of sale to retailers, “and every distributor or dealer to another wholesaler in respect of the said sectors”, shall collect advance tax at the rate specified in Division XV of Part IV of the First Schedule, from the aforesaid person to whom such sales have been made.

    The rate of collection of tax under section 236H on the gross amount of sales shall be as follows:-

    Category of saleRate of tax
     FilerNon-Filer
    (1)(2)(3)
    Electronics1 percent1 percent
    Others0.5 percent

    Sub-Section (2): Credit for the tax collected under sub-section (1) shall be allowed in computing the tax due by the retailer on the taxable income for the tax year in which the tax was collected.

    Section 236HA: Tax on sale of certain petroleum products

    Sub-Section (1): Every person selling petroleum products to a petrol pump operator or distributor, where such operator or distributor is not allowed a commission or discount, shall collect advance tax on ex-depot sale price of such products at the rate specified in Division XVA of Part IV of the First schedule.

    The rate of collection of tax under section 236HA shall be 0.5 percent of ex-depot sale price for filers and 1 percent for non-filers.

    Sub-Section (2): The tax deductible under sub-section (1) shall be a final tax on the income arising from the sale of petroleum products to which sub-section (1) applies.

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    Income Tax Ordinance 2001: advance tax on electricity consumption

  • Advance tax on electronic media, cable operators

    Advance tax on electronic media, cable operators

    KARACHI: Electronic media and cable operators are required to pay adjustable advance tax at the time of obtaining new license or renewal of license.

    According to updated Income Tax Ordinance, 2001 issued by the Federal Board of Revenue (FBR), Pakistan Electronic Media Regulatory Authority (PEMRA) shall collect the advance tax at the time of issuance of licence for distribution services or renewal of the licence to a licencee under Section 236F of the Ordinance.

    Section 236F: Advance tax on cable operators and other electronic media

    Sub-Section (1): Pakistan Electronic Media Regulatory Authority, at the time of issuance of licence for distribution services or renewal of the licence to a licencee, shall collect advance tax at the rates specified in Division XIII of Part IV of the First Schedule.

    (1) The rate of tax to be collected under section 236F in the case of Cable Television Operator shall be as follows:—

    License Category as provided in PEMRA RulesTax on License FeeTax on Renewal
    HRs. 7,500Rs. 10,000
    H-IRs. 10,000Rs. 15,000
    H-IIRs. 25,000Rs. 30,000
    RRs. 5,000Rs. 12,000
    BRs. 5,000Rs. 40,000
    B-1Rs. 30,000Rs. 35,000
    B-2Rs. 40,000Rs. 45,000
    B-3Rs. 50,000Rs. 75,000
    B-4Rs. 75,000Rs. 100,000
    B-5Rs. 87,500Rs. 150,000
    B-6Rs. 175,000Rs. 200,000
    B-7Rs. 262,500Rs. 300,000
    B-8Rs. 437,500Rs. 500,000
    B-9Rs. 700,000Rs. 800,000
    B-10Rs. 875,500Rs. 900,000

    (2) The rate of tax to be collected by Pakistan Electronic Media Regulatory Authority under section 236F in the case of IPTV, FM Radio, MMDS, Mobile TV, Mobile Audio, Satellite TV Channel and Landing Rights, shall be 20 per cent of the permission fee or renewal fee, as the case may be.

    “(3) In addition to tax collected under paragraph (2) Pakistan Electronic Media Regulatory Authority shall collect tax at the rate of fifty per cent of the permission fee or renewal fee, as the case may be, from every TV Channel on which foreign TV drama serial or a play in any language, other than English, is screened or viewed.”

    Sub-Section (2): The tax collected under sub-section (1) shall be adjustable.

    Sub-Section (3): For the purpose of this section, “cable television operator” “DTH”, “Distribution Service”, “electronic media”, “IPTV”, “loop holder”, “MMDS”, “mobile TV”, shall have the same meanings as defined in Pakistan Electronic Media Regulatory Authority Ordinance, 2002 (XIII of 2002) and rules made thereunder.

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  • FBR adds over 114,000 return filers to ATL

    FBR adds over 114,000 return filers to ATL

    ISLAMABAD: Federal Board of Revenue (FBR) has added over 114,000 return filers to Active Taxpayers List (ATL) following the grant of extension in filing income tax returns for Tax Year 2018 up to March 31, 2019.

    The FBR issued weekly updated ATL 2018 on Monday, which showed the number of active taxpayers increased to 1.75 million.

    The FBR issued first ATL 2018 on March 01, 2019 which had carried 1.6 million taxpayers in the list.

    The appearance of ATL is mandatory for availing reduced rate of withholding tax rate and other benefits available only to return filers.

    Through Finance Act, 2018, a section 182A was inserted to Income Tax Ordinance, 2001 which barred the late filers to appear on the ATL.

    Therefore, the ATL issued on March 01, 2019 only those taxpayers were included who filed their returns by December 15, 2018 in case of salaried persons, business individuals and companies with special years and December 31, 2018 for companies with normal tax year.

    However, the FBR last week extended the last date for filing income tax returns for all classes of taxpayers. Hence, those taxpayers who have filed their returns after December 15 or December 31 became eligible for ATL.

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  • Income Tax Ordinance 2001: amended advance tax rates on marriages, functions

    Income Tax Ordinance 2001: amended advance tax rates on marriages, functions

    KARACHI: Federal Board of Revenue (FBR) has updated advance tax rates on marriages and functions through latest amendment to Income Tax Ordinance, 2001.
    The national assembly recently approved Finance Supplementary (Second Amendment) Act, 2019 and advance tax rate for functions and gathering has been updated.
    The advance tax is collected under following section of the Ordinance.
    Section 236D: Advance tax on functions and gatherings
    Sub-Section (1): Every prescribed person shall collect advance tax at the rate specified in Division XI of Part IV of the First Schedule on the total amount of the bill from a person arranging or holding a function in a marriage hall, marquee, hotel, restaurant, commercial lawn, club, a community place or any other place used for such purpose.
    Sub-Section (2): Where the food, service or any other facility is provided by any other person, the prescribed person shall also collect advance tax on the payment for such food, service or facility at the rate specified in Division XI of Part IV of the First Schedule from the person arranging or holding the function.
    Sub-Section (3): The advance tax collected under sub-section (1) and sub-section (2) shall be adjustable.
    Sub-Section (4): In this section,—
    (a) “function” includes any wedding related event, a seminar, a workshop, a session, an exhibition, a concert, a show, a party or any other gathering held for such purpose; and
    (b) “prescribed person” includes the owner, a lease-holder, an operator or a manager of a marriage hall, marquee, hotel, restaurant, commercial lawn, club, a community place or any other place used for such purpose.
    The rate of tax to be collected under each sub-sections (1) and (2) of section 236D shall be 5%;
    Provided that the rate for the function of marriage in a marriage hall, marquee, hotel, restaurant, commercial lawn, club, a community place or any other place used for such purpose shall be as set out in the Table below:─

    S. No.Rate of tax 
    015% of the bill ad valorem or Rs20,000 per function, whichever is higherFor Islamabad, Lahore, Multan,Faisalabad, Rawalpindi, Gujranwala, Bahawalpur, Sargodha, Sahiwal, Shekhurpura, Dera Ghazi Khan, Karachi, Hyderabad, Sukkur, Thatta, Larkana, Mirpur Khas, Nawabshah, Peshawar, Mardan, Abbottabad, Kohat, Dera Ismail Khan, Quetta, Sibi, Loralai, Khuzdar, Dera Murad Jamali and Turbat.
     
    025% of the bill ad valorem or Rs10,000 per function, whichever is higherFor cities other than those mentioned above.

    Through Finance Supplementary (Second Amendment) Act, 2019, the following amendment has been inserted:
    “Provided further that the rate for the function of marriage in a marriage hall, marquee or a community place with the total function area less than 500 square yards or, in case of a multi-stories premises, with the largest total function area on one floor less than 500 square yards, shall be 5 percent of the bill ad valorem or Rs5,000 function whichever is higher.”
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  • Filing annual return: large number to benefit from date extension

    Filing annual return: large number to benefit from date extension

    KARACHI: A large number of taxpayers may file their annual income tax returns while taking advantage of date extension up to March 31, 2019, tax manager said.

    The Federal Board of Revenue (FBR) recently extended the last date for filing income tax return for tax year 2018 up to March 31, 2018, which was December 15, 2018 for salary, business individuals, taxpayers falling in final tax regime and companies having special tax year.

    Similarly, the date was also extended for corporate units up to March 31, 2019, whose last date was December 31, 2018.

    The tax managers said that due to burden and restrictions on non-filers under Income Tax Ordinance, 2001 a huge number of individuals and companies would file their income tax returns for tax year 2018 to appear on Active Taxpayers List (ATL).

    They said that the non-filers have been restricted in purchasing immovable properties over Rs40 million and registration of imported motor vehicles.

    Further, the non-filers are also required to pay higher percent of withholding tax on various transactions. The non-filers in the recent mini-budget allowed to purchase and register new locally assembled motor vehicles. However, the withholding tax rates on non-filers have been increased by 50 percent.

    The ATL issued by FBR on March 01, 2019 for tax year 2018 carried list of 1.59 million active taxpayers. In contrast the ATL for the tax year 2017 had carried 1.84 million active taxpayers, which showed about 240,000 taxpayers were not on the new list.

    With the extension of date up to March 31, 2019 the return filers would not require to pay penalty and also become eligible for appearing on the ATL.

    To some estimates the recent date extension by the FBR around 250,000 to 300,000 more returns would be added to the current active taxpayers list.

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  • Income Tax Ordinance 2001: advance tax on sale, purchase of immovable properties

    Income Tax Ordinance 2001: advance tax on sale, purchase of immovable properties

    KARACHI: Adjustable advance tax is applicable for filers and non-filers of income tax return on sales and purchase of immovable properties to be collected at the time of transaction.

    According to updated Income Tax Ordinance, 2001 issued by Federal Board of Revenue (FBR) the tax shall be collected under Section 236C and Section 236K of the Ordinance, which are as follow:

    Section 236C: Advance Tax on sale or transfer of immovable Property
    Sub-Section (1): Any person responsible for registering, recording or attesting transfer of any immovable property shall at the time of registering, recording or attesting the transfer shall collect from the seller or transferor advance tax at the rate specified in Division X of Part IV of the First Schedule:

    “The rate of tax to be collected under section 236C shall be 1% of the gross amount of the consideration received for filers and 2% of the gross amount of the consideration received for non-filers.”

    Explanation,—For removal of doubt, it is clarified that the person responsible for registering, recording or attesting transfer includes person responsible for registering, recording or attesting transfer for local authority, housing authority, housing society, co-operative society and registrar of properties.

    Provided that this sub-section shall not apply to a seller, being the dependant of a Shaheed belonging to Pakistan Armed Forces or a person who dies while in the service of the Pakistan Armed Forces or the service of Federal or Provincial Government, in respect of first sale of immovable property acquired from or allotted by the Federal Government or Provincial Government or any authority duly certified by the official allotment authority, and the property acquired or allotted is in recognition of or for services rendered by the Shaheed or the person who dies in service.

    Sub-Section (2): The Advance tax collected under sub-section (1) shall be adjustable:

    Provided that where immovable property referred to in sub-section (1) is acquired and disposed of within the same tax year, the tax collected under this section shall be minimum tax.

    Sub-Section (3): Advance tax under sub-section (1) shall not be collected if the immovable property is held for a period exceeding three years.

    Section 236K: Advance tax on purchase or transfer of immovable property

    Sub-Section (1): Any person responsible for registering, recording or attesting transfer of any immovable property shall at the time of registering, recording or attesting the transfer shall collect from the purchaser or transferee advance tax at the rate specified in Division XVIII of Part IV of the First Schedule.

    The rate of tax to be collected under section 236K shall be:-

    S. NoPeriodRate of Tax
    01Where value of immovable property is up to Rs4 millionZero percent
    02Where the value of immovable property is more than Rs4 millionFiler 2 percent
    Non-filer 4 percent

     
    Explanation,—For removal of doubt, it is clarified that the person responsible for registering, recording or attesting transfer includes person responsible for registering, recording or attesting transfer for local authority, housing authority, housing society, co-operative society and registrar of properties.

    Sub-Section (2): The advance tax collected under sub-section (1) shall be adjustable.

    Sub-Section (3): Any person responsible for collecting payments in installments for purchase or allotment of any immovable property where the transfer is to be effected after making payment of all installments, shall at the time of collecting installments collect from the allotee or transferee advance tax at the rate specified in Division XVIII of Part IV of the First Schedule.

    Sub-Section (4): Nothing contained in this section shall apply to a scheme introduced by the Federal Government, or Provincial Government or an Authority established under a Federal or Provincial law for expatriate Pakistanis:

    “Provided that the mode of payment by the expatriate Pakistanis in the said scheme or schemes shall be in the foreign exchange remitted from outside Pakistan through normal banking channels.”

  • Income Tax Ordinance 2001: advance tax on domestic, international air tickets

    Income Tax Ordinance 2001: advance tax on domestic, international air tickets

    KARACHI: Passengers traveling through domestic or international airlines are required to pay certain amount of advance tax on purchase of air tickets.

    According to Income Tax Ordinance, 2001 issued by Federal Board of Revenue (FBR) passengers of domestic and international destinations are required to pay advance tax under Section 236B and Section 236L.
    Section 236B: Advance tax on purchase of air ticket.

    Sub-Section (1): There shall be collected advance tax at the rate specified in Division IX of Part IV of the First Schedule, on the purchase of gross amount of domestic air ticket:

    (The rate of tax to be deducted under section 236B shall be 5 percent of the gross amount of air ticket.)

    “Provided that this section shall not apply to routes of Baluchistan coastal belt, Azad Jammu and Kashmir, Federally Administered Tribal Areas, Gilgit-Baltistan and Chitral.”

    Sub-Section (2): The airline issuing air ticket shall charge advance tax under sub-section (1) in the manner air ticket charges are charged.

    Sub-Section (2A): The mode, manner and time of collection shall be as may be prescribed.

    Sub-Section (3): The advance tax collected under sub-section (1) shall be adjustable.

    Section 236L: Advance tax on purchase of international air ticket
    Sub-Section (1): Every airline, issuing ticket for journey originating from Pakistan, shall collect advance tax at the rates specified in Division XX of Part IV of the First Schedule, on the gross amount of international air tickets issued to passengers booking one-way or return, from Pakistan.
     

    01First/Executive ClassRs16,000 per person
    02Other excluding EconomyRs12,000 per person
    03Economy0

     
    Sub-Section (2): The airline issuing air ticket shall collect or charge advance tax under sub-section (1) in the manner air ticket charges are collected or charged, either manually or electronically.

    Sub-Section (3): The mode, manner and time of collection under sub-section (1) and time of collection shall be as may be prescribed.

    Sub-Section (4): The advance tax collected under sub-section (1) shall be adjustable.

  • Foreign Remittances: Non-filers get exemption on cash withdrawal

    Foreign Remittances: Non-filers get exemption on cash withdrawal

    KARACHI: The government has granted exemption from deduction of income tax on cash withdrawal by non-filers from Pak Rupee bank accounts, which have been opened for receiving foreign remittances.

    Through Finance Supplementary (Second Amendment) Act, 2019 a clause 101A has been inserted to Second Schedule of Income Tax Ordinance, 2001.

    It said: “The provisions of Section 231A shall not apply to Pak Rupee account if the deposits in the account are made solely from foreign remittances credited directly into such account.”

    The Section 231A is related to deduction of withholding tax on cash withdrawal from banking system.

    The government through the latest Act already exempted deduction of withholding tax on cash withdrawal by filers of income tax returns.

    The instant clause also exempts the non-filers of income tax returns if their bank accounts receive foreign remittances.

    Sources in Federal Board of Revenue (FBR) said that the measures have been taken to promote inflows of foreign remittances through normal banking system.

    The sources further said that on normal transactions by non-filers a tax rate of 0.6 percent will apply on cash withdrawal of Rs50,000 per day.

  • FBR’s issues updated ATL, adds over 42,000 active taxpayers

    FBR’s issues updated ATL, adds over 42,000 active taxpayers

    ISLAMABAD: Federal Board of Revenue (FBR) updated Active Taxpayers List (ATL) on Monday and added around 42,000 taxpayers’ names since launch of new list.

    (more…)
  • Income Tax Ordinance 2001: advance tax on electricity consumption

    Income Tax Ordinance 2001: advance tax on electricity consumption

    KARACHI: Power supply companies are required to deduct and collect advance tax from industrial and commercial consumers at rates specified.

    According to updated Income Tax Ordinance, 2001 issued by Federal Board of Revenue (FBR), the Section 235 explained the rates of advance tax on consumption of electricity.

    Section 235: Electricity consumption

    Sub-Section (1): There shall be collected advance tax at the rates specified in Part-IV of the First Schedule on the amount of electricity bill of a commercial or industrial consumer.

    Rate of collection of tax under section 235 where the gross amount of electricity bill

    (a)does not exceed Rs. 400Rs. 0
    (b)exceeds Rs. 400 but does not exceed Rs. 600Rs. 80
    (c)exceeds Rs. 600 but does not exceed Rs. 800Rs. 100
    (d)exceeds Rs. 800 but does not exceed Rs. 1000Rs. 160
    (e)exceeds Rs. 1000 but does not exceed Rs. 1500Rs. 300
    (f)exceeds Rs. 1500 but does not exceed Rs. 3000Rs. 350
    (g)exceeds Rs. 3000 but does not exceed Rs. 4500Rs. 450
    (h)exceeds Rs. 4500 but does not exceed Rs. 6000Rs. 500
    (i)exceeds Rs. 6000 but does not exceed Rs. 10000Rs. 650
    (j)exceeds Rs. 10000 but does not exceed Rs. 15000Rs. 1000
    (k)exceeds Rs. 15000 but does not exceed Rs. 20000Rs. 1500
    (l)exceeds Rs. 20000.(i) at the rate of 12 per cent for commercial consumers;
    (ii) at the rate of 5 per cent for industrial consumers.

    Sub-Section (2): The person preparing electricity consumption bill shall charge advance tax under sub-section (1) in the manner electricity consumption charges are charged.

    Explanation.— For removal of doubt, it is clarified that for the purposes of this section electricity consumption bill referred to in sub-section (2) means electricity bill inclusive of sales tax and all incidental charges.

    Sub-Section (3): Advance tax under this section shall not be collected from a person who produces a certificate from the Commissioner that his income during tax year is exempt from tax.

    Sub-Section (4): Under this section, —

    (a) in the case of a taxpayer other than a company, tax collected up to bill amount of three hundred and sixty thousand Rupees per annum shall be treated as minimum tax on the income of such persons and no refund shall be allowed;

    (b) in the case of a taxpayer other than a company, tax collected on monthly bill over and above thirty thousand rupees per month shall be adjustable; and

    (c) in the case of a company, tax collected shall be adjustable against tax liability.

    Section 235A: Domestic electricity consumption

    Sub-Section (1) There shall be collected advance tax at the rates specified in Division XIX of Part IV of the First Schedule on the amount of electricity bill of a domestic consumer.

    The rate of tax to be collected under section 235A shall be-

    (i) 7.5% if the amount of monthly bill is Rs. 75,000 or more; and
    (ii) 0% the amount of monthly bill is less than Rs. 75,000.

    Explanation.— For removal of doubt, it is clarified that for the purposes of this section, electricity consumption bill referred to in sub-section (2) means electricity bill inclusive of sales tax and all incidental charges.

    Sub-Section (2): The person preparing electricity consumption bill shall charge advance tax under sub-section (1) in the manner electricity consumption charges are charged.

    Sub-Section (3): Tax collected under this section shall be adjustable against tax liability.