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  • Share of payment to Chinese imports increases 21.42pc

    Share of payment to Chinese imports increases 21.42pc

    KARACHI: The share of import payment to China has increased to 21.42 percent during first four months (July – October) 2019/2020 as compared with share of 18 percent in the corresponding period of the last fiscal year.

    The total payment for import from China was at $3.14 billion during first four months of current fiscal year out of Pakistan’s total import bill of $14.65 billion for the same period, according to statistics released by State Bank of Pakistan.

    The total payment for import from China was at $3.45 billion in first four months of fiscal year 2018/2019 when total import bill for the period was $19.02 billion.

    The payment for total import bill has registered 23 percent decline to $14.656 billion during first four months of current fiscal year as compared with $19.016 billion in the corresponding months of the last fiscal year.

    The payment for import from China, however, also declined but by 9.14 percent to $3.14 billion during first four months of current fiscal year as compared with $3.45 billion in the same period of the last fiscal year.

    China is remained the largest exporting country for Pakistani markets during the first four months of current fiscal year.

    The United Arab Emirates (UAE) is the second largest exporting country for Pakistani markets during the period under review.

    However, the import payment to UAE fell sharply by 30 percent and stood at $2.44 billion during first four months of current fiscal year as compared with $3.5 billion in the corresponding period of the last fiscal year.

    The share of import payment to UAE in total import payment of Pakistan also fell to 16.68 percent during July – October 2019/2020 as compared with share of 18.44 percent in total import bill in July – October 2018/2019.

    Pakistan has taken several measures during the past couple of years to discourage imports of luxury and non-essential items.

    The decline in import bill during the first four months can be attributed to those measures taken by the government.

  • Tax collection witnesses negative growth after 51 years

    Tax collection witnesses negative growth after 51 years

    ISLAMABAD: The revenue collection in 2018/2019 has witnessed negative growth after 51 years, according to year book released by Federal Board of Revenue (FBR). The historical revenue collection shows the tax collecting agency witnessed the negative growth in 1967/1968.

    Following is the historical revenue collection figures since 1948/1949:

    Rupees in million

    YearTotal 
    1948-49311+
    1949-50448+
    1950-51785+
    1951-52951+
    1952-53882–
    1953-54701–
    1954-55775+
    1955-56965+
    1956-57884–
    1957-58978+
    1958-591,281+
    1959-601,178–
    1960-611,400+
    1961-621,565+
    1962-631,760+
    1963-642,083+
    1964-652,498+
    1965-662,686+
    1966-673,299+
    1967-683,213–
    1968-693,902+
    1969-704,610+
    1970-714,984+
    1971-725,162+
    1972-736,508+
    1973-749,019+
    1974-7510,937+
    1975-7613,193+
    1976-7715,664+
    1977-7819,188+
    1978-7922,399+
    1979-8030,016+
    1980-8134,764+
    1981-8238,551+
    1982-8343,308+
    1983-8450,331+
    1984-8552,410+
    1985-8659,202+
    1986-8765,301+
    1987-8875,425+
    1988-8990,381+
    1989-90104,233+
    1990-91110,493+
    1991-92139,776+
    1992-93153,238+
    1993-94172,591+
    1994-95226,578+
    1995-96268,037+
    1996-97282,087+
    1997-98293,631+
    1998-99308,509+
    1999-00347,104+
    2000-01392,277+
    2001-02404,070+
    2002-03460,627+
    2003-04520,843+
    2004-05590,387+
    2005-06713,442+
    2006-07847,236+
    2007-081,008,091+
    2008-091,161,150+
    2009-101,327,382+
    2010-111,558,014+
    2011-121,882,693+
    2012-131,946,360+
    2013-142,254,532+
    2014-152,589,978+
    2015-163,115,054+
    2016-173,367,900+
    2017-183,843,755+
    2018-193,828,482–

    The negative growth in revenue collection for fiscal year 2018/2019 has been witnessed when Syed Muhammad Shabbar Zaidi is performing as chairman.

    The previous negative growth in revenue collection was recorded in 1967/1968 when Ghulam Ishaq Khan was Ex-Officio Chairperson of the then Central Board of Revenue (CBR) presently FBR.

    Record shows the tax collection also witnessed negative growth in 1952/1953, 1953/1954 and 1956/1957 when Mumtaz Hassan was ex-official chairperson of the CBR. He served at head of the tax collecting agency from February 25, 1952 to November 01, 1958.

    The tax collecting agency again witnessed negative collection growth in 1959-1960 when H A Majid was ex-officio chairperson of the CBR.

  • Income tax collection from doctors surges by 135pc; services sector contribution falls by 8.2pc

    Income tax collection from doctors surges by 135pc; services sector contribution falls by 8.2pc

    ISLAMABAD: The income tax collection from doctors has witnessed unprecedented growth of 135 percent in fiscal year 2018/2019, according to official statistics of Federal Board of Revenue (FBR).

    The FBR revealed that the tax collection from doctors increased to Rs2.83 billion in fiscal year 2018/2019 as compared with Rs1.21 billion in the preceding fiscal year.

    Sources in the FBR said that the monitoring of professionals resulted in revenue collection growth.

    Similarly, the income tax collection from engineers registered 80 percent growth to Rs5.24 billion in fiscal year 2018/2019 as compared with Rs2.91 billion in the preceding fiscal year.

    The collection of income tax from another segment of services sector i.e. accountants witnessed 10.3 percent growth. The collection of income tax from accountants was Rs3.05 billion in fiscal year 2018/2019 as compared with Rs2.76 billion in the preceding fiscal year.

    The overall collection of income tax from services sector fell by 8.2 percent to Rs350 billion in the last fiscal year as compared with Rs381.7 billion in the fiscal year 2017/2018.

    The major chunk of revenue came from banking and financial institutions under the head of services sector. The banks and financial institutions paid Rs152.21 billion in fiscal year 2018/2019 as compared with Rs177.41 billion, registering 14.2 percent decline.

    Other major revenue spinner under this head was insurance sector but it also witnessed negative growth of 13.3 percent. The insurance sector paid Rs11.24 billion during fiscal year 2018/2019 as compared with Rs12.96 billion in preceding fiscal year.

    However, the income tax collection from hotels and restaurants registered 33 percent growth in revenue collection to Rs8.16 billion in 2018/2019 as compared with Rs6.15 billion in the preceding fiscal year.

    The income tax collection from travel agencies posted 15.5 percent increase. The collection from travel agencies increased to Rs2.12 billion in fiscal year 2018/2019 as compared with Rs1.83 billion in the preceding fiscal year.

  • Income tax return filing rises to record high of 2.66 million

    Income tax return filing rises to record high of 2.66 million

    ISLAMABAD: The income tax return filing has increased to record high of 2.66 million for tax year 2018, according to returns filed up to October 27, 2019 for the said tax year.

    Officials of Federal Board of Revenue (FBR) attributed the record high to 100 percent higher withholding tax imposed on persons not appearing on Active Taxpayers List (ATL).

    The official said that around 150,000 – 200,000 returns, which were filed manually, were still not added to the ATL. The addition of these returns will further increase the total number of filed returns for tax year 2018.

    The FBR received around 1.84 million annual income tax returns for tax year 2017. This means the return filing registered 45 percent so far for tax year 2018.

    Through Finance Act, 2019 the Tenth Schedule was introduced to Income Tax Ordinance, 2001 under which persons not appeared on the ATL, even filed the return, would liable to pay 100 percent more withholding tax amount.

    The FBR issues ATL on every year on March 01 on the basis of return filed by taxpayers by due date for relevant tax year.

    The FBR issued latest ATL on March 01, 2019 on the basis of returns filed for tax year 2018. Since the date for filing returns extended up to August 09, 2019 for tax year 2018, the names of those return filers were added to the updated ATL.

    By August 09, 2019 the number of return filers was increased to 2.5 million. However, additional 0.16 million returns were been filed after payment of late filing surcharge.

    The FBR in an explanatory note said that restriction on including a person’s name on ATL, if the person has not filed Tax Return by the due date specified by Income tax authorities was introduced through Finance Act, 2018.

    However, through Finance Act, 2019 a person’s name can be part of ATL, even if the person has filed Tax Return after the due date specified by Income Tax authorities, the FBR said.

    Furthermore, it added, a surcharge for placement on ATL after due date of filing of Tax Return will be charged at Rs1,000 from individuals, Rs10,000 from Association of Persons (AOPs) and Rs20,000 from companies.

    FBR officials said that people were filing their income tax returns for tax year 2018 along with late surcharge, despite the due date for tax year 2019 had been prescribed, for avoiding 100 percent withholding tax rates.

    They said that the current ATL would remain applicable till February 29, 2020 as new ATL on the basis of return filed for tax year 2019 would be issued on March 01, 2020.

  • Withholding tax collection on profit from bank deposits surges by 194pc

    Withholding tax collection on profit from bank deposits surges by 194pc

    KARACHI: The collection of withholding tax from profit on bank deposits registered unprecedented growth of 194 percent during first quarter of first fiscal year as the tax rates increased by 100 percent for persons not on the Active Taxpayers List (ATL).

    Sources in Regional Tax Office (RTO) –II Karachi said that the withholding tax collection under Section 151(1)(b) of Income Tax Ordinance, 2001 increased to Rs14.56 billion during first quarter (July – September) of fiscal year 2019/2020 as compared with Rs4.95 billion in the corresponding period of the last fiscal year.

    The sources explained that under Section 151(1)(b) withholding tax is collected on profit on debt paid by banking companies or financial institutions on account or deposit maintained.

    Every banking company is required to collect 10 percent of the gross yield/profit paid up to Rs500,000 or 15 percent of the gross yield / profit paid exceeding amount Rs500,000 at the time the profit on debt is credited to the account of the recipient or is actually paid, whichever is earlier.

    The sources said that it is mandatory for the banks to collect double the amount of withholding tax from those persons receiving profit on debt but not on the Active Taxpayers List (ATL).

    The government through Finance Act, 2019 introduced 10th Schedule to the Income Tax Ordinance, 2001 to enhance the rate of withholding tax by 100 percent on certain transactions.

    The measure has been taken to force persons making large transactions and paying withholding tax on such transactions but remained outside the tax net.

    The sources said that after the implementation of the 10th Schedule the pace of return filing for Tax Year 2018 increased in order to avoid paying 100 percent higher rate of withholding tax.

    According to ATL updated October 21, 2019 the number of return filers were increased to 2.64 million for tax year 2018 as compared with 1.84 million returns received for tax year 2017.

  • Post refund divisions to be set up at RTOs/LTUs to audit claims

    Post refund divisions to be set up at RTOs/LTUs to audit claims

    ISLAMABAD: Federal Board of Revenue (FBR) has decided to audit sales tax refunds by establishing ‘refund division’ at all Regional Tax Offices (RTOs) and Large Taxpayers Units (LTUs).

    According to amended Sales Tax Rules, 2006 issued by the FBR the Rule 27 has been amended to establish Centralized Sales Tax Refund Office (CSTRO), Refund Division and posting of officers.

    The FBR said that a CSTRO would be established under the Board for centralized payment of all refund amounts as due under the Act.

    Further a Refund Division will be established, which will be headed by an officer, not below the rank of Assistant Commissioner, herein after referred to as officer-in-charge, duly supported by audit staff referred to as processing officers, to examine, process and settle the refund claims filed under these rules.

    Further Post Refund Division in each RTO or LTU shall be established, which will be headed by an officer not below the rank of an Assistant Commissioner to audit the refund claims processed and sanctioned by the Refund Division.

    The FBR said that that scrutiny of the refund claims processed or sanctioned after the June 30, 2014 shall be carried out on the basis of risk-based selection through computerized Post Refund Scrutiny (PRS):

    Provided that where the Commissioner Inland Revenue has reasons to believe that a registered person, whose refund claim was processed or sanctioned, has been paid refund which was not admissible to him, he may direct through order in writing to conduct computerized Post Refund Scrutiny (PRS) of such claim.

    Post refund audit of refund claims process through RMS will be the responsibility of the audit Divisions of respective RTO/LTU.

    The registered person claiming refund under these rules shall maintain and keep all the paper documents relating to the refund claim, such as invoices, credit notes, debit notes, goods declarations, bank credit advice, etc. in his office.

  • FBR issues broadening of tax base jurisdictions for Karachi

    FBR issues broadening of tax base jurisdictions for Karachi

    KARACHI: Federal Board of Revenue (FBR) has divided territorial jurisdictions of tax offices in order to identify potential taxpayers in Karachi city – the commercial hub of the country, FBR officials said on August 24, 2019.

    The FBR empowered Regional Tax Office (RTO) II and RTO III to identify persons having taxable income but not registered with tax authorities.

    According to revised jurisdiction of commissioners of broadening of tax base (BTB) the RTO-II Karachi will exercise powers over civil districts of Karachi Division of Sindh Province, within the limits of areas, included: Saddar Town, Lyari Town, Jamshed Town, Liaquatabad, SITE, Baldia, Orangi, DHA, Clifton, Kemari Town, Clifton Cantt, Kemari Cantt and Manora Cantt.

    The FBR created a new BTB unit at RTO-III Karachi empowering over all cases of persons who are not registered under the Income Tax Ordinance, 2001, who:

    (a) are carrying on business within the territorial jurisdiction of following areas of Karachi Division of Sindh Province:

    Gulberg Town

    Gadap Town

    New Karachi

    North Nazimabad

    New Nazimabad

    Korangi Cantonment

    Gulshan-e-Iqbal

    Gulsitan-e-Johar

    Shah Faisal Town

    Malir Town

    Faisal Cantonment

    Malir Cantonment

    Bin Qasim

    Landhi,

    In respect of any other person who reside within the territorial jurisdiction of areas specified at para (a) above;

    Who have been issued notices under sub-section (2) of Section 181 of Income Tax Ordinance, 2001, by the commissioner or his sub-ordinate officers.

  • SRB suspends sales tax registration of Chinese sanitation firm

    SRB suspends sales tax registration of Chinese sanitation firm

    KARACHI: Sindh Revenue Board (SRB) on Tuesday suspended sales tax registration of a Chinese sanitation firm for defaulting sales tax payment and failure to file monthly sales tax returns.

    The SRB issued notice on August 20, 2019 to suspend registration of M/s. Hangzhou Jinjiang Group Sanitation Services Co. Pakistan (Private) Limited.

    The provincial revenue body said that the company had failed to make payment of sales tax on services for the four consecutive months i.e. April, May, June and July 2019. Similarly, the company has also failed to comply with mandatory filing of monthly returns for the same months.

    The SRB in its notice informed the company that its sales tax registration had been suspended with immediate effect. However, suspension would be revoked if the company takes remedial measures of depositing outstanding amount and file all pending returns on or before August 26, 2019.

    The SRB warned that in case of non-satisfactory response or failure to take remedial measures as advised above on or before August 26, the matter shall be further proceeded for further necessary penal action under the Act, 2011.

  • FBR sacks senior auditor on corruption charges

    FBR sacks senior auditor on corruption charges

    ISLAMABAD: Federal Board of Revenue (FBR) has sacked a senior tax auditor on the charges of corruption and misconduct.

    In an office order issued on Tuesday, the FBR said that disciplinary proceedings under Government Servants (Efficiency & Discipline) Rules, 1973 were initiated against Mian Muhammad Ibrahim, Senior Auditor (BS-16) (under suspension), Regional Tax Office, Islamabad vide Charge Sheet No.2(95)/2009-IR-III dated 21.02.2017.

    Tauqir Ahmad, the then Additional Commissioner, Regional Tax Office, Rawalpindi was appointed as Inquiry Officer to conduct inquiry on account of various acts of omission and commission committed by the accused officer; constituting “Misconduct” and “Corruption”.

    The Inquiry Officer submitted inquiry report dated 23.10.2017 according to which the charges of “Misconduct” & “Corruption” stand established against the accused officer.

    A Show Cause Notice dated 11.12.2017 was issued to the accused officer by the Authorized Officer and in response, he submitted his defence / written reply. Opportunity of personal hearing was provided to the accused officer by the Authorized Officer, which was availed on 30.10.2018.

    After considering the inquiry report, reply of the accused to the Show Cause Notice and his oral submissions during the personal hearing with the Authorized Officer, the accused officer has been found guilty of “Misconduct” and “Corruption” under Rule 3(b)&(c) of the Government Servants (E&D) Rules, 1973.

    Now therefore, Member (Admn), being the Authority in this case, after having considered all aspects of the case and the recommendations of the Authorized Officer has imposed major penalty of “Removal from Service” upon Mian Muhammad Ibrahim, Senior Auditor (BS-16) under Rule 4(1)(b)(iii) of the Government Servants (Efficiency & Discipline) Rules, 1973 with immediate effect.

  • FBR asks banks to provide details of government securities investment

    FBR asks banks to provide details of government securities investment

    ISLAMABAD: Federal Board of Revenue (FBR) has asked banks to provide details of additional investment made into the government securities during the tax year 2019.

    The sources in FBR on Tuesday said that a commissioner of Inland Revenue had been empowered to ask the banking companies to furnish details of the investment in the federal government securities so as to ascertain the applicability of enhanced rate of tax.

    The FBR said that the rate of tax on taxable income of a banking company is 35 percent. “Through the Finance Act, 2019, a new rule 6C has been inserted to Seventh Schedule which provides tax rate of 37.5 percent on taxable income from federal government securities.”

    As per this rule, the taxable income arising from additional income earned from additional investment in the federal government securities for the tax year 2020 and onwards shall be taxed at the rate of 37.5 percent.

    “A banking company shall furnish a certificate from external auditor along with accounts while e-filing return of income certifying the amount of money invested in the federal government securities in the preceding tax year, additional investments made for the tax year and mark-up income earned from the additional investment for the tax year.”

    The FBR defines ‘additional income earned’ as to mean mark-up income earned from additional investment in the federal government securities by the bank for the tax year.

    The FBR also defines the term ‘additional investment’ as to mean average investment made in the federal government securities by the bank during the tax year, in addition to average investment held during the tax year 2019.

    As per sub-rule (3) of the rule 6C, the Commission may require the banking company to furnish details of the investment in the federal government securities so as the ascertain the applicability of enhanced rate of tax.