KARACHI: The government has allowed whitening of money investment in immovable properties at nominal income tax rate of 1.5 percent on declaration made by June 30, 2019.
(more…)Category: Exclusive
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SRB suspends sales tax registration of four freight forwarders
KARACHI: Sindh Revenue Board (SRB) has suspended sales tax registration of four freight forwarders for defaulting payment and non-compliance of filing sales tax returns.
The SRB issued suspension notices to the following freight forwarders:
Muhammad Rafique (M/s. Rafique Brothers)
M/s. Prime Ocean Cargo Management Company (Pvt) Limited
M/s. Shahnoor Weavers
Muhammad Tahir Imam (M/s. ST Logistics International)
The SRB said that Muhammad Rafique (M/s. Rafique Brothers) had failed to make payment of Sindh Sales Tax on Services for the period from July 2011 till to date. Further the company also failed to file return electronically for the tax periods February 2017 to December 2018 and July 2011 to April 2013.
The SRB asked the company that the notice would be revoked in case it takes remedial action by May 24 by making payment and filing true and correct returns for the said periods. Otherwise the case shall be proceeded for cancellation in case remedial action was not taken by May 25, 2019.
In case of M/s. Prime Ocean Cargo Management Company (Pvt) Limited, the SRB said that the company had failed to file returns for the period July 2016, December 2015, March 2015, June 2013, March 2013, September 2012, August 2012, June 2012, May 2012, April 2012, March 2012, February 2012, January 2012, December 2011, October 2011, September 2011, August 2011, July 2011.
The SRB directed the company to take remedial action by May 24, 2019. “In case of non-satisfactory response or failure to take remedial measures as suggested above on or before May 25, 2019 the case shall be further preceded for cancellation of registration wit the SRB.”
In the case of M/s. Shahnoor Weaver, the SRB said that the company had failed to make payment since July 2011 till date. Further, the company had failed to e-filer sales tax returns for tax periods from July 2011 to June 2015 and from August 15 to December 2018.
The SRB directed the company to take remedial action by May 26, 2019. “In case of non-satisfactory response or failure to take remedial measures as suggested on or before May 27, 2019, the case shall be further preceded for cancellation of registration with the SRB.”
In the fourth case of Muahmmad Thair Imam (M/s. ST Logistics International), the SRB said that the company had failed to make payment of sales tax on services from July 2011 till date. Further, the company also failed to e-filer sales tax returns for the said period.
The SRB has directed the company to take remedial action by May 23, 2019. “In case o non-satisfactory response or failure to take remedial measures as suggested on or before May 24, 2019 the case shall be further preceded for cancellation of registration wit SRB,” it added.
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Sales Tax Act 1990: treatment of tax paid by person required to get registration
KARACHI: A person, who is required to be get registration, paid sales tax on goods purchased from a registered person shall be treated as input tax.
According to updated Sales Tax Act, 1990 issued by Federal Board of Revenue (FBR), the Section 59 explained the treatment of tax paid shall be input tax for a person who purchased goods from a registered person.
Section 59: Tax paid on stocks acquired before registration
The tax paid on goods purchased by a person who is subsequently required to be registered under section 14 due to new liabilities or levies or gets voluntary registration under this Act or the rules made thereunder, shall be treated as input tax, provided that such goods were purchased by him from a registered person against an invoice issued under section 23 during a period of thirty days before making an application for registration and constitute his verifiable unsold stock on the date of compulsory registration or on the date of application for registration or for voluntary registration:
Provided that where a person imports goods, the tax paid by him thereon during a period of ninety days before making an application for registration shall be treated as an input tax subject to the condition that he holds the bill of entry relating to such goods and also that these are verifiable unsold or un-consumed stocks on the date of compulsory registration or on the date of application for registration or for voluntary registration.
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Sindh exempts sales tax on insurance services
KARACHI: The Sindh government has exempted the insurance services from payment of sales tax up to June 30, 2019.
Sindh Revenue Board (SRB) on Wednesday issued a notification stating that with the approval of the provincial government it had exempted the insurance services (other than its related re-insurance services) from the whole of the sales tax payable.
The SRB said that the exemption is available with the condition that the amount of sales tax already charged, received or collected by the service provider shall be deposited by such service provider to the provincial exchequer.
The following services have been exempted from sales tax:
9813.1500 Life Insurance from July 01, 2018 to June 30, 2019
9813.1600 Health Insurance from July 01, 2016 to June 30, 2019.
The SRB said that the notification shall not entitle any person, whether a service provider or a service recipient, to any refund or adjustment of tax.
The notification, if not rescinded earlier, shall stand rescinded at 2359 hours of the 30th day of June 2019. -
FBR field offices show resentment on appointment of chairman from private sector
KARACHI: A massive resentment has been shown by the employees of Federal Board of Revenue (FBR) on nomination of a chartered accountant for top post of the revenue body.
The working at the FBR is at standstill following the nomination of Shabbar Zaidi as FBR chairman by the Prime Minister two days back.
The officers of the FBR are arguing that till today Shabbar Zaidi was helping his clients to avoid taxes if not evade taxes through aggressive tax planning.
“If he is appointed as chairman of the FBR then he will lead tax teams in the field to conduct audit of taxpayers including his clients to detect mis-declarations / under-declarations, tax avoidance and tax evasion,” a FBR official said.
There is no legal bar except that his appointment may be against the doctrine of conflict of interest, the official said.
There is no moral justication for employees of FBR to raise objection on his appointment as Section 3(3) of FBR Act, 2007 empowers the federal government to appoint any person as Chairman FBR on such terms and conditions as it may determine.
The official said that the only point on the basis of which Shabbar Zaidi’s appointment can be challenged by FBR employees is that the appointment may be in violation of doctrine of conflict of interest, which can only be decided by a court of law.
Shabbar Zaidi has been the Managing Partner of Fergusson in Pakistan and hundreds of companies audit have been conducted and completed under his supervision, advice, guidance and signature.
Those audited books of accounts up to previous five years would now be presented before his subordinate officers in the FBR and in the field formations.
What would happen if an issue of his client is brought before him under section 7 of FBR Act 2007 for settlement where in he himself or even his former Chartered accountant firm has completed audit, the official questioned.
Conflict of interest would still be there even if he assigns the case to any member of FBR for decision because he would be head of the office.
Other serious issue in his case would be that he can not be Secretary Revenue Division so the government has to have separate Secretary Revenue Division from the bureaucratic hierarchy most probably from PAS.
So working conditions may not be good for Shabbar due to probable resistance though he is highly competent and an extraordinary individual of strategic thinking and also very fair, honest and judicious.
The other technical hitch is that if Chairman FBR has to be brought from private sector then it has to be through open competition by giving advertisement in the press as ruled by the Superior Courts.
Another officer said that the appointment of FBR officials was made through Federal Public Service Commission (FPSC) in a transparent manner.
“An officer spends his entire life with hope that in reward to his judicious work he would become chairman,” the officer said, adding that the precedent set by the government would demoralize the FBR officials.
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Sales Tax Act 1990: tax payment by company in liquidation
KARACHI: The sales tax law has defined the procedure for liability for payment of tax in case of private company is in state of liquidation.
The updated Sales Tax Act, 1990 issued by Federal Board of Revenue (FBR), the Section 58 explained the payment method from the company is wound up.
Section 58: Liability for payment of tax in the case of private companies or business enterprises
Notwithstanding anything contained in the Companies Act, 2017 (XIX of 2017), where any private company or business enterprise is wound up and any tax chargeable on the company or business enterprise, whether before, or in the course, or after its liquidation, in respect of any tax period cannot be recovered from the company or business enterprise, every person who was a owner of, or partner in, or director of, the company or business enterprise during the relevant period shall, jointly and severally with such persons, be liable for the payment of such tax.
Section 58A: Representatives
Sub-Section (1): For the purpose of this Act and subject to sub-sections (2) and (3), the expression “representative” in respect of a registered person, means:
(a) where the person is an individual under a legal disability, the guardian or manager who receives or is entitled to receive income on behalf, or for the benefit of the individual;
(b) where the person is a company (other than a trust, a Provincial Government, or local authority in Pakistan), a director or a manager or secretary or agent or accountant or any similar officer of the company;
(c) where the person is a trust declared by a duly executed instrument in writing whether testamentary or otherwise, any trustee of the trust;
(d) where the person is a Provincial Government, or local authority in Pakistan, any individual responsible for accounting for the receipt and payment of money or funds on behalf of the Provincial Government or local authority;
(e) where the person is an association of persons, a director or a manager or secretary or agent or accountant or any similar officer of the association or, in the case of a firm, any partner in the firm;
(f) where the person is the Federal Government, any individual responsible for accounting for the receipt and payment of moneys or funds on behalf of the Federal Government; or
(g) where the person is a public international organization, or a foreign government or political sub-division of a foreign government, any individual responsible for accounting for the receipt and payment of moneys or funds in Pakistan on behalf of the organization, government, or political subdivision of the government.
Sub-Section (2): Where the Court of Wards, the Administrator General, the Official Trustee, or any receiver or manager appointed by, or under, any order of a Court receives or is entitled to receive income on behalf, or for the benefit of any person, such Court of Wards, Administrator General, Official Trustee, receiver, or manager shall be the representative of the person for the purposes of this Act.
Sub-Section (3): Subject to sub-section (4), where a person is a non-resident person, the representative of the persons for the purpose of this Act for a tax year shall be any person in Pakistan:
(a) who is employed by, or on behalf of, the non-resident person;
(b) who has any business connection with the non-resident person;
(c) from or through whom the non-resident person is in receipt of any income, whether directly or indirectly;
(d) who holds, or controls the receipt or disposal of any money belonging to the non-resident person;
(e) who is the trustee of the non-resident person; or
(f) who is declared by the 1[Commissioner] by an order in writing to be the representative of the non-resident person.
Sub-Section (4): No person shall be declared as the representative of a non-resident person unless the person has been given an opportunity by the 1[Commissioner] of being heard.
Section 58B: Liability and obligations of representatives
Sub-Section (1): Every representative of a person shall be responsible for performing any duties or obligations imposed by or under this Act on the person, including the payment of tax.
Sub-Section (2): Subject to section 58 and sub-section (5) of this section, any tax that, by virtue of sub-section (1), is payable by a representative of a registered person shall be recoverable from the representative only to the extent of any assets of the registered person that are in the possession or under the control of the representative.
Sub-Section (3): Every representative of a registered person who pays any tax owing by the registered person shall be entitled to recover the amount so paid from the registered person or to retain the amount so paid out of any moneys of the registered person that are in the representative’s possession or under the representative’s control.
Sub-Section (4): Any representative, or any person who apprehends that he may be assessed as a representative, may retain out of any money payable by him to the person on whose behalf he is liable to pay tax (hereinafter in this section referred to as the “principal”), a sum equal to his estimated liability under this Act, and in the event of disagreement between the principal and such a representative or a person as to the amount to be so retained, such representative or person may obtain from the 1[Commissioner] a certificate stating the amount to be so retained pending final determination of the tax liability, and the certificate so obtained shall be his authority for retaining that amount.
Sub-Section (5): Every representative shall be personally liable for the payment of any tax due by the representative in a representative capacity if, while the amount remains unpaid, the representative:
(a) alienates, charges or disposes of any moneys received or accrued in respect of which the tax is payable; or
(b) disposes of or parts with any moneys or funds belonging to the person that is in the possession of the representative or which comes to the representative after the tax is payable, if such tax could legally have been paid from or out of such moneys or funds.
Sub-Section (6): Nothing in this section shall relieve any person from performing any duties imposed by or under this Act on the person which the representative of the person has failed to perform.
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Sales Tax Act 1990: No suit shall lie against government servant
KARACHI: The sales tax law had explained that no suit, prosecution or other legal proceeding shall lie against the federal government or against any public servant in respect of any order passed in good faith.
The updated Sales Tax Act, 1990 issued by the Federal Board of Revenue (FBR) explained the bar of suits, prosecution and other legal proceedings under this act.
Section 51: Bar of suits, prosecution and other legal proceedings
Sub-Section (1): No suit shall be brought in any Civil Court to set aside or modify any order passed, any assessment made, any tax levied, any penalty imposed or collection of any tax made under this Act.
Sub-Section (2): No suit, prosecution or other legal proceeding shall lie against the Federal Government or against any public servant in respect of any order passed in good faith under this Act.
Sub-Section (3): Notwithstanding anything in any other law for the time being in force, no investigation or inquiry shall be undertaken or initiated by any governmental agency against any officer or official for anything done in his official capacity under this Act, rules, instructions or direction made or issued thereunder without the prior approval of the Board.
Section 52: Appearance by authorized representative
A registered person required to appear before the Appellate Tribunal or an officer of 2[Inland Revenue] in connection with any proceedings under this Act may, in writing, authorize any person having such qualification as may be prescribed to represent him or appear on his behalf.
Section 52A: e-intermediaries to be appointed
Sub-Section (1): Subject to such conditions, limitations and restrictions, the Board may, by a notification in the official Gazette, appoint a person to electronically file return under Chapter V and such other documents electronically, as may be prescribed from time to time, on behalf of a person registered under section 14.
Sub-Section (2): A person registered under section 14 may authorize an e-intermediary to electronically file return or any other documents, as specified in sub-section (1).
Sub-Section (3): The return or such other documents filed by an e-intermediary on behalf of a registered person shall be deemed to have been filed by that registered person.
Sub-Section (4): Where this Act requires anything to be done by the registered person and if such thing is done by an e-intermediary authorized by the registered person under sub-section (2), unless the contrary is proved, shall be deemed to have been done with the knowledge and consent of such registered person so that in any proceedings under this Act, the registered person shall be liable as if the thing has been done by him.
Sub-Section (5): Where an e-intermediary, authorized by a registered person under sub-section (2) to act on his behalf, knowingly or willfully submits a false or incorrect information or document or declaration with an intent to avoid payment of tax due or any part thereof or claiming a tax credit or a refund that is not due to the registered person, such e-intermediary shall be jointly and severally responsible for recovery of the amount of tax short paid or the amount refunded in excess as a result of such incorrect or false information or document or declaration, without prejudice to any other action that may be taken against him under the relevant provisions of the law.
Sub-Section (6): The Board may, by notification in the official Gazette, prescribe rules for the conduct and transaction of business of e- intermediaries, including their appointment, suspension and cancellation of appointment, subject to such conditions as specified therein.
Section 53: Estate of deceased person
The tax liability of a deceased registered person under the Act shall be the first charge on his estate in the hands of his successors.
Section 54: Estate in bankruptcy
Sub-Section (1): If a registered person is declared bankrupt, the tax liability under this Act shall pass on to the estate in bankruptcy if it continues to operate the business.
Sub-Section (2): If tax liability is incurred by an estate in bankruptcy, the tax is deemed to be a current expenditure in the operations of the estate in bankruptcy and shall be paid before the claims preferred by other creditors are settled.
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Utility Stores Corporation implements Ramazan Package ahead of fasting month: RM Javed Khan
KARACHI: Utility Stores Corporation (USC) has implemented subsidized rates under Ramazan Package announced by the government to provide relief the masses during the holy month, a top official said on Sunday.
“The reduced rates have been implemented across the country from May 03, 2019 around three or four days ahead of Ramazan,” said Muhammad Javed Khan, USC, Regional Manager (RM), Karachi.
“All the USC outlets are now selling hundreds of items at the subsidized rates,” he added.
Khan said that a significant reduction had been announced in those items that were mostly used during the fasting month such as sugar, wheat flour, rice, pulses, edible oil and ghee etc.
“These commodities have reduced prices up to 20 percent when compared with the open market,” the regional manager added.
The federal government has provided Rs2 billion to subsidized the rates of essential items to be sold through the Utility Stores.
The Economic Coordination Committee of the Cabinet (ECC) in its meeting on March 12 approved subsidy amounting Rs2 billion to provide relief the masses during Ramazan ul Mubarak.
Javed Khan pointed out some of items having significant reduction in prices, which included: sugar Rs 64 per kilogram, wheat flour Rs340/10-kg, whet gram Rs100/kg, Dal Chana Rs105/kg, Dal Masoor Rs90/kg, vegetable ghee Rs129/kg, edible oil Rs153/liter, Rooh Afza Rs183/800ml, cold drink (all brands) Rs77/1.5 liters, Tapal tea 793/kg, dates Rs60/500 grams, Rice Super Rs114/kg.
The regional manager said that in order to ensure availability and avoid bulk sale the zonal chief had constituted vigilance teams for monitoring.
He said that on the directives of Prime Minister Imran Khan the regional chiefs across the country were also visiting the outlets to ensure the availability and for price checks as well.
Prime Minister Imran Khan has recently directives all the government functionaries to ensure securities and availability of essential items at reduced rates during the holy month of Ramazan ul Mubarak.
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Sales Tax Act 1990: ownership transfer of taxable activity
KARACHI: The sales tax law has explained application of sales tax on taxable activity or transfer of ownership.
According to updated Sales Tax Act, 1990 issued by Federal Board of Revenue (FBR) the law explained the sales of taxable activity or transfer of ownership.
Section 49: Sales of taxable activity or transfer of ownership
Sub-Section (1): In case of termination of taxable activity or part thereof or its sale or transfer of ownership to a non-registered person, the possession of taxable goods or part thereof by the registered person shall be deemed to be a taxable supply and the registered person shall be required to account for and pay the tax on the taxable goods held by him:
Provided that if the tax payable by such registered person remains unpaid, the amount of unpaid tax shall be the first charge on the assets of the business and shall be payable by the transferee of business.
(2) In the case of sale or transfer of ownership of a taxable activity or part thereof to another registered person as an ongoing concern, the taxable goods or part thereof shall be transferred to the new owner through a zero-rated invoice and the sales tax chargeable thereon shall be accounted for and paid by the registered person to whom such taxable activity or part thereof is transferred.
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FBR notifies sales tax rates on petroleum products for May 2019
ISLAMABAD: Federal Board of Revenue (FBR) on Saturday notified sales tax rates for petroleum products for the month of May 2019.
The FBR issued SRO 507(I)/2019 on May 04, 2019 to amend the rates issued on April 30 and also amend the SRO 57(I)/2016 dated January 29, 2016.
Following sales tax rates on petroleum products will be applicable for the month of May 2019:
Petrol 12 percent ad valorem
High Speed Diesel oil 17 percent ad valorem
Kerosene 17 percent ad valorem
Light Diesel Oil 17 percent ad valorem
Earlier, the FBR issued SRO 499(I)/2019 issued on April 30, 2019 and reduced temporarily till May 05 at the rates: petrol 2 percent, HSD 13 percent, kerosene 8 percent and light diesel oil 9 percent.