Category: Exclusive

Withholding tax rates on purchase, registration of motor vehicle for Tax Year 2019

KARACHI: Federal Board of Revenue (FBR) has issued updated withholding tax rates on purchase and registration of motor vehicles.

The withholding tax rates have been updated through Finance Supplementary (Second Amendment) Act, 2019 as on March 09, 2019.
The withholding tax rate on registration of motor vehicle to be collected by excise and taxation department of provincial government under Sub-Section 1 of Section 231B of Income Tax Ordinance, 2001:

Registration of Motor Vehicle	Filer	Non-Filer
Up to 850CC	Rs7,500	Rs15,000
851CC to 1000CC	Rs15,000	Rs37,500
1001CC to 1300CC	Rs25,000	Rs60,000
1301CC to 1600CC	Rs50,000	Rs150,000
1601CC to 1800CC	Rs75,000	Rs225,000
1801CC to 2000CC	Rs100,000	Rs300,000
2001CC to 2500CC	Rs150,000	Rs450,000
2501CC to 3000CC	Rs200,000	Rs600,000
Above 3000CC	Rs250,000	Rs675,000

Every leasing company or a scheduled bank or a non-banking financial institution or an investment bank or a modaraba or a development finance institution, whether shariah compliant or under conventional mode, at the time of leasing of a motor vehicle to a non-filer, either through ijara or otherwise, shall collect advance tax at the rate of four per cent of the value of the motor vehicle under Sub-Section 1A of Section 231B of Income Tax Ordinance.

Every motor vehicle registering authority of Excise and Taxation Department shall collect advance tax at the time of transfer of registration or ownership of a private motor vehicle, at the following rates under Sub-Section 2 Section 231B of Income Tax Ordinance, 2001:

Engine Capacity	Tax for Filer	Tax for Non-Filer
Up to 850CC	Rs 0	Rs5,000
851CC to 1000CC	Rs5,000	Rs15,000
1001CC to 1300CC	Rs7,500	Rs25,000
1301CC to 1600CC	Rs12,500	Rs65,000
1601CC to 1800CC	Rs18,750	Rs100,000
1801CC to 2000CC	Rs25,000	Rs135,000
2001CC to 2500CC	Rs37,500	Rs200,000
2501CC to 3000CC	Rs50,000	Rs270,000
Above 3000CC	Rs62,500	Rs300,000

Provided that no collection of advance tax under this sub-section shall be made on transfer of vehicle after five year from the date of first registration in Pakistan.

Every manufacturer of a motor vehicle shall collect, at the time of sale of a motor car or jeep, advance tax at the following rates under Sub-Section 3 of Section 231B of Income Tax Ordinance, 2001 from the person to whom such sale is made:

Engine Capacity	Tax for Filer	Tax for Non-filer
Up to 850CC	Rs7,500	Rs15,000
851CC to 1000CC	Rs15,000	Rs37,500
1001CC to 1300CC	Rs25,000	Rs60,000
1301CC to 1600CC	Rs50,000	Rs150,000
1601CC to 1800CC	Rs75,000	Rs225,000
1801CC to 2000CC	Rs100,000	Rs300,000
2001CC to 2500CC	Rs150,000	Rs450,000
2501CC to 3000CC	Rs200,000	Rs600,000
Above 3000CC	Rs250,000	Rs675,000

May 4, 2019

Sales Tax Act 1990: Vast recovery powers of IR officers

KARACHI: The officers of Inland Revenue have vast powers under sales tax laws to recover outstanding amount from taxpayers.

Section 48 of updated Sales Tax Act, 1990 issued by Federal Board of Revenue (FBR) explained the powers of IR officers for recovery of outstanding amount from taxpayers.

Section 48: Recovery of arrears of tax.

Sub-Section (1): Subject to sub-section (1A), where any amount of tax is due from any person, the officer of Inland Revenue may:-

(a) deduct the amount from any money owing to person from whom such amount is recoverable and which may be at the disposal or in the control of such officer or any officer of Income Tax, Customs or Central Excise Department;

(b) require by a notice in writing any person who holds or may subsequently hold any money for or on account of the person from whom tax may be recoverable to pay to such officer the amount specified in the notice;

(c) stop removal of any goods from the business premises of such person till such time the amount of tax is paid or recovered in full;

(ca) require by a notice in writing any person to stop clearance of imported goods or manufactured goods or attach bank accounts;

(d) seal the business premises till such time the amount of tax is paid or- recovered in full;

(e) attach and sell or sell without attachment any movable or immovable property of the registered person from whom tax is due; and

(f) recover such amount by attachment and sale of any moveable or- immovable property of the guarantor, person, company, bank or financial institution, where a guarantor or any other person, company, bank or financial institution fails to make payment under such guarantee, bond or instrument:

Provided that the Commissioner Inland Revenue or any officer of Inland Revenue shall not issue notice under this section or the rules made thereunder for recovery of any tax due from a taxpayer if the said taxpayer has filed an appeal under section 45B in respect of the order under which the tax sought to be recovered has become payable and the appeal has not been decided by the Commissioner (Appeals), subject to the condition that ten per cent of the amount of tax due has been paid by the taxpayer.

Sub-Section (1A): If any arrears of tax, default surcharge, penalty or any other amount which is adjudged or payable by any person and which cannot be recovered in the manner prescribed above, the Board or any officer authorized by the Board, may, write off the arrears in the manner as may be prescribed by the Board.

Sub-Section (2): For the purpose of recovery of tax, penalty or any other demand raised under this Act, the officer of Inland Revenue shall have the same powers which under the Code of Civil Procedure 1908 (V of 1908), a Civil Court has for the purpose of recovery of an amount due under a decree.

May 2, 2019
FBR may proceed for sales tax blacklisting of M/s. Hascol Petroleum Limited

KARACHI: Federal Board of Revenue (FBR) will start proceeding to blacklist a major oil marketing company after suspending this week for non-compliance and suppressing sales to evade taxes.

The FBR suspended the sales tax registration of M/s. Hascol Petroleum Limited earlier this week for evading sales tax to the tune of Rs3.9 billion by concealing actual sales.

The status of the company for active sales taxpayer is remained suspended on the official FBR website till 2:50AM on May 02, 2019.

The status of the company can be checked at https://e.fbr.gov.pk/atlsearchutility.aspx?PID=BLcOS/IMzEf3Rn3kVI062g== by inserting company’s sales tax registration number (STRN) 1200271018373 or through National Tax Number (NTN) 1496632-8.

A notice issued on April 29, 2019 for suspending sales tax registration of the OMC said that the company had concealed and evaded sales tax amounting to Rs3.69 billion and further tax amounting to Rs279.84 million.

“Therefore, registered person is being charged with the contravention of Section 3, 3(1A), 6, 22, 23 and 26 of the Sales Tax Act, 1990 and Rs3.97 billion is recoverable Under Section 11(2) of the Sales Tax Act, 1990, along with default surcharge Under Section 34(1) and penalty Under Section 33(5) the Sales Tax Act, 1990,” according to the notice.

The notice also stated: “sales tax registration of above mentioned registered person is hereby suspended with immediate effect till finalization of the proceedings,” it added.

The OMC through a notice to Pakistan Stock Exchange (PSX) on April 30, 2019 flatly denied all the charges stating that it was not involved in any form of theft and tax fraud.

Some section of press ran the story regarding suspension of sales tax registration of the company along with charges framed by the FBR. The notice sent to the PSX by M/s. Hascol Petroleum Limited also threatened to initiate legal action against such news reports.

FBR sources said that suspension of sales tax registration of any company was not done on the wishes of a person. It is thorough process and a commissioner of Inland Revenue only issued such order after having sufficient records.

The sources further said that since the centralization of system the suspension of sales tax registration was done through the main system of Inland Revenue and WeBOC system.

The sources said: “Commissioner shall issue written order to the concerned registered person detailing the reasons for suspension. The order shall also be provided to all other Large Taxpayer Units (LTUs)/Regional Tax Offices (RTOs), the FBR‘s computer system, the STARR computer system and the Customs Wing computer system for information and necessary action as per law.”

They also said that suspension of registered person will make them ineligible to avail input tax adjustment/refund. “Similarly, no input tax adjustment/refund shall be allowed to any other registered persons on the basis of invoices issued by such suspended person (whether issued prior to or after such suspension).”

The sources said that the suspension would also disable a company to file a goods declaration in customs system for clearance of consignment.

What is post suspension?

According to FBR’s official website the suspended registered person will be issued a show cause notice (through registered post or courier service) within seven days of issuance of order of suspension by the Commissioner.

“The registered person will have an opportunity of hearing with fifteen days of the issuance of such notice clearly indicating that he will be blacklisted.”

In case of non-availability of the suspended person at the given address, the notice may be placed on the main notice Board of the LTU/RTO.

The sources said that where the show cause notice is not issued within seven days of the order of suspension, the order of suspension shall become invalid.

The notice issued by LTU Karachi to suspend the registration:

May 2, 2019
Sales Tax Act 1990: Suo Moto powers of FBR, IR Commissioner to call for record

KARACHI: The sales tax laws have authorized suo moto powers to Federal Board of Revenue (FBR) and Commissioner of Inland Revenue (IR) to call for records from department and taxpayers.

The Section 45 of updated Sales Tax Act, 1990 explained the suo moto powers of FBR and IR commissioner to call for records in any case.

Section 45A: Power of the Board and Commissioner to call for records:

Sub-Section (1): The Board may, of its own motion, or otherwise call for and examine the record of any departmental proceedings under this Act or the rules made there under for the purpose of satisfying itself as to the legality or propriety of any decision or order passed therein by an Officer of Inland Revenue, it may pass such order as it may think fit:

Provided that no order imposing or enhancing any penalty or fine requiring payment of a greater amount of Sales Tax than the originally levied shall be passed unless the person affected by such order has been given an opportunity of showing cause and of being heard.

Sub-Section (2): No proceeding under 9[this section] shall be initiated in a case where an appeal under Section 45B or Section 46 is pending.

Sub-Section (3): No order shall be made under this Section after the expiry of five years from the date of original decision or order of the sub-ordinate officer referred to in sub-section (1).

Sub-Section (4): The Commissioner may, suo moto, call for and examine the record of any proceeding under this Act or the rules made thereunder for the purpose of satisfying himself as to the legality or propriety of any decision or order passed by an officer of Inland Revenue subordinate to him, and pass such order as he may deem fit.

Section 45B: Appeals

Sub-Section (1): Any person, other than the Sales Tax Department, aggrieved by any decision or order passed under sections 10, 11, 25, 36, or 66, by an officer of Inland Revenue may, within thirty days of the date of receipt of such decision or order, prefer appeal to the Commissioner Inland Revenue (Appeals):

Provided that an appeal preferred after the expiry of thirty days may be admitted by the Commissioner Inland Revenue (Appeals) if he is satisfied that the appellant has sufficient cause for not preferring the appeal within the specified period:

Provided further that the appeal shall be accompanied by a fee of one thousand rupees to be paid in such manner as the Board may prescribe.

Sub-Section (1A): Where in a particular case, the Commissioner (Appeals) is of the opinion recovery of tax levied under this act, shall cause undue hardship to the taxpayer, he, after affording opportunity of being heard to the commissioner or officer of Inland revenue against whose orders appeal has been made, may stay the recovery of such tax for a period not exceeding thirty days in aggregate.

Sub-Section (2): The Commissioner Inland Revenue (Appeals) may, after giving both parties to the appeal an opportunity of being heard, pass such order as he thinks fit, confirming, varying, altering, setting aside or annulling the decision or order appealed against:

Provided that such order shall be passed not later than one hundred and twenty days from the date of filing of appeal or within such extended period as the Commissioner (Appeals) may, for reasons to be recorded in writing fix:

Provided further that such extended period shall, in no case, exceed sixty days:

Provided further that any period during which the proceedings are adjourned on account of a stay order or Alternative Dispute Resolution proceedings or the time taken through adjournment by the petitioner not exceeding thirty days shall be excluded from the computation of aforesaid periods.

Sub-Section (3): In deciding an appeal, the Commissioner of Inland Revenue (Appeals) may make such further inquiry as may be necessary provided that he shall not remand the case for de novo consideration.

May 1, 2019
Sales Tax Act, 1990: FBR may posts IR officer to business premises

KARACHI: Federal Board of Revenue (FBR) may post an officer of Inland Revenue to the premises of a registered taxpayer to monitor sale, purchase and production activities.

The Section 40 of updated Sales Tax Act, 1990 explained the powers of FBR and Inland Revenue officers under the law.

Section 40: Searches under warrant

Sub-Section (1): Where any officer of Inland Revenue has reason to believe that any documents or things which in his opinion, may be useful for, or relevant to, any proceedings under this Act are kept in any place, he may after obtaining a warrant from the magistrate, enter that place and cause a search to be made at any time.

2) The search made in his presence under sub-section (1) shall be carried out in accordance with the relevant provisions of the Code of Criminal Procedure, 1898 (V of 1898).

Section 40B: Posting of Inland Revenue Officer

Subject to such conditions and restrictions, as deemed fit to impose, the Board, may post Officer of Inland Revenue to the premises of registered person or class of such persons to monitor production, sale of taxable goods and the stock position.

Section 40C: Monitoring or Tracking by Electronic or other means

Sub-Section (1): Subject to such conditions, restrictions, and procedures, as it may being fit to impose or specified, the Board may, by notification in the official Gazette, specify any registered person or class of registered persons or any good or class of goods in respect of which monitoring or tracking of production, sales, clearances, stocks or any other related activity may be implemented through electronic or other means as may be prescribed.

Sub-Section(2): From such date as may be prescribed by the Board, no taxable goods shall be removed or sold by the manufacturer or any other person without affixing tax stamp, bandrole stickers, labels, barcodes, etc. in any such form, style and manner as may be prescribed by the Board in this behalf.

Sub-Section (3): Such tax stamps, banderols, stickers, labels, barcodes etc., shall be acquired by the registered person referred to in sub-section (2) from a licensee appointed by the Board for the purpose, against price approved by the Board, which shall include the cost of equipment installed by such licensee in the premises of the said registered person.

April 30, 2019
April 30 last day for filing annual return; eyes on amnesty scheme for further extension

ISLAMABAD: Tomorrow April 30, 2019 is the last day for filing income tax return for Tax Year 2018, which was extended many times since the actual filing date.

Sources in on Monday said that the Federal Board of Revenue (FBR) may further extend the last date for filing income tax returns with the launch of proposed tax amnesty scheme.

Previously the FBR on March 31, 2019 extended the last date for filing income tax returns by month up to April 30 through Circular No. 03/2019.

It was second extension, when the FBR on March 15 extended the date for filing income tax returns up to March 31, 2019.

The salary persons are required to file their annual returns by August 31 and business individuals and companies having special year required to file returns by September 30. Companies having normal tax year (July – June) are required to file annual return by December 31.

For tax year 2018 the FBR previously extended the last date for filing income tax returns up to December 15, 2018 in case of salary individuals, business individuals, FTR taxpayers and companies having special tax year.

Through Finance Act, 2018 a new section 182A was inducted to Income Tax Ordinance, 2001 under which the taxpayers who filed their annual returns after due date were disqualified to appear on Active Taxpayers List (ATL). The ATL is an important document to avail the benefits of reduced rate of withholding taxes. The restriction was also disabled the late return filers to avail advantage in purchasing motor vehicles and immovable properties.

This restriction also reduced the number of return files massively by due date ended in December 2018. The FBR received income tax returns around 1.59 million as per new ATL for tax year 2018 issued on March 01, 2019. The FBR received 1.84 million returns up to February 28, 2019 for tax year 2017.

Stakeholders have demanded the FBR to find out way for including late filers into ATL and increase the number of returns.

Following the extension the date for filing returns on March 15, 2019 the FBR has received over 1.9 million returns for tax year 2018 up to April 15, 2019.

April 29, 2019
Withholding tax card for dividend income, return on Sukuk: updated for Tax Year 2019

KARACHI: Federal Board of Revenue (FBR) has updated withholding tax card for Tax Year 2019 incorporating amendment made to Income Tax Ordinance, 2001 through Finance Supplementary (Second Amendment) Act, 2001.

Following are the withholding tax rates for dividend income and return on investment in Sukuk under Section 150 and Section 150 A updated up to March 09, 2019 for Tax Year 2019.

Every persons paying dividend under Section 150 of Income Tax Ordinance, 2001 shall deduct withholding tax on the gross amount of dividend paid to the recipient at the following rates:

a. Purchaser of Wapda privatized power project, company setups for power generation or company supplying coal exclusively to power generation projects: 7.50 percent

b. the tax rate for filer (other than mentioned in (a) above): 15 percent

c. non-filers (other than mentioned in (a) above): 15 percent

i. in the case of collective investment scheme, REIT scheme or mutual funds, rate of tax on dividend paid shall be:

Stock Fund: Individual 12.50 percent; company 12.5 percent; Association of Person (AOP) 12.5 percent.

Money market Fund, Income Fund, or , REIT scheme or any other fund:

Individual: filer 12.5 percent; non-filer 15 percent

Company: filer 15 percent; non-filer 25 percent

AOP: filer 12.5 percent; non-filer 15 percent

ii. In case of Stock Fund if dividend recipient gain, the rate of tax shall be: 12.5 percent

iii. In the case of Money Market Mutual Fund, the rate of tax on dividend paid up to Rs2.5 million, to a person (i.e. individual and AOP) other than company, shall be: 10 percent

iv. In the case of Rental REIT, the rate of tax on dividend paid to an Individual shall be: 7.5 percent

The withholding tax for return on investment in Sukuk under Section 150A shall be deducted by special purpose vehicle, company from Sukuk holders on payment of gross amount on return on investment.

The withholding tax rates will be:

a) In case the Sukuk- holder is a company: 15 percent

b) In case the Sukuk – holder is an individual or an association of person, if the return on investment is more than one million: 12.50 percent

c) In case the Sukuk – holder is an individual and an association of person, if the return on investment is less than one million, 10 percent, and

d) In case the Sukuk – holder is a non-filer: 17.50 percent

April 29, 2019
Sales Tax Act 1990: IR officers empowered with free access to enter business premises

KARACHI: Authorized officers of Inland Revenue have access to business premises of sales tax registered taxpayers to inspect record of sales and purchases.

According to Section 38 of updated Sales Tax Act, 1990 issued by Federal Board of Revenue (FBR), explained the powers of authorized officers of Inland Revenue to enter business premises for inspecting records.

Section 38: Authorized officers to have access to premises, stocks, accounts and records

Sub-Section (1): Any officer authorized in this behalf by the Board or the Commissioner shall have free access to business or manufacturing premises, registered office or any other place where any stocks, business records or documents required under this Act are kept or maintained belonging to any registered person or a person liable for registration or whose business activities are covered under this Act or who may be required for any inquiry or investigation in any tax fraud committed by him or his agent or any other person; and such officer may, at any time, inspect the goods, stocks, records, data, documents, correspondence, accounts and statements, utility bills, bank statements, information regarding nature and sources of funds or assets with which his business is financed, and any other records or documents, including those which are required under any of the Federal, Provincial or local laws maintained in any form or mode and may take into his custody such records, statements, diskettes, documents or any part thereof, in original or copies thereof in such form as the authorized officer may deem fit against a signed receipt.

Sub-Section (2): The registered person, his agent or any other person specified in sub-section (1) shall be bound to answer any question or furnish such information or explanation as may be asked by the authorized officer.

Sub-Section(3): The department of direct and indirect taxes or any other Government department, local bodies, autonomous bodies, corporations or such other institutions shall supply requisite information and render necessary assistance to the authorized officer in the course of inquiry or investigation under this section.

Section 38A: Power to call for information

The Commissioner may, by notice in writing, require any person, including a banking company, to furnish such information or such statement in connection with any investigation or inquiry in cases of tax fraud, as may be specified in such notice:

Provided that the Commissioner may require any regulatory authority to provide information concerning the licenses and authorizations issued by it.

Section 38B: Obligation to produce documents and provide information

Sub-Section (1): Notwithstanding anything contained in this Act or any other law for the time being in force, any person required to maintain the record under the Act, on demand by an officer, not below the rank of an Assistant Commissioner Inland Revenue, by notice in writing, as and when specified in the notice, shall,–

(a) produce for examination, such documents or records which the officer of Inland Revenue considers necessary or relevant to the audit, inquiry or investigation under the Act;

(b) allow the officer of Inland Revenue to take extracts from or copies of such documents or records; and

(c) appear before the officer of Inland Revenue and answer any question put to him concerning the documents and records relating to the audit or inquiry or investigation referred to in clause (a) above.

Sub-Section (2): An officer of Inland Revenue conducting an audit, inquiry or, as the case may be, an investigation under the Act, may require in writing any person, department, company or organization to furnish such information as is held by that person, department, company or organization, which, in the opinion of the officer of Inland Revenue, is relevant to such audit, inquiry or investigation.

Sub-Section (3): The Board may require, in writing, any person, department, company or organization, as the case may be, to provide any information or data held by that person, department, company or organization, which, in the opinion of the Board, is required for purposes of formulation of policy or administering the Customs, Sales Tax, Federal Excise or Income Tax.

Sub-Section (4): Every person, department, company or organization shall furnish the information requisitioned by the Board or the officer of Sales Tax under sub-section (2) or (3), within the time specified in the notice issued by the Board or, as the case may be, the officer of Inland Revenue.

April 29, 2019
Sales Tax Act 1990: IR officers authorized to arrest fraudsters

KARACHI: The sales tax law has authorized officers of Inland Revenue to arrest persons committing fraud or any other offence.

The Section 37A of the updated Sales Tax Act, 1990 issued by Federal Board of Revenue (FBR) explained the powers of IR officers for making arrests.

Section 37A: Power to arrest and prosecute

Sub-Section (1): An officer of Inland Revenue not below the rank of an Assistant Commissioner of Inland Revenue or any other officer of equal rank authorised by the Board in this behalf, who on the basis of material evidence has reason to believe that any person has committed a tax fraud or any offence warranting prosecution under this Act, may cause arrest of such person.

Sub- Section (2): All arrests made under this Act shall be carried out in accordance with the relevant provisions of the Code of Criminal Procedure, 1898 (Act V of 1898).

Sub-Section (3): deleted

Sub-Section (4): Notwithstanding anything contained in sub-section (1) to subsection (3) or any other provision of this Act, where any person has committed a tax fraud or any offence warranting prosecution under this Act, the Commissioner may, either before or after the institution of any proceedings for recovery of tax, compound the offence if such person pays the amount of tax due along with such default surcharge and penalty as is determined under the provisions of this Act.

Sub-Section (5): Where the person suspected of tax fraud or any offence warranting prosecution under this Act is a company, every director or officer of that company whom the authorized officer has reason to believe is personally responsible for actions of the company contributing the tax fraud or any offence warranting prosecution under this Act shall be liable to arrest; provided that any arrest under this sub-section shall not absolve the company from the liabilities of payment of tax, default surcharge and penalty imposed under this Act.

April 28, 2019
Sales Tax Act 1990: IR officers empowered to summon persons

KARACHI: The sales tax laws have empowered officers of Inland Revenue to summon person in legal proceedings for evidence and produce documents.

According to updated Sales Tax Act, 1990 issued by Federal Board of Revenue (FBR), Section 37 explains power of IR officers to summon persons.

Section 37: Power to summon persons to give evidence and produce documents in inquiries under the Act

Sub-Section (1): Any officer of Inland Revenue shall have powers to summon any person whose attendance he considers necessary either to tender evidence or to produce documents or any other thing in any inquiry which such officer is making for any of the purposes of this Act.

Sub-Section (2): Any person summoned under sub-section (1) shall be bound to attend either in person or by an authorized agent, as the officer of Inland Revenue may direct;

Provided that a person who is exempted from personal appearance in a court under section 132 and 133 of the Code of Civil Procedure (Act V of 1908), shall not be required to appear in person.

Sub-Section (3): Any inquiry before an officer of Inland Revenue shall be deemed to be a judicial proceeding within the meaning of section 193 and 228 of the Pakistan Penal Code (Act XLV of 1860).

April 27, 2019