Category: Taxation

Stay updated on taxation news, tax laws, FBR policies, compliance, audits, income tax, sales tax, and fiscal developments in Pakistan.

FBR strictly implementing tax laws for revenue collection

KARACHI: Federal Board of Revenue (FBR) is strictly implementing tax laws for achieving revenue collection target.

“The tax laws are being strictly implemented and any negligence by the officials of the revenue department will not be tolerated,” Tariq Mehmood Pasha, Special Assistant to the Prime Minister for Revenue said in a meeting with a delegation of business community.

READ MORE: Last date for filing income tax return is Dec 31

Pasha further said that the FBR revenue collection is satisfactory. “All goals will be achieved,” Tariq Mehmood Pasha informed the delegation of United Business Group (UBG).

He said that Prime Minister Mian Shahbaz Sharif is aware of the problems of the business community, all resources are being used to improve the country’s economic condition and the government will soon provide all the economic resources to overcome the problems.

READ MORE: FTO intervention helps taxpayer to get withholding certificate

According to Gulzar Feroze, the main spokesperson of UBG, the delegation included President UBG and former President FPCCI Zubair Tufail. Former President FPCCI Abdul Rauf Alam, Former Vice President Atif Ikram Sheikh and Secretary General US Pakistan International Chamber Malik Sohail Hussain were present.

READ MORE: FBR imposes $5,000 cash carrying limit for foreign travel

On this occasion, Zubair Tufail said that at present the business conditions in the country are not satisfactory, firstly Covid-19 and later floods have badly affected the industrial and agricultural sector and many sectors have not yet recovered, so the government should provide relief to the business community.

The UBG delegation congratulated the Special Assistant to the Prime Minister for Revenue, Minister of State Tariq Mehmood Pasha and the FBR administration on the improved revenue situation.

READ MORE: FBR exempts CVT on assets of Reko Diq Mining Company

December 14, 2022
Last date for filing income tax return is Dec 31

Last date for filing annual income tax returns for corporate entities is December 30, 2022. By this deadline the companies have financial year ending June 30 are required to file their annual returns.

However, companies having other financial year, individuals and association of persons (AOPs) are required to file their returns by December 15, 2022, which is already extended three times.

READ MORE: FTO intervention helps taxpayer to get withholding certificate

Every year September 30 is the last date for filing income tax returns for business individuals, salaried persons, AOPs and companies having special year. However, for tax year 2022 the Federal Board of Revenue (FBR) has already extended date for return filing first up to October 2022, then November 30, 2022 and latest up to December 15, 2022.

Section 18 of Income Tax Ordinance, 2001 updated up to June 30, 2022 explained the method of furnishing returns and other documents.

Following is the text of the Section:

READ MORE: FBR imposes $5,000 cash carrying limit for foreign travel

Section 118. Method of furnishing returns and other documents. — (1) A return of income under section 114, a wealth statement under section 116 or a foreign income and assets statement under 116A, if applicable shall be furnished in the prescribed manner.

(2) A return of income under section 114 of a company shall be furnished —

(a) in the case of a company with a tax year ending any time between the first day of January and the thirtieth day of June, on or before the thirty-first day of December next following the end of the tax year to which the return relates; or

(b) in any other case, on or before the thirtieth day of September next following the end of the tax year to which the return relates.

(2A) Where salary income for the tax year is five hundred thousand rupees or more, the taxpayer shall file return of income electronically in the prescribed form and it shall be accompanied by the proof of deduction or payment of tax and wealth statement as required under section 116 or a foreign income and assets statement under 116A, if applicable”:

READ MORE: FBR exempts CVT on assets of Reko Diq Mining Company

“Provided that the Board may amend the condition specified in this sub-section or direct that the said condition shall not apply for a tax year.”

(3) A return of income for any person (other than a company) shall be furnished as per the following schedule, namely:—

(a) in the case of a return required to be filed through e-portal in the case of a salaried individual, on or before the 30th day of September] next following the end of the tax year to which the statement or return relates; or

(b) in the case of a return of income for any person (other than a company), as described under clause (a), on or before the 30th day of September next following the end of the tax year to which the return relates.

READ MORE: FBR chairman directs chief commissioners to meet December collection target

(4) A wealth statement shall be furnished by the due date specified in the notice requiring the person to furnish such statement or, where the person is required to furnish the wealth statement for a tax year under sub-section (2) of section 116, by the due date for furnishing the return of income for that year.

(5) A return required to be furnished by a notice issued under section 117 shall be furnished by the due date specified in the notice.

(6) Where a taxpayer is not borne on the National Tax Number Register and fails to file an application in the prescribed form and manner with the taxpayer’s return of income, such return shall not be treated as a return furnished under this section.

December 14, 2022
SRB invites proposals for budget 2023-2024

KARACHI: Sindh Revenue Board (SRB) has invited proposals for budget 2023-2024 and advised stakeholders to send their recommendations by January 27, 2023.

In a notification issued on Tuesday, the SRB said that it had invited proposals in relation to the Sindh Sales Tax on Services Act, 2011 and the Rules and Notifications issued thereunder.

The provincial revenue body said that it was in the process of formulating budgetary proposals (for the Sindh Budget 2023-2024) in relation to taxation and procedural provisions of Sindh Sales Tax on Services Act, 2011, The Sindh Sales Tax on Services Rules, 2011, the Sindh Sales Tax Special Procedures (Withholding) Rules, 2014, the Sindh Sales Tax Special Procedure (Transportation or Carriage of Petroleum Oil through Oil Tankers) Rules, 2018, the Sindh Sales Tax Special Procedure (Services provided or rendered by cab aggregator and the services provided or rendered by the owners or drivers of the motor vehicles using the cab aggregator services) Rules, 2019 and Sindh Sales Tax Special Procedure (Online Integration of Business) Rules, 2022 and other various notifications issued under the said Act, 2011.

It has been a policy of the SRB to consult all chambers, associations, groups, stakeholders and taxpayers before finalizing the budget proposals.

With this end in view, the SRB requests all persons (including the chambers of commerce and industry, business councils, trade associations, tax bars, Institute of Chartered Accountants, Institute of Cost and Management Accountants, taxpayers etc.) to send written proposals in the given format urgently so as to reach through e-mail (followed by its hard copy to be sent by post / courier) latest by Friday, January 27, 2023.

The SRB asked the stakeholders to provide proposals in the format included: name of the act/rules/notification proposed to be amended; section no., schedule no., tariff heading no., rule no., para no., involved; existing provisions/rates of tax/ proposed provisions/rates of tax; reasons and rationale for the proposal; and estimated revenue effect, (if any).

December 13, 2022
FTO intervention helps taxpayer to get withholding certificate

ISLAMABAD: Federal Tax Ombudsman (FTO) provided relief to a taxpayer by intervening in a matter where withholding tax certificate was denied to the taxpayer.

The Tax Ombudsman’s timely intervention has resolved a genuine taxpayers’ grievance with a withholding company, said a statement issued on Tuesday.

READ MORE: FBR imposes $5,000 cash carrying limit for foreign travel

It is a matter of appreciation that in order to protect Taxpayers Rights FTO has gone an extra mile to resolve the issue.

Briefly, a complainant, Ehsan Ul Haq has approached the tax ombudsman regarding the non-issuance of tax-deduction certificate by Muller & Philips Pakistan (Pvt) Limited as the withholding agent.

READ MORE: FBR exempts CVT on assets of Reko Diq Mining Company

Tax deduction certificates are mostly required from the withholding companies by their clients at time of submission of Income Tax returns and tax adjustments.

The tax withheld is deposited with tax authorities by withholding companies while evidence of such tax-deductions are provided by such companies to their clients.

READ MORE: FBR chairman directs chief commissioners to meet December collection target

As tax collecting agency FBR is bound to ensure that taxes are withheld & deposited according to law. Similarly under the same tax laws the withholding agents, as compliance of their tax obligations are obligated to maintain certain record like CPRs, file periodical withholding statements and issue prescribed tax deduction certificates to the concerned withholdees for submission before tax authorities.

READ MORE: SRB says cases worth Rs 80 billion stuck in litigation

FTO, accordingly, took up the matter with the withholding company and resolved the grievance of the tax payer. Upon FTO’s intervention the company issued withholding evidence of tax to the Complainant for period 01.07.2019 to 31.10.2022 without any further delay.

December 13, 2022
FBR imposes $5,000 cash carrying limit for foreign travel

ISLAMABAD: Federal Board of Revenue (FBR) on Tuesday imposed cash carrying limit of $5,000 for travelling abroad.

The FBR issued SRO 2201(I)/ 2022 dated December 12, 2022 to make part of law the amendment made to Baggage Rules, 2006. Previously, draft amendments to the rules were introduced through SRO 2043(I)/2022 on November 15, 2022.

READ MORE: FBR exempts CVT on assets of Reko Diq Mining Company

According to the latest notification, any person travelling abroad (except to Afghanistan) is allowed to take out Pakistan US Dollars or equivalent thereof in other foreign currencies as per the limits give below:

For individuals 18 years and above, the maximum limit per person per visit in US$ (or equivalent in other foreign currencies) is $5,000 and annual limit per person in US$ (or equivalent in other foreign currencies) is $30,000.

For individuals below 18 years, the maximum limit per person per visit in US$ (or equivalent in other foreign currencies) is $2,500 and annual limit per person in US$ (or equivalent in other foreign currencies) is $15,000.

READ MORE: FBR chairman directs chief commissioners to meet December collection target

In case of passengers travelling to Afghanistan, the maximum limit per person per visit (US$ or equivalent in other foreign currencies) is $1,000 and annual limit per person (US$ or equivalent in other foreign currencies) is $6,000.

The FBR said that the annual limits for outbound passengers for the respective countries mentioned above for a calendar year starting from the year 2023. However, for calendar year 2022, the existing annual limits in vogue before the issuance of this notification will continue to be effective till December 31, 2022.

READ MORE: SRB says cases worth Rs 80 billion stuck in litigation

The FBR further stated that any person taking foreign currency or any other prohibited or restricted item out of Pakistan shall file a declaration before or at the time of departure, electronically in the WeBOC or pass track or manual at the airport.

According to the amendments to Baggage Rules, 2006, the incoming passenger when in possession of foreign currency exceeding $10,000 or equivalent, or any other prohibited restricted items, shall also file a declaration.

READ MORE: Customs appraising officer awarded major penalty for inefficiency

December 13, 2022
FBR exempts CVT on assets of Reko Diq Mining Company

KARACHI: Federal Board of Revenue (FBR) on Monday exempted capital value tax (CVT) on all assets of Reko Diq Mining Company.

The FBR issued SRO 2200(I)/2022 to announce that the federal government had exempted all assets of the Reko Diq Mining Company (Private) Limited (formerly) Tethyan Copper Company Pakistan (Private) Limited from the whole of the capital value tax payable under sub-section of section 8 to the Finance Act, 2022.

READ MORE: FBR chairman directs chief commissioners to meet December collection target

It is worth mentioning that the Economic Coordination Committee of the Cabinet (ECC) a day earlier took important decisions regarding Reko Diq.

The ECC considered and approved two important agenda items related to Reko Diq project, thus paving the way for early start of the Reko Diq Project. Ministry of Energy (Petroleum Division) submitted a summary on accrued interest with respect to the amount held in an escrow account in connection with the Reko Diq Project dispute settlement.

READ MORE: SRB says cases worth Rs 80 billion stuck in litigation

It was presented that government of Pakistan (GoP) and Provincial Government of Baluchistan (GoB) entered into an out-of-court dispute settlement with M/s Tethyan Copper Company Pvt Limited- a consortium of Barrick Gold Corporation of Canada and M/s Antofagasta PLC of Chile, in respect of Reko Diq Copper-Gold Project in Chaghai district of Baluchistan.

As per settlement terms, Government of Pakistan has to clear liabilities to Antofagasta PLC. In the light of the terms of agreed settlement, the ECC allowed Finance Division to direct GHPL (for its own as well as GoB’s share), OGDCL and PPL to deposit the aggregate amount of interest to the sum of US$ 22,718,173/- in the escrow account from March 31, 2022 to December 15, 2022.

READ MORE: Customs appraising officer awarded major penalty for inefficiency

The ECC further allowed Finance Division to arrange the interest payable for GoB’s share amounting to US$ 8,519,314 /- from the loan of Rs. 65 billion already raised by the GHPL with the GoP guarantee.

Further, the ECC allowed the concerned Divisions of GoP and the SOEs to act in such a manner to ensure that the deposited amount alongwith interest deposited by the SOEs in the escrow account to form part of the consideration for share purchase of Reko Diq Mining Company Limited.

READ MORE: Further tax collection on pharmaceutical products unlawful: KTBA

The ECC also considered and approved a proposal of Finance Division through a summary on funding plan of Government of Pakistan for share of Government of Baluchistan in Reko Diq Project.

As per proposal, overall funding commitment of US$ 717 million over the period of 6 years by GoP in respect of GoB SPV Project Capital Commitment to be provided by the Government of Pakistan.

December 12, 2022
FBR chairman directs chief commissioners to meet December collection target

KARACHI: Asim Ahmed, Chairman, Federal Board of Revenue (FBR) on Saturday directed chief commissioners to ensure meeting revenue collection target for the month of December 2022.

The FBR chairman visited Large Taxpayers Office (LTO) Karachi and held meeting with Chief Commissioners of all the field formations stationed at Karachi.

READ MORE: SRB says cases worth Rs 80 billion stuck in litigation

Asim Ahmed reviewed the performance of all Chief Commissioners vis-à-vis targets assigned for the month of December, 2022.

Detailed presentations, outlining the projection and strategy for achieving the budgetary target for the current month were given by all Chief Commissioners Inland Revenue.

The CCIRs gave workable strategy and new avenues for achieving the target set for the month of December, 2022 and closure of 2nd Quarter for the Financial Year 2022-2023.

READ MORE: Customs appraising officer awarded major penalty for inefficiency

FBR chairman directed all CCIRs to leave no stone unturned to safeguard Revenue and to meet the budgetary target fixed for the month of December, 2022 and 2nd quarter ending December 31, 2022.

Chairman FBR further reiterated that facilitation of taxpayers is the harbinger for successful implementation of policies of FBR and taxpayers must be facilitated in resolving their pending issues with the Department, invariably.

READ MORE: Further tax collection on pharmaceutical products unlawful: KTBA

He also directed the CCIRs that the revenue stuck in appeals should be effectively pursued and cases pending test of appeal should be argued, based on strong legal footings, to win the test of appeal thereby safeguarding the revenue and its realization thereafter.

Asim Ahmed appreciated the field formations on achieving the budget target assigned in the preceding month i.e. November, 2022 and at the same time expected the same zeal and commitment to achieve the targets assigned to them for the Financial Year 2022-2023.

READ MORE: Non-filers will not be included in ATL 2022

December 10, 2022
SRB says cases worth Rs 80 billion stuck in litigation

KARACHI: Sindh Revenue Board (SRB) Friday said that cases worth Rs80 billion were stuck in litigation and it is willing to resolve amicably.

SRB chairman Dr. Wasif Ali Memon highlighted that Rs80 billion worth of cases are stuck in litigation and the provincial revenue board is all-willing to resolve as many cases amicably as possible.

READ MORE: Customs appraising officer awarded major penalty for inefficiency

“We want to be the facilitators and partners to the business community and no highhandedness is ever desired by SRB,” he added during his visit to Federation of Pakistan Chambers of Commerce and Industry (FPCCI).

On the demand of FPCCI, Dr. Wasif Ali Memon announced that an effective and inclusive Alternative Dispute Resolution Committee (ADRC) would be formulated by SRB in few weeks and we will include 5 – 6 nominees of FPCCI into the committee.

READ MORE: Further tax collection on pharmaceutical products unlawful: KTBA

Chairman SRB also proposed that FPCCI nominees should come from varied sectors to address issues of all the sectors. Additionally, he requested the business community to exhaust the ADRC and other SRB procedures before going into litigation as it only delays the dispute resolution.

On the occasion, Irfan Iqbal Sheikh, President FPCCI, has stressed upon the need to strengthen and broaden the scope of ADRC to save the precious time, resources and hassle of both the sides, i.e. business community and the SRB.

Co-chairing the high-profile meeting with SRB Chairman, Suleman Chawla, SVP FPCCI, offered to nominate technical and expert members of the business, industry and trade community from the platform of FPCCI to facilitate SRB’s efforts to strengthen ADRC.

READ MORE: Non-filers will not be included in ATL 2022

FPCCI nominees will come with the first-hand knowledge of real issues and with deep understanding of the taxation matters, he added.

Shabbir Mansha, VP FPCCI, demanded that as Karachi contributes the lion’s share of taxes in federal & provincial authorities, there should be an enhanced focus on the infrastructural development of Karachi – specifically in industrial& commercial areas and port infrastructure. This will only increase the revenue generation from Karachi, he added.

READ MORE: FBR directs BS-21 officers to submit declaration of assets

Shuakat Omerson, VP FPCCI, apprised the top management of SRB that many members of FPCCI are qualified in alternative dispute resolution mechanism; including the incumbent and former office bearers of FPCCI; and, they can offer great support to SRB’s ADRC initiatives.

Khurram Ejaz, Advisor to the President of FPCCI on FBR & revenue matters, said that FPCCI considers SRB as their partners and not as adversaries; because objectives of both the institutions are same – economic development of the province and resolution of all disputes & anomalies pertaining to provincial tax collection.

December 10, 2022
Customs appraising officer awarded major penalty for inefficiency

KARACHI: A customs appraising officers has been awarded major penalty and demoted to lower scale on the charges of inefficiency.

According to the Federal Board of Revenue (FBR) on Friday, disciplinary proceedings were initiated against Syed Muhammad Fawad Ahmad, Appraising Officer Collectorate of Customs Exports (Port Muhammad Bin Qasim), Karachi through an order of inquiry dated August 02, 2022 on charge of inefficiency under Rules-3(a) of the Civil Servants (Efficiency & Discipline) Rules, 2020.

READ MORE: Further tax collection on pharmaceutical products unlawful: KTBA

Muhammad Haris Ansari, Additional Collector (PCS/BS-19), Collectorate of Customs Appraisement (PMBQ), Karachi was appointed as Inquiry Officer to scrutinize the conduct of accused officer.

The Inquiry Officer submitted inquiry report on October 07, 2022 concluded that the charge of inefficiency stand established against the accused under Rule-3(a) of the Civil Servants (Efficiency & Discipline) Rules, 2020.

READ MORE: Non-filers will not be included in ATL 2022

Based on the findings and recommendations of the inquiry report, a Show Cause Notice dated October 18, 2022 was served upon the accused. The accused officer furnished his reply to Show Cause Notice, on October 29, 2022.

The Member (Admn/HR)/ Authority provided an opportunity of personal hearing to the accused on November 29, 2022.

READ MORE: FBR directs BS-21 officers to submit declaration of assets

Whereas, the Member (Admn/HR)/ Authority after having gone through the available record of the case, the Inquiry Report, reply of the Show Cause Notice, and verbal submissions made by accused during the course of personal hearing. However the Authority has not agreed with recommendations of inquiry officer and, therefore, decided to impose a major penalty of “Reduction to a lower post and pay scale from the substantive or regular post, for a period of one year” under Rule-4(3)(b) of the Civil Servants (E&D) Rules, 2020 upon Syed Muhammad Fawad Ahmad, Appraising officer, Collectorate of Customs Exports (PMBQ), Karachi.

READ MORE: Customs Intelligence Gwadar auctions motor vehicles on December 12

The Performance Allowance of the officer has also been stopped for one year from the date of award of the penalty as provided at Sr.No.7(iii) of FBR’s Circular No.1 of 2015 dated March 06, 2015 and he will have to appear afresh for restoration of the same.

The officer will have a right to appeal against this Order to the Appellate Authority under Civil Servants (Appeals) Rules, 1977 within a period of 30 days from the date of communication of this Notification.

December 9, 2022

Further tax collection on pharmaceutical products unlawful: KTBA

Karachi Tax Bar Association (KTBA) on Thursday termed the collection of further tax on sales of pharmaceutical products to unregistered persons as unlawful.

In a letter sent to Asim Ahmad, Chairman of Federal Board of Revenue (FBR), the tax bar informed that substances registered as drugs under the Drugs Act, 1976 were earlier exempt from levy of sales tax under the Sales Tax Act, 1990, the Finance (Supplementary) Act, 2022, withdrawn, and the pharmaceutical products were made zero rated in terms of Serial No.19 to the Fifth Schedule of the Act.

Later one, through the Finance Act 2022, Serial No.19 of the Fifth Schedule was omitted and a new Serial No.81 was introduced in Table-1 of the Eighth Schedule to the Act is as follow:

Serial No.	Description	Heading Nos. of the First Schedule to the Customs Act, 1969 (IV of 1969)	Rate of Sales Tax	Condition
(1)	(2)	(3)	(4)	(5)
81.	Manufacture or import of substances registered as drugs under the Drugs Act, 1976 (XXXI of 1976)	Respective Heading	1%	Subject to the conditions that: (i) Tax charged and deposited by the manufacturer or importer, as the case may be, shall be final discharge of tax in the supply chain. (ii) No input tax shall be adjusted by the manufacturer or importer.

The tax bar stated that it becomes clear that Serial No.81 created the sales tax charge at the rate of 1 per cent on manufacturer/importer of drugs and that the tax so charged and deposited by a manufacturer would be treated as final discharge of sales tax liability for the entire supply chain.

Therefore, once the manufacturer/importer has charged and deposited the sales tax at 1 per cent, the rest of the entire supply chain would be ousted from levy of sales tax.

KTBA invited the attention of the FBR chairman towards a clarification C.No. 3(16)ST&FE-Policy/2022/230285-R issued by the FBR on November 23, 2022, which has asked to pay further tax at 3 per cent on sale of drugs to unregistered persons.

The tax bar said clarification and its directions are contradictory to the legal position. It is being re-iterated that Serial No.81 in Table-1 of the Eighth Schedule to the Act categorically states that tax collected and discharged by the manufacturer of drugs under the Drugs Act, 1976 is final discharge of tax for the entire supply chain.

Therefore, if further tax is asked to be levied on sale by the manufacturer/importer, it stands exactly opposite to the substantive law for declaring collection and discharge of tax by manufacturer/importer as final tax.

“Needless to mention that the term ‘final tax’ in itself implies that no further collection of tax would be made under the Act irrespective of the nature/class/category/registration status of a person,” the tax bar added.

The FBR chairman has been urged that above clarification may be re-clarified in the light of decisions given by higher courts and Appellate Tribunal.

The position taken by the FBR yet for the second time and too knowingly, on the same issue, does not signify anything and is uncalled for on the part of Regulator. It is apprehended that the matter will yet again land in High Courts and will not yield anything but unnecessary and avoidable litigation.

December 8, 2022