Section 236A of Income Tax Ordinance, 2001 describes the advance tax on sale through auction. The Federal Board of Revenue (FBR) issued the Income Tax Ordinance, 2001 updated up to June 30, 2021.
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Advance tax rates on telephone and internet users
Section 236 of Income Tax Ordinance, 2001 has explained the advance tax rates on telephone and internet users.
The Federal Board of Revenue (FBR) issued the Income Tax Ordinance, 2001 updated up to June 30, 2021. The Ordinance incorporated amendments brought through Finance Act, 2021.
Following is the text of Section 236 of Income Tax Ordinance, 2001:
236. Telephone and internet users.- (1) Advance tax at the rates specified in Division V Part IV of the First Schedule shall be collected on the amount of –
(a) telephone bill of a subscriber;
(b) prepaid cards for telephones;
(c) sale of units through any electronic medium or whatever form; and
“(d) internet bill of a subscriber; and
(e) prepaid cards for internet.”
(2) The person preparing the telephone or internet bill shall charge advance tax under sub-section (1) in the manner telephone or internet charges are charged.
(3) The person issuing or selling prepaid cards for telephones or internet shall collect advance tax under sub-section (1) from the purchasers at the time of issuance or sale of cards.
(3A) The person issuing or selling units through any electronic medium or whatever form shall collect advance tax under sub-section (1) from the purchaser at the time of issuance of sale of units.
(4) Advance tax under this section shall not be collected from Government, a foreign diplomat, a diplomatic mission in Pakistan, or a person who produces a certificate from the Commissioner that his income during the tax year is exempt from tax.
(Disclaimer: The text of the above section is only for information. Team PkRevenue.com makes all efforts to provide the correct version of the text. However, the team PkRevenue.com is not responsible for any error or omission.)
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Advance tax rates on electricity consumption
Section 235 of Income Tax Ordinance, 2001 has explained the advance tax rates on electricity consumption.
The Federal Board of Revenue (FBR) issued the Income Tax Ordinance, 2001 updated up to June 30, 2021. The Ordinance incorporated amendments brought through Finance Act, 2021.
Following is the text of Section 235 of Income Tax Ordinance, 2001:
235. Electricity consumption.- (1) There shall be collected advance tax at the rates specified in Division IV of Part-IV of the First Schedule on the amount of electricity bill of a commercial or industrial or domestic consumer:
Provided that the provisions of sub-section (1) shall not apply to a domestic consumer of electricity if his name appears on the Active Taxpayers’ List.
(2) The person preparing electricity consumption bill shall charge advance tax under sub-section (1) in the manner electricity consumption charges are charged.
Explanation.— For removal of doubt, it is clarified that for the purposes of this section electricity consumption bill referred to in sub-section (2) means electricity bill inclusive of sales tax and all incidental charges.
(3) Advance tax under this section shall not be collected from a person who produces a certificate from the Commissioner that his income during tax year is exempt from tax or that he has discharged advance tax liability under section 147 or whose entire income is subject to final tax regime or minimum tax regime under any provisions of this Ordinance other than this section.
(4) Under this section, —
(a) in the case of a taxpayer other than a company, tax collected upto bill amount of three hundred and sixty thousand Rupees per annum shall be treated as minimum tax on the income of such persons and no refund shall be allowed;
(b) in the case of a taxpayer other than a company, tax collected on monthly bill over and above thirty thousand rupees per month shall be adjustable; and
(c) in the case of a company, tax collected shall be adjustable against tax liability.
(Disclaimer: The text of the above section is only for information. Team PkRevenue.com makes all efforts to provide the correct version of the text. However, the team PkRevenue.com is not responsible for any error or omission.)
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Advance income tax on motor vehicles
Section 234 of Income Tax Ordinance, 2001 has defined the rate of advance income tax on motor vehicles to be collected by persons collecting motor vehicle tax.
The Federal Board of Revenue (FBR) issued the Income Tax Ordinance, 2001 updated up to June 30, 2021. The Ordinance incorporated amendments brought through Finance Act, 2021.
Following is the text of Section 234 of Income Tax Ordinance, 2001:
234. Tax on motor vehicles.— (1) Any person at the time of collecting motor vehicle tax shall also collect advance tax at the rates specified in Division III of Part IV of the First Schedule.
(2) If the motor vehicle tax is collected in instalments or lump sum the advance tax may also be collected in instalments or lump sum in like manner.
(2A) In respect of motor cars used for more than ten years in Pakistan, no advance tax shall be collected after a period of ten years.
(3) In respect of a passenger transport vehicle with registered seating capacity of ten or more persons, advance tax shall not be collected after a period of ten years from the first day of July of the year of make of the vehicle.
(4) In respect of a goods transport vehicle with registered laden weight of less than 8120 kilograms, advance tax shall not be collected after a period of ten years from the date of first registration of vehicle in Pakistan.
(5) Advance tax collected under this section shall be adjustable.
“(6) For the purpose of sub-sections (1) and (2) “motor vehicle” shall include the vehicles specified in sub-section (7) of section 231B.”
(Disclaimer: The text of the above section is only for information. Team PkRevenue.com makes all efforts to provide the correct version of the text. However, the team PkRevenue.com is not responsible for any error or omission.)
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Income tax on payment for brokerage, commission
Section 233 of Income Tax Ordinance, 2001 has defined rate of income tax on payment on account of brokerage and commission.
The Federal Board of Revenue (FBR) issued the Income Tax Ordinance, 2001 updated up to June 30, 2021. The Ordinance incorporated amendments brought through Finance Act, 2021.
Following is the text of Section 233 of Income Tax Ordinance, 2001:
233. Brokerage and commission. — (1) Where any payment on account of brokerage or commission is made by the Federal Government, a Provincial Government, a Local Government, a company or an association of person or
individual having turnover of hundred million rupees or more (hereinafter called the “principal”) to a person (hereinafter called the “agent”), the principal shall deduct advance tax at the rate specified in Division II of Part IV of the First Schedule from such payment.
(2) If the agent retains Commission or brokerage from any amount remitted by him to the principal, he shall be deemed to have been paid the commission or brokerage by the principal and the principal shall collect advance tax from the agent.
(2A) Notwithstanding the provisions of sub-section (1), where the principal is making payment on account of commission to an advertising agent, directly or through electronic or print media, the principal shall deduct tax (in addition to tax required to be deducted under clause (b) of sub-section (1) of section 153 on advertising services excluding commission), at the rate specified in Division II of Part IV of the First Schedule on the amount equal to-
A x 15/85
Where A = amount paid or to be paid to electronic or print media for advertising services (excluding commission) on which tax is deductible under clause (b) of sub-section (I) of section 153.
(2B) Tax deducted under sub-section (2A) shall be minimum tax on the income of the advertising agent.
(3) Where any tax is required to be collected from a person under sub-section (1), such tax shall be the minimum tax on the income of such persons.
(Disclaimer: The text of the above section is only for information. Team PkRevenue.com makes all efforts to provide the correct version of the text. However, the team PkRevenue.com is not responsible for any error or omission.)
For income tax rates on brokerage and commission please visit the following link:
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Date extension to become useless on flawed return form
Karachi Tax Bar Association (KTBA) on Wednesday pointed out that serious technical issues in online return form are not resolved and the date extension granted by the Federal Board of Revenue (FBR) will become useless.
The FBR through Circular No. 08 extended the last date for filing income tax return for tax year 2021 up to October 15, 2021 from September 30, 2021. The FBR extended the date after admitting serious technical problems on the IRIS – the online return filing portal.
The KTBA wrote a letter to FBR Chairman Dr. Muhammad Ashfaq Ahmed apprising him about computational errors and technical issues in filing of income tax return for the tax year 2021.
In his letter KTBA President Muhammad Zeeshan Merchant said that technical issues were not rectified yet and taxpayers were facing difficulties in filing their returns.
“The 90 days time prescribed under section 118 of the Income Tax Ordinance, 2001, will only begin once the due diligence prescribed in law and rules is following in pitch and substance and a complete and flawless return of income is notified in terms of Section 237 of the Income Tax Ordinance, 2001,” Merchant said.
The tax bar said the issues were previously highlighted related to erroneous tax computation on the IRIS portal with respect to income expressed as ‘minimum tax’, where owing to pre-fixed attributes/formulas taxpayer are forced to pay additional tax or file mix-up return.
This issue despite being pitted to judicial wrangling before the Lahore High Court in writ jurisdiction dated September 24, 2021, has not been resolved as yet, Merchant added
Furthermore, the return of income at the IRIS still suffers technical issues and anomalies that were already highlighted through the KTBA letter dated September 21, 2021. The issues are included: loss on disposal of securities; incorrect working of tax on foreign incomes; discrepancies in tax computation of commercial importers; tax on fee for technical services/royalty of a non-resident person etc.
The KTBA pointed out that simplified return of income for SMEs was unceremoniously uploaded on IRIS portal without prescribing a draft return.
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POS installation offers reduced tax rates: LTO Karachi
KARACHI: Officials of Large Taxpayers Office (LTO) Karachi have apprised the business community that installation of Point of Sale (POS) offered reduced rate of sales tax.
A team of tax officials from Large Tax Office (LTO) Karachi visited Pakistan Business Council (PBC) on Wednesday to discuss the integration of Tier-1 retailers, a statement said on Wednesday.
The purpose of the visit was to listen and redress the grievances regarding the online integration of Tier-1 retailers / Point of Sale (POS) with the FBR system.
It was apprised to the members that the POS integration of retailers does not involve new tax, rather it gives the benefit of reduced rate of sales tax to consumers who buy the goods from integrated Tier-1 retailers.
The LTO Karachi team was comprised of officers included: Shakeel Ahmad Kasana, Commissioner-Inland Revenue (IR); Aijaz Hussain, Additional Commissioner-IR; Shoukat Ali Changezi, Additional Commissioner-IR; Abdul Hameed Mangrio Deputy Commissioner-IR; and Amjad Ali Moroojo, Audit Officer-IR.
The representatives of the PBC were: Ehsan A. Malik, Chief Executive; Samir S. Amir, Director Research; and Aman Chanchi, Unilever Pakistan.
The Commissioner-IR briefed the members regarding the scope and purpose of POS integration.
A formal presentation was given by Abdul Hameed Mangrio, Deputy Commissioner which was followed by Q&A session.
The delegation requested the members to encourage the Tier-1 retailers to get integrated with the FBR system for ease of reporting of sales and avoid unnecessary documentation besides enjoying reduced rates of tax on their supplies.
The members of the Council appreciated the outreach efforts of FBR to remove the misconception and misgivings regarding the online integration of retailers with the FBR system.
They appreciated the system and informed that Pakistan Business Council is always encouraged to promote documentation of the economy and Point of Sale (POS) is the right step in this direction.
They also assured their active engagement for making the Point of Sale (POS) integration a success story for the larger interest of the country and the documentation of the economy.
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Advance tax on private motor vehicles
Section 231B of Income Tax Ordinance, 2001 explains advance tax on private motor vehicles.
The Federal Board of Revenue (FBR) issued the Income Tax Ordinance, 2001 updated up to June 30, 2021. The Ordinance incorporated amendments brought through Finance Act, 2021.
Following is the text of Section 231B of Income Tax Ordinance, 2001:
231B. Advance tax on private motor vehicles.— (1) Every motor vehicle registering authority of Excise and Taxation Department shall collect advance tax at the time of registration of a motor vehicle, at the rates specified in Division VII of Part IV of the First Schedule:
“Provided that no collection of advance tax under this sub-section shall be made after five years from the date of first registration as specified in clauses (a), (b) and (c) of sub-section (6).”
(1A) 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 “person whose name is not appearing in the active taxpayers’ list”, either through ijara or otherwise, shall collect advance tax at the rate of four per cent of the value of the motor vehicle.
(2) 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 rates specified in Division VII of Part IV of the First Schedule:
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.
(2A) Every motor vehicle registration authority of Excise and Taxation Department shall, at the time of registration, collect tax at the rates specified in Division VII of Part IV of the First Schedule, if the locally manufactured motor vehicle has been sold prior to registration by the person who originally purchased it from the local manufacturer.
(3) Every manufacturer of a motor “vehicle”shall collect, at the time of sale of a motor car or jeep, advance tax at the rate specified in Division VII of Part IV of the First Schedule from the person to whom such sale is made.
(4) Sub-section (1) shall not apply if a person produces evidence that tax under sub-section (3) in case of a locally manufactured vehicle or tax under section 148 in the case of imported vehicle was collected from the same person in respect of the same vehicle.
(5) The advance tax collected under this section shall be adjustable:
Provided that the provisions of this section shall not be applicable in the case of –
(a) the Federal Government;
(b) a Provincial Government;
(c) a Local Government;
(d) a foreign diplomat; or
(e) a diplomatic mission in Pakistan.
(6) For the purposes of this section the expression “date of first registration” means—
(a) the date of issuance of broad arrow number in case a vehicle is acquired from the Armed Forces of Pakistan;
(b) the date of registration by the Ministry of Foreign Affairs in case the vehicle is acquired from a foreign diplomat or a diplomatic mission in Pakistan;
(c) the last day of the year of manufacture in case of acquisition of an unregistered vehicle from the Federal or a Provincial Government; and
(d) in all other cases the date of first registration by the Excise and Taxation Department.
(7) For the purpose of this section “motor vehicle” includes car, jeep, van, sports utility vehicle, pick-up trucks for private use, caravan automobile, limousine, wagon and any other automobile used for private purpose.”
Explanation.— For the removal of doubt, it is clarified that a motor vehicle does not include a rickshaw, motorcycle-rickshaw and any other motor vehicle having engine capacity upto 200cc.
(Disclaimer: The text of the above section is only for information. Team PkRevenue.com makes all efforts to provide the correct version of the text. However, the team PkRevenue.com is not responsible for any error or omission.)
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FBR issues list of 1136 retailers for POS integration
ISLAMABAD: Federal Board of Revenue (FBR) has issued a list of 1136 big retailers for mandatory installation of Point of Sale (POS). The FBR issued Sales Tax General Order (STGO) No. 3 of 2022 on Tuesday.
The FBR said that through Finance Act, 2019 added a sub-section (6) to Section 8B of the Sales Tax Act, 1990 whereby a Tier-1 Retailer who did not integrate its retail outlet in the manner prescribed under sub-section (9A) of Section 3 of the Sales Tax Act, 1990 during a tax period, its adjustable tax for that period would be reduced by 15 per cent. The figure of 15 per cent has been raised to 60 per cent through Finance Act, 2021.
In order to operationalize the provision of law, a system-based approach has been adopted whereby all Tier-1 retailers who are liable to integrate but have not yet integrated, with effect from July 2021 (Sales Tax Returns filed in August 2021) are to be dealt with as per the procedure laid down in STGO No.01 of 2022 issued on August 03, 2021.
Through the latest STGO, a list of 1,136 identified Tier-1 Retailers has been placed on FBR’s portal allowing them to integrate with FBR’s system by October 10, 2021 and the procedure of exclusion from this list of 1,136 identified Tier-1 retailers shall apply as laid down in STGO 01 of 2022 dated August 03, 2021.
Upon filing of sales tax return for the month of September 2021 all notified Tier-1 retailers not having yet integrated, the input tax claim would be disallowed as above, without any further notice or proceedings, creating tax demand by the same amount.
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Functions of Directorates under tax law
Section 228 to Section 230I of Income Tax Ordinance, 2001 explains the functions of Directorates under tax law.
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