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Category: Taxation

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  • Sportsmen allowed tax holiday on temporary import

    Sportsmen allowed tax holiday on temporary import

    ISLAMABAD: Sportsmen – participating in an international event – have been allowed tax holiday o import of professional and technical apparatus with condition of re-export of those things within stipulated time period.

    Sources in Federal Board of Revenue (FBR) on Tuesday said that the exemption from income tax, sales tax and customs duty has been allowed through Tax Laws (Amendment) Ordinance, 2021, which was recently promulgated through presidential order.

    Customs duty has been reduced to zero percent on temporary import of professional and technical apparatus or equipment or instruments imported by foreign nationals, experts and athlete etc. participating in an international event (including but not limited to sports events) or under any international arrangement for use solely during such event or arrangement provided:

    (a) it is endorsed on the passports of importer.

    (b) The goods allowed for temporary admission shall be identified at the time of import and subsequent re-export

    The condition of furnishing undertaking or bond by such foreign nationals has been made inapplicable.

    Goods temporarily imported into Pakistan by international athletes or sportsmen, which would be subsequently taken back by them within 120 days have been allowed exemption from sales tax as well as income tax at import stage.

  • Tax exemption granted to transmission line projects set up till June 2022

    Tax exemption granted to transmission line projects set up till June 2022

    ISLAMABAD: A time period for setting up transmission line projects has been extended for four years up to June 30, 2022 in order to allow 10-year tax exemption on profit and gains derived by a taxpayer from such projects.

    The amendment has been made to clause 126M of Second Schedule to Income Tax Ordinance, 2001 through Tax Laws (Amendment) Ordinance, 2021.

    Earlier, income tax exemption was granted to those projects which were set up on or after June 30, 2018. However, with the amendment the time for setting up projects has been extended up to June 30, 2022.

    The text of the clause is:

    “(126M) Profits and gains derived by a taxpayer from a transmission line project set up in Pakistan on or after the1st day of July, 2015 for a period of ten years. The exemption under this clause shall apply to such project which is—

    (a) owned and managed by a company formed for operating the said project and registered under the Companies Ordinance, 1984 (XLVII of1984), and having its registered office in Pakistan;

    (b) not formed by the splitting up, or the reconstruction or reconstitution, of a business already in existence or by transfer to a new business of any machinery or plant used in a business which was being carried on in Pakistan at any time before the commencement of the new business; and

    (c) owned by a company fifty per cent of whose shares are not held by the Federal Government or Provincial Government or a Local Government or which is not controlled by the Federal Government or a Provincial Government or a Local Government.

  • Tax collected on immovable properties made final liability on payment through RDAs

    Tax collected on immovable properties made final liability on payment through RDAs

    ISLAMABAD: The collection of withholding tax on immovable properties has been made final liabilities in case payment made through Roshan Digital Accounts (RDAs).

    The changes have been brought through Tax Laws (Amendment) Ordinance, 2021. The Federal Board of Revenue (FBR) posted the ordinance on its website on Monday.

    An amendment has been made to Section 236C of the Income Tax Ordinance, 2001, which is related to deduction of withholding tax on sale of immovable properties.

    According to the amendment that if the seller or transferor is a non-resident individual holding Pakistan Origin Card (POC) or National ID Card for Overseas Pakistanis (NICOP) or Computerized National ID Card (CNIC) who had acquired the said immovable property through a Foreign Currency Value Account (FCVA) or NRP Rupee Value Account (NRVA) maintained with authorized banks in Pakistan under the foreign exchange regulations issued by the State Bank of Pakistan (SBP), the tax collected under the section from such persons shall be final discharge of tax liability in lieu of capital gain taxable under Section 37 earned by the seller or transferor from the property so disposed of.

    Similar change has been made in Section 236K of the Income Tax Ordinance, 2001. This section is related to deduction of withholding tax on purchase of immovable property.

    According to the amendment that if the buyer or transferee is a non-resident individual holding Pakistan Origin Card (POC) or National ID Card for Overseas Pakistanis (NICOP) or Computerized National ID Card (CNIC) who has acquired the said immovable property through a Foreign Currency Value Account (FCVA) or NRP Rupee Value Account (NRVA) maintained with the authorized banks in Pakistan under the foreign exchange regulations issued by the SBP, the tax collected under this section from such persons shall be final discharge of tax liability for such buyer or transferee.

    According to the SBP, there are two types of accounts offered under Roshan Digital Accounts.

    These are:

    Foreign Currency Value Account (FCVA)

    NRP Rupee Value Account (NRV)

  • Super tax made permanent for banks

    Super tax made permanent for banks

    ISLAMABAD: The levy of super tax has been made permanent for banking companies beyond Tax Year 2021, sources in Federal Board of Revenue (FBR) said on Monday.

    Tax Laws (Amendment) Ordinance, 2021 has been promulgated on February 12, 2021 after approval by the President of Pakistan.

    As per the ordinance the levy of super tax on banks shall continue beyond Tax Year 2021. Through the ordinance the levy shall apply in tax year 2021 and onwards.

    With this amendment the banks shall pay the super tax at four percent in subsequent tax years. For the banking companies the tax year 2022 has commenced from January 01, 2021.

    The one-time super tax was imposed by inserting Section 4B of Income Tax Ordinance, 2001 through Finance Act, 2015.

    The Income Tax Ordinance, 2001 explained the super tax as:

    “4B. Super tax for rehabilitation of temporarily displaced persons.― (1) A super tax shall be imposed for rehabilitation of temporarily displaced persons, for tax years 2015 and onwards, at the rates specified in Division IIA of Part I of the First Schedule, on income of every person specified in the said Division.

    (2) For the purposes of this section, “income” shall be the sum of the following:—

    (i) profit on debt, dividend, capital gains, brokerage and commission;

    (ii) taxable income (other than brought forward depreciation and brought forward business losses) under section (9) of this Ordinance, if not included in clause (i);

    (iii) imputable income as defined in clause (28A) of section 2 excluding amounts specified in clause (i); and

    (iv) income computed, other than brought forward depreciation, brought forward amortization and brought forward business lossess under Fourth, Fifth, Seventh and Eighth Schedules.

    (3) The super tax payable under sub-section (1) shall be paid, collected and deposited on the date and in the manner as specified in sub-section (1) of section 137 and all provisions of Chapter X of the Ordinance shall apply.

    (4) Where the super tax is not paid by a person liable to pay it, the Commissioner shall by an order in writing, determine the super tax payable, and shall serve upon the person, a notice of demand specifying the super tax payable and within the time specified under section 137 of the Ordinance.

    (5) Where the super tax is not paid by a person liable to pay it, the Commissioner shall recover the super tax payable under subsection (1) and the provisions of Part IV,X, XI and XII of Chapter X and Part I of Chapter XI of the Ordinance shall, so far as may be, apply to the collection of super tax as these apply to the collection of tax under the Ordinance.

    (6) The Board may, by notification in the official Gazette, make rules for carrying out the purposes of this section.”

    In tax year 2018 the rate of super tax was four percent for banking companies on percentage of income and three percent on person other than a banking company, having income equal to or exceeding Rs500 million.

    In tax year 2020 the tax rate at 4 percent was maintained for banking companies. However, in other cases it was abolished.

    With the new amendment, the banking companies shall continue to pay the super tax with not time frame.

  • Withholding tax up to Rs200,000 imposed on sale of new car within 90 days

    Withholding tax up to Rs200,000 imposed on sale of new car within 90 days

    ISLAMABAD: The Federal Board of Revenue (FBR) has imposed up to Rs200,000 as withholding tax on sale of motor cars within 90 days of first registration, sources said on Monday.

    The withholding tax has been imposed till June 30, 2021. The revenue generation measure has been taken in order to discourage the trend of ‘on money’.

    Following withholding income tax rates have been imposed on motor vehicles:

    01. Tax rate at Rs50,000 has been imposed on sale of up to 1000CC motor vehicles.

    02. Tax rate at Rs100,000 has been imposed on sale of motor vehicles between 1000CC and 2000CC.

    03. Tax rate up to Rs200,000 has been imposed on motor vehicles with engine capacity of 2000CC and above.

    In order to apply the rates an amendment to Section 231B of Income Tax Ordinance, 2001 has been made.

    Following is the text of the amendment:

    “Every motor vehicle registration authority of Excise and Taxation Department shall collect advance tax from the buyers of locally manufactured motor vehicles who subsequently sell it within ninety days of delivery of such vehicle whether prior to or after registration.”

    The FBR said that no collection of the withholding tax under the new amendment would be made after June 30, 2021.

  • Illicit cigarettes worth Rs549 million confiscated in seven months

    Illicit cigarettes worth Rs549 million confiscated in seven months

    ISLAMABAD: Pakistan Customs has confiscated non-duty paid cigarettes worth Rs549 million during first seven months of the current fiscal year, a statement said on Sunday.

    A spokesman of Federal Board of Revenue (FBR) said that over 7.1 million sticks of illegal cigarettes had been confiscated during the period under review.

    The spokesman said that the FBR had issued instructions to field formation of Inland Revenue and Pakistan Customs to accelerate their efforts against smuggled and non-duty paid cigarettes.

    The FBR chairman issued instructions to both the field formations in this regard.

    In the anti-smuggling efforts to prevent movement of illegal cigarettes the Intelligence and Investigation of Inland Revenue had conducted 65 operations. In these operations, the IR authorities confiscated 44.827 million sticks of cigarettes worth Rs95.51 million. Out of these amount the authorities had recovered Rs2.2 million and remaining amount was in litigation before the court.

    The FBR chairman had directed the tax authorities to expand the anti-smuggling operation across the country.

    The customs authorities have been issued special instructions for enhancing vigilance at sea ports, air ports and dry ports to prevent smuggling of illicit cigarettes.

    The spokesman said that the customs authorities had recovered huge quantity of non-duty paid cigarettes on the basis of information.

    The spokesman further said that in order to avoid misuse auction process, the FBR had imposed complete ban on auction of confiscated cigarettes.

  • Stamp duty collection falls by 24 percent in first half

    Stamp duty collection falls by 24 percent in first half

    The revenue collection from stamp duty fell sharply by 24 percent during first half of the current fiscal year owing to significant decline in revenue reported by the province of Punjab, according to a report issued by the federal finance ministry.

    (more…)
  • Taxpayers advised to update profile to avoid penalty, exclusion from ATL

    Taxpayers advised to update profile to avoid penalty, exclusion from ATL

    KARACHI: Taxpayers have been advised to update their profile by March 31, 2021 to avoid penalty and exclusion from Active Taxpayers List (ATL).

    Sources in the Federal Board of Revenue (FBR) said that the last date for updating the profile was December 31, 2020. However, this date was extended by the FBR up to March 31, 2021 considering the problems faced by the taxpayers.

    Through the Finance Act, 2020 a Section 114A was inserted to Income Tax Ordinance, 2001 regarding taxpayer’s profile.

    As per the provision, following persons are required to update their profile on IRIS – the official web portal of the FBR:

    a. every person applying for registration under Section 181;

    b. every person deriving income chargeable to tax under the head ‘income from business’;

    c. every person whose income is subject to final taxation;

    d. any non-profit organization as defined in clause (36) of Section 2;

    e. any trust or welfare institution; or

    f. any other person prescribed by the FBR.

    Following details are required for updating the taxpayer’s profile:

    i. bank accounts;

    ii. utility connections;

    iii. business premises, including all manufacturing, storage or retail outlets operated or leased by the taxpayer;

    iv. types of businesses; and

    v. such other information as may be prescribed.

    The FBR issued a detailed explanation on the issue stating that complexity of return forms is an embodiment of the complexity of tax law. “Nevertheless, there is a dire need to simplify return forms without compromising on data required to verify accuracy of the declared version.”

    The FBR said that instead of endeavoring to obtain all the relevant information in the income tax return, a new section has been added wherein taxpayers’ profile may be prescribed in order to capture data relevant to the taxpayer.

    “Person who are already registered before September 30, 2020 and are deriving business income or income subject to final taxation, trust, welfare institutions, non-profit organizations and such other persons prescribed by the board are proposed to file a profile on or before December 31, 2020 (this has been extended up to March 31, 2021).”

    The FBR further said that persons who obtain their registration after September 30, 2020 are proposed to furnish such a profile within 90 days of registration. In case of any change in particulars of information, such persons shall update their profile within 90 days of the change in particulars.

    “The profile contains information relevant to income regarding bank accounts, utility connections, business premises including all manufacturing, storage or retail outlets operated or leased by the taxpayer, types of businesses and such other information as may be prescribed by the board.”

    The FBR said: “If a person fails to furnish or update a taxpayer’s profile within the due date or time period as extended by the FBR under Section 214A of the Ordinance, such person shall not be included in the active taxpayers’ list for the latest tax year ending prior to the aforesaid due date or extended date.”

    However, upon filing or updating the profile, such persons shall be allowed to be placed on the ATL upon payment of surcharge which is proposed to be Rs20,000 in the case of a company, Rs10,000 in the case of an association of persons (AOPs) and Rs1,000 in the case of an individual.

    “Further, a penalty for non-filing or not updating of profile is also proposed at the rate of Rs2,500 for each day of default subject to minimum penalty of Rs10,000,” the FBR added.

  • SRB starts preparation for provincial budget 2021/2022; invites proposals

    SRB starts preparation for provincial budget 2021/2022; invites proposals

    KARACHI: Sindh Revenue Board (SRB) has started preparation for the provincial budget 2021/2022 and in this regard asked all the association and chambers and other stakeholders to submit their tax proposals by February 15, 2021.

    In a communication sent to all chambers, associations, tax bars, Institute of Chartered Accountants of Pakistan (ICAP), Institute of Cost and Management Accountants of Pakistan (ICMAP) and other stakeholders to submit their proposals in relation to the Sindh Sales Tax on Services Act, 2011 and the rules and notifications issued thereunder.

    The SRB said that it was in the process of formulating budgetary measures for Sindh Budget 2021/2022 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 Procedure (Withholding) Rules, 2014, the Sindh Sales Tax Special Procedure (Transportation or carriage of Petroleum Oil through Oil Tankers) Rules, 2018, and the Sindh Sales Tax Special Procedure (Services provided or rendered by cab aggregator and the services provided or rendered by owners or drivers of the motor vehicles using the cab aggregators services) Rules, 2019 and the various notifications issued under the said Act, 2011.

    The SRB further said it has been policy of the provincial revenue board 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 their written proposals in the prescribed format so as to reach latest by Monday, February 15, 2021.

    The SRB provided a format for proposals which 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; revenue effect etc.

  • FBR takes all steps to facilitate taxpayers: Chairman

    FBR takes all steps to facilitate taxpayers: Chairman

    ISLAMABAD: Muhammad Javed Ghani, Chairman, Federal Board of Revenue (FBR) on Friday said that the tax authorities are taking all possible steps to facilitate taxpayers.

    As a sequel to E-Kutcheries held on monthly basis to comply with the directions of the Prime Minister of Pakistan, FBR chairman/Secretary Revenue Division, Muhammad Javed Ghani held an E-Kutchery at FBR HQ on Friday to listen to the complaints and issues of taxpayers.

    The complainants interacted directly with the Chairman FBR.

    Chairman FBR listened to the complaints of the taxpayers and issued on spot directions for resolution of complaints.

    Chairman FBR appreciated the suggestions put forth by the taxpayers and assured them that their comments and suggestions would be looked into.

    The chairman assured that FBR was taking all possible steps to facilitate the taxpayers.

    He also requested the taxpayers to visit their nearest RTO and Collectorate for redressal of any problem confronted by them.

    Chairman FBR has already strictly instructed all the field offices to resolve all outstanding issues of taxpayers’.