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Category: Taxation

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  • FBR urged immediate measures for speedy customs clearance

    FBR urged immediate measures for speedy customs clearance

    KARACHI: Federal Board of Revenue (FBR) has been asked to take immediate measures for speedy cargo clearance and avoid losses to trade and industry. Karachi Customs Agents Association (KCAA) on Wednesday raised difficulties of the trade and industry due to rising dwell time of cargoes at terminals.

    The association said in a statement expressed concerns over the alarming situation of delays in clearance of cargos of import and exports at all the terminals.

    The terminals are taking extra time for grounding of containers and arranging the cargo for the examination that is causing an increase in the cost of doing business in the shape of heavy container detention charges and port storage/demurrage which are being charged in US Dollar and the same amount is remitting by the terminal operators and shipping companies to their principal offices.

    The KCAA further informed that dwell time was also increasing due to shortage of handling equipment, skilled labor and even terminal tariffs were different.

    The association said that theft, pilferage and damage cases are being reported regularly inside the premises of terminals / off-dock terminals, as there is no proper mechanism to compensate the trade in case of any loss.

    All terminals are licensed to facilitate the trade under terminal rules specified in Licensing Rule, 2001 promulgated through SRO 450(I)/2001 are not being complied in its true spirit, which is causing hardship in the cargo clearance.

    The association also informed the FBR that difficulties faced by the trade were discussed with terminal operators on various occasions but no fruitful results had been achieved.

  • FBR extends date for updating taxpayers’ profile up to March 31

    FBR extends date for updating taxpayers’ profile up to March 31

    ISLAMABAD: Federal Board of Revenue (FBR) on Wednesday extended the last date for updating taxpayers profile up to March 31, 2021.

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  • Retailers share CNICs of consumers with FBR

    Retailers share CNICs of consumers with FBR

    ISLAMABAD: Retailers registered with Federal Board of Revenue (FBR) have started obtaining detail of Computerized National Identity Card (CNIC) of consumers, who buy goods above Rs100,000, tax officials said.

    The sources on Tuesday said that retailers having sales tax registration number (STRN) were providing details of ordinary consumers on sale of goods above Rs100,000 through their monthly sales tax return.

    The threshold amount was increased from Rs50,000 to Rs100,000 through Finance Act, 2020.

    The sources said that through Finance Act, 2019 an important amendment was inserted to Sales Tax Act, 1990 under which it was made mandatory for registered retailers to collect information of ordinance consumers.

    The FBR explains ordinary consumer as a person who is buying the goods for his own consumption and not for the purpose of re-sale or processing.

    The retailers are required to collection information of retailers including name, address and CNIC etc.

    This condition of CNIC or NTN was to apply from August 01, 2019. However, business community had demanded to extend the application of the condition of NTN besides it was also demanded to increase the threshold for requirement of CNIC.

    The FBR explained the implementation of the CNIC through Circular No. 01 of 2019 dated July 26, 2019 that Section 23 of the Sales Tax Act, 1990, relating to issuance of invoices and particulars to be specified therein, has been amended to provide that in case of supplies to un-registered persons, their NIC or NTN number shall be specified in invoice.

    The caveats, provided therein, are as under: NIC or NTN shall not be required in case of supplies made by a retailer where the transaction value inclusive of sales tax amount does not exceed rupees fifty thousand and the sale is being made to an ordinary consumer buying goods for his own consumption and not for the purpose of resale or processing;

    If it is subsequently proved that NIC provided by the purchaser was not correct, liability of tax or penalty shall not arise against the seller, in case of sale made in good faith.

    The FBR through Sales Tax Circular No. 02 of 2019 issued clarification in this regard stating that it had been observed in many cases, suppliers of goods and services are charging sales tax on invoices/receipts without identifying their sales tax registration number (STRN) on the invoice/receipts issued to the customers. At times, National Tax Number (NTN) is indicated on invoices, to exhibit that the suppliers is registered.

    Customers are suggested to ask for invoices/receipts having sales tax number on the invoice/receipts on purchase of goods and services. Sales tax can only be recovered from the customer if the supplier is registered for sales tax purpose, and reflects the STRN on the invoice/receipt issued to the customer.

    “In other cases, the supplier is not entitled to recover sales tax from the customers. Customers should beware of the same.”

    Explaining the purpose of the clarification, the FBR said that may suppliers were charging sales tax from customers without getting them registered under the sales tax regime.

    This practice is against the law and is liable to penal action. This practice leads to increase in prices and undue enrichment of sellers without any deposit of tax with the government. Customers are suggested to seek invoice/receipts from suppliers with STRN on the invoices/receipts issued, if sales tax is charged on their purchases.

    The FBR further clarified that buyer is not required to provide his NIC in case of purchases from a person not registered for sales tax.

  • Monument to be constructed for FBR’s martyrs

    Monument to be constructed for FBR’s martyrs

    ISLAMABAD: Federal Board of Revenue (FBR) on Tuesday decided to construct a monument at its Headquarters at Islamabad to commemorate and pay homage to martyrs of the revenue body.

    The FBR in its notification said that in order to commemorate and pay homage to martyrs of FBR who laid their lives in the line of duty, competent authority had desired that a monument shall be constructed at FBR (HQ).

    The FBR instructed field offices to provide details of such martyrs including name of martyred, designation, age o the date of death, place of posting, date of death and nature of death i.e. COVID-19/other.

  • Cash paid for housing unit above Rs2 million required to be reported under AML/CFT: FBR

    Cash paid for housing unit above Rs2 million required to be reported under AML/CFT: FBR

    ISLAMABAD: Every cash transaction for sale and purchase of a housing unit of above Rs2 million is required to be reported under anti-money laundering (AML) / Counter Financing of Terrorism (CFT) to comply with conditions of Financial Action Task Force (FATF), the Federal Board of Revenue (FBR) said on Monday.

    The FBR issued guidelines to provide guidance to real estate agents (REAs) in implementing and complying with requirement in AML/CFT regime.

    The FBR said that currency transaction report (CTR) is required to be submitted when a developer receives cash or bearer negotiable instruments Rs2 million and above for selling real estate e.g. developer sells directly to buyer and receives direct cash payments.

    Similarly, a developer pays with cash or bearer negotiable instruments Rs2 million and above for buying real estate e.g. property developer or builder pays for purchase of real estate for development.

    Likewise, a broker receives or pays in case Rs2 million and above to be used subsequently in the purchase of real estate e.g. broker is a buyer’s agent who receives cash to be used subsequently to pay deposit/ or a settlement (either receipt or subsequent use may meet the CTR threshold).

    However, real estate agent would not be required to file any CTR if all financial transactions are via wire transfers. If REA pays cash to sales staff as remuneration over the threshold, or to a supplier, or purchase of an asset such as a motor vehicle, it would not be subject to CTR filing. They would not be considered as buying and selling real estate.

    The FBR said that the reason REAs are subject to the FATF standards and AML/CFT measures is because the real estate sector provides attractive assets for persons to launder funds from criminal activities given the large sums involved. “There are many example of criminals or corrupt officials using funds acquired from illegal activities to purchase real estate. REAs and their salespersons help customers to transact real properties and this could involve or facilitate the movement of large amounts of funds, sometimes across international boundaries. Real estate may also be involved with the financing of terrorism as terrorist groups may buy or sell real estate.”

    Pakistan’s AML/CFT regulatory regime is strongly informed by the international AML/CFT standards promulgated by the FATF. The FATF is an international task force established in 1989 to develop international standards to combat ML, TF and the financing of proliferation (PF). The FATF published a revised set of 40 Recommendations on AML/CFT measures in 2012, which are being continuously updated.

    Pakistan is currently under the FATF International Cooperation Review Process (ICRG) “Jurisdictions under Increased Monitoring” or “Grey list” process. Pakistan has committed to working with the FATF to address strategic deficiencies to counter ML and TF. Pakistan has also committed to improving its broader compliance with the FATF standards as part of its membership with the APG.

    There is a definition of a REA under both the AMLA and AML/CFT regulations, as extracted below:

    – AMLA, Section 2.Definitions (xii) (a)

    (a) real estate agents, including builders and real estate developers, when performing the prescribed activities in the prescribed circumstances and manner;

    -FBR AML/CFT Regulations for DNFBPs in Section 2.Definitions (n):

    (n) “Real Estate Agent” includes builders, real estate developers and property brokers and dealers when execute a purchase and sale of a real property, participate in a real estate transaction capacity and are exercising professional transactional activity for undertaking real property transfer;

    While the FBR AML/CFT Regulations for DNFBPs identifies four categories of REAs, in reality, your business could include all four with different business lines, or your real estate agency business is just brokerage.

  • PTBA demands 90-day date extension for taxpayers’ profile update

    PTBA demands 90-day date extension for taxpayers’ profile update

    ISLAMABAD: Pakistan Tax Bar Association (PTBA) has demanded the Federal Board of Revenue (FBR) to extend the last date for taxpayers’ profile update at least for 90 days as system glitches creating hurdles in making compliance.

    The PTBA on Monday sent a letter to FBR chairman Muhammad Javed Ghani highlighting issues related to updating the profiles of the taxpayers up till December 31, 2020 in compliance of the provisions of Section 114A of the Income Tax Ordinance, 2001 inserted through Finance Act, 2020.

    The Section has made it compulsory for the taxpayers to update their profile electronically containing various information such as bank account, utilities etc. Furthermore, failure to file the prescribed form will also trigger the penal provisions as well as exclusion of the taxpayers from ATL list.

    The PTBA highlighted that there are several issues which needs to be addressed in this cumbersome and time consuming process of updating profile of around 2.5 million taxpayers across the country.

    The apex tax bar pointed out that the in the prescribed format for updating profile, the date can be put into it but there is no option for submission or is it just need to be entered into the said form? Hence, needs clarification in this regard.

    “Whether the salaried individuals are also required to update their profile as there is no provision under Section 114A of the Ordinance, ibid requiring them to do so? Furthermore, the persons applying for registrations under section 181 are also required update their profiles. Will the same apply for the salaried individuals apply for registration under Section 181?”

    The PTBA also pointed out that the tab/icon for the profile update is also appearing in the portals of the e-intermediary however, it does not work to update the profiles of the taxpayers appearing the portal of such e-intermediaries. The said issue needs to be rectified as most of the taxpayers rely on their representatives to do the e-filing work in this regard.

    The necessary amendments needs to be made into IRIS system to allow the taxpayers to update their profile at the time of registration as the said updating is time consuming, cumbersome process as well as duplication of the information put through form 181.

    Keeping in view the glitches, shortfall, issues the member has been requested to issue directions to the concerned IT department in order to do the needful in this regard as early as possible.

    Furthermore, till such time these issues are resolved by the relevant IT department, the time line for updating the profile under the provisions of the Section 114A of the Ordinance, ibid may kindly be extended for further reasonable time (preferably 90 days).

  • KTBA urges FBR to issue form for updating taxpayers’ profile

    KTBA urges FBR to issue form for updating taxpayers’ profile

    KARACHI: Tax practitioners have urged the Federal Board of Revenue (FBR) to issue form for updating taxpayers’ profile and provide suitable time for making compliance.

    In a letter sent to Member Inland Revenue (Operations) FBR, the KTBA said that the last date for updating taxpayers’ profile is December 31, 2020 but the prescribed form is still not issued.

    Although, the FBR issued draft rules for updating profile through SRO1341(I)/2020 on December 16, 2020 but the finalized format is still awaited, said KTBA President Muhammad Zeeshan Merchant.

    The KTBA president said that the prescribed form as mentioned in clause (a) of sub-section (2) of Section 114A of the Income Tax Ordinance, 2001 has still not been issued and or made available on IRIS.

    “It was, though, discussed in our meeting at length and also agreed by your goodself that when the information sought under section 114A of the Ordinance is already available on IRIS in the registration form under Section 181 of the Ordinance, this new form would simply be a repetitive and arduous exercise in the presence of the information already available on IRIS (in the form under section 181), the KTBA president told the Member.

    In addition to above, Merchant said that it was also discussed that as and when the form is prescribed, the timelines available under the Ordinance would suitably be extended/amended accordingly and at least 90 days time would be given from the date of the form is prescribed. “It is needless to say that for the form to be prescribed and uploaded on IRIS, has first to be issued in draft form for public seeking comments and objection, if any, and after that only the said form can be legally prescribed or notified.”

    Considering the issue, the KTBA requested the Member to immediately take urgent measures to prescribe the said form as soon as possible and also provide/allow proper time available under the law which is minimum for 90 days which is not only the right of the taxpayers but at present also genuinely needed as the delay is not part of the taxpayers.

  • Banks directed to collect advance tax from non-ATL persons

    Banks directed to collect advance tax from non-ATL persons

    ISLAMABAD: Federal Board of Revenue (FBR) has directed banks to collect advance income tax on non-cash banking transactions from persons non-appearing on the Active Taxpayers List (ATL).

    Sources said that financial institutions are required to collection advance tax at 0.6 percent on the transactions of above Rs50,000 non-cash banking transactions.

    The government introduced the withholding tax provision through Finance Act, 2015 and a new Section 236P was inserted to Income Tax Ordinance, 2001. Under this provision 0.6 percent withholding tax was imposed only on non-filers of income tax returns on aggregate transactions of Rs50,000 per day.

    The provision was aimed at increasing burden on person not filing income tax returns.

    The government faced opposition from various quarters after the introduction of Section 236P. Therefore, the government reduced the tax rate to 0.3 percent in the same fiscal year of its launch. The reduced rate increased to 0.4 percent in March 2017 and finally this rate made part of the statute through Finance Act, 2018.

    However, the present government through Finance Supplementary (Amendment) Act, 2018 in October 2018 restored the tax rate to 0.6 percent in order to made transactions costlier for non-compliant taxpayers.

    Through Finance Act, 2019 a new Tenth Schedule was introduced to the Ordinance, under which withholding tax would be collected form persons not appearing on the ATL.

    Previously, the income tax return filing was mandatory for appearing on the ATL. But in the latest arrangement a person will only be appear on the ATL if he files annual return by due date.

    However, after paying late filing fine a person can enroll his name to the ATL.

    The FBR sources said that the levy of advance tax on non-cash banking transactions that is only applicable on those persons not appearing on the ATL, had helped the FBR to receive all time high number of returns of 3 million for the tax year 2019 by December 21, 2020.

  • FBR receives 377,766 tax returns after due date

    FBR receives 377,766 tax returns after due date

    The Federal Board of Revenue (FBR) disclosed on Saturday that it has received an impressive 377,766 tax returns for the tax year 2020, surpassing the filing deadline of December 08, 2020.

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  • Non-filers may face concealment of income charges

    Non-filers may face concealment of income charges

    ISLAMABAD: Federal Board of Revenue (FBR) may invoke provisions of Tenth Schedule of Income Tax Ordinance, 2001 under which non-filers of income tax returns for tax year 2020 may face charges of concealment of income.

    Rule 3 of the Tenth Schedule of Income Tax Ordinance, 2001, explained:

    (1) Where for a tax year person’s tax has been collected or deducted in accordance with rule 1 and the person fails to file return of income for that tax year within the due date provided in section 118 or as extended by the Board, the Commissioner shall notwithstanding anything contained in sub-sections (3) and (4) of section 114, within sixty days of the due date provided in section 118 or as extended by the Federal Board of Revenue (FBR) make a provisional assessment of the taxable income of the person and issue a provisional assessment order specifying the taxable income assessed and tax due thereon.

    (2) In making the provisional assessment under sub-rule (1), the Commissioner shall impute taxable income on the amount of tax deducted or collected under rule 1 by treating the imputed income as concealed income for the purposes of clause (d) of sub-section (1) of section 111:

    Provided that the provision of section 111 shall be applicable on unexplained income, asset or expenditure in excess of imputed income treated as concealed income under this rule.

    Explanation.- For the removal of doubt it is clarified that the imputable income so calculated or concealed income so determined shall not absolve the person so assessed, from requirement of filing of wealth statement under sub-section (1) of section 116, the nature and source of amounts subject to deduction or collection of tax under section 111, section of audit under section 177 or 214C or subsequent amendment of assessment as provided in rule 8 and all the provisions of the Ordinance shall apply.

    The last date for filing income tax return for tax year 2020 was expired on December 08, 2020 and a large number of taxpayers have failed to comply with the mandatory requirement of filing annual return.

    At present the applicable ATL is of tax year 2019 and will remain applicable till February 28, 2021. The ATL for tax year 2020 will be issued on March 01, 2021 and will applicable till February 28, 2022.

    The FBR has received record 3 million returns for tax year 2019 and making all efforts to further increase the number for the tax year 2020.

    According to rule 01 of the Tenth Schedule the tax rate of withholding is 100 percent higher for persons having taxable income but not on the ATL.