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Category: Taxation

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

  • FBR developing software to eliminate bogus invoices: CTO Chief

    FBR developing software to eliminate bogus invoices: CTO Chief

    KARACHI: Federal Board of Revenue (FBR) is working to develop a new software which will eliminate flying / bogus invoices, Dr. Aftab Imam, Chief Commissioner, Corporate Tax Office (CTO) Karachi said during his visit to Pakistan Hosiery Manufacturers Association (PHMA).

    The chief commissioner assured the exporters that all the issues of exporters will be resolved on top priority without delay, a statement issued by PHMA on Saturday quoted the chief commissioner as saying.

    The chief commissioner stated that exporters may personally visit his office to meet and discuss their individual issues in order to resolve them. He stated after transformation to FASTER plus, the sales tax refund system was efficiently processing the claims. There were certain checks in the system which was necessary.

    He said that CTO was playing its due role in policy making by communicating the matters and issues related to exporters by sending to the Board for implementation thereof.

    Commenting on the Post Refund Audit notices, he added that all the income tax notices issued bear a barcode while the Post Refund audit notices regarding sales tax bear no barcode, however, they are valid notices.

    The system is going through developmental phase and in next few weeks Post Refund Audit notices issued shall also reflect the barcode.

    Replying to huge demand of documents in the notices, he opined that particular documents which are not available in the online system like stock and proof of payment should be given.

    Responding to the requests of issuance of zero rated certificates, he informed that he has already written to FBR for the purpose. Upon confirmation, the requested certificates shall be issued on urgent basis.

    Earlier Tariq Munir, Chairman (SZ), Pakistan Hosiery Manufacturers & Exporters Association welcomed the Dr. Aftab Imam, Chief Commissioner, Corporate Tax Office (CTO) Karachi who was accompanied by Zulfiqar Khokhar, Collector to PHMA.

    Speaking on the occasion, Muhammad Jawed Bilwani, Chief Coordinator & Former Central Chairman, Pakistan Hosiery Manufacturers & Exporters Association invited the attention of Chief Commissioner CTO-Karachi on burning issue of exporters related to Sales Tax Refund / Audit, Income Tax Refund / Audit, Zero Rated Certificate for reduced tariff of electricity and gas and other issues.

    He was of the view that after a lapse of 16 months, after various consultative sessions, suggestion of exporters, FASTER refund system has been improved and also transformed to FASTER plus which is appreciable as the system is efficiently processing the refunds electronically up to 80 percent without human involvement.

    Remaining 20 percent may have some issues of filing which after resolution shall also be processed on fast track.

    He was of the view that due to speedy refunds increasing trend in textile exports is witnessed. He stated that several members have informed that still amounts are missed and deferred in the FASTER system which should be looked into and rectified. He proposed that total missing amount should be reflected in the Sales Tax Refund MIS.

    Bilwani also highlighted the matter of Notices of Post Audit Refund of Sales Tax as well as Income Tax issued to exporters demanding huge documentation which is already available with FBR system and same should be done away with and only necessarily required relevant documents should be demanded because the entire textile export chain is documented.

    He also urged that all the FBR Notices should have barcodes and should sent electronically. The exporters should be provided the facility to apply for zero rated certificate regarding reduced tariff of gas and electricity to FBR and same should also be provided electronically.

    FBR and SRB system are linked and integrated. exporters are in practice to adjust WWF amount against income tax refund. Hence, the FBR should intimate to the SRB that the exporters have paid the WWF amount.

    On this occasion, Abdul Jabbar Gajiani, Senior Vice Chairman, Bashir Ghaffar Vice Chairman, Khizer Mehboob, Chairman, Taxation Committee, Abdur Rehman Former Vice Chairman PHMA, Saleem Parekh, Qadir Bilwani, Ilyas Gigi, Advocate Arshad Shehzad, Tax Advisor presented and other member exporters through zoom participated in the meeting.

  • Rate of tax on sale to distributors, dealers and wholesalers

    Rate of tax on sale to distributors, dealers and wholesalers

    ISLAMABAD: Federal Board of Revenue (FBR) has updated rate of advance income tax on sale to distributors, dealers and wholesalers during tax year 2021 (July 01, 2020 to June 30, 2020).

    The FBR issued Income Tax Ordinance, 2001 (updated up to June 30, 2020) after incorporating amendment brought through Finance Act, 2020.

    The FBR updated the rate of advance income tax on sale to distributors, dealers and wholesalers under Section 236G of Income Tax Ordinance, 2001.

    The rate of collection of tax under section 236G shall be at 0.7 percent on sale of fertilizers and 0.1 percent on sale of other than fertilizers/

    The text of section 236G is as follow:

    Section 236G. Advance tax on sales to distributors, dealers and wholesalers.—

    (1) Every manufacturer or commercial importer of electronics, sugar, cement, iron and steel products, fertilizer, motorcycles, pesticides, cigarettes, glass, textile, beverages, paint or foam sector, at the time of sale to distributors, dealers and wholesalers, shall collect advance tax at the rate specified in Division XIV of Part IV of the First Schedule, from the aforesaid person to whom such sales have been made.

    (2) Credit for tax collected under sub-section (1) shall be allowed in computing the tax due by the distributor, dealer or wholesaler on the taxable income for the tax year in which the tax was collected.

  • Sales tax rates for construction services updated

    Sales tax rates for construction services updated

    KARACHI: Sindh Revenue Board (SRB) has issued updated rates of sales tax on construction services. The SRB explained the rate of sales tax at normal, concessionary and exempted on construction services.

    The SRB issued working tariff updated up to November 01, 2020.

    Following are the rate of sales tax on construction services:

    The SRB said that a general rate of 13 percent is applicable on the construction services.

    However, a reduced rate at 8 percent is also available on following conditions:

    (i) The benefit of this reduced rate is not available to persons, engaged in providing or rendering the construction services, who elect or opt to pay the statutory rate of tax at 13 per cent under the Special Procedure prescribed by the Board and avail of the input tax credit/adjustment facility as prescribed in the Act and rules

    (ii) Input tax credit/adjustment shall not be admissible.

    Another reduced rate at 5 percent is also available on following conditions:

    (i) Construction service in relation to Government Civil Works for which expenditure is paid out of the expenditure budget of the Federal Government or the Local Government or the Cantonment Board.

    (ii) Input tax credit/adjustment shall not be admissible.

    The SRB said that sales tax on service is exempted on construction services related to:

    (i) Construction work undertaken by a person whose annual turnover does not exceed 4 million rupees in a financial year;

    (ii) Construction and development of EPZ, SEZ and diplomatic and counselor buildings; and

    (iii) Construction of an independent private residential house, other than residential unit covered by tariff headings 9807.0000 or 9814.3000, having total covered area not exceeding 10,000 square feet.

  • FBR issues procedure for oversight committee to settle cases

    FBR issues procedure for oversight committee to settle cases

    ISLAMABAD: Federal Board of Revenue (FBR) on Friday issued procedure for assessment oversight committee for resolving cases of settlement filed against assessment notices.

    The FBR issued SRO 1184(I)/2020 to notify the rules. Previously, the FBR issued draft rules through SRO 957(I)/2020 dated October 02, 2020 to seek input from stakeholders.

    The FBR introduced Rule 231CA to the Income Tax Rules, 2002 for procedures for assessment oversight committee that shall apply to all cases of settlement filed under Section 122D (agreed assessment in certain cases) of Income Tax Ordinance, 2001.

    As per the rule, a settlement application shall be made electronically by the applicant in person or by his authorized representative, under Section 122D for agreed assessment of the committee on IRS web portal.

    A settlement application shall be preferred to the committee after the date of service of the notice issued under sub section (9) of Section 122 of the Ordinance and before finalization of assessment.

    The commissioner shall not conclude assessment proceedings under section 122 if an application, made against the notice issued under sub section (9) of section 122, lies pending before the committee.

    The committee, after examination of the contents of an application submitted by an applicant and facts stated therein and on scrutiny of requisitioned record, if any, shall afford opportunity of being heard to the applicant in writing.

    The committee shall finalize the applications filed under section 122D of the Ordinance within thirty days of receipt of application or within an extended period of sixty days, for reasons to be recorded in writing by the committee.

  • FBR issues rules to finalize return forms by January 31

    FBR issues rules to finalize return forms by January 31

    ISLAMABAD: Federal Board of Revenue (FBR) on Friday amended rules under which annual income tax return form will be available on January 31 every year following the financial year to which the return relates.

    The FBR issued SRO 1185(I)/2020 to amend Income Tax Rules 2002. Previously, the FBR issued SRO 1041(I)/2020 dated October 13, 2020 to notify draft rules and invited suggestions from the stakeholders.

    The FBR introduced Rule 34A for making it mandatory that the annual income tax return form shall be available by January 31 every on IRIS portal and ready for filing by taxpayers.

    The text of the new rule 34A is as:

    34A. Time limit for notifying income tax return form:

    (1) This rule shall apply for the purpose of setting timelines in respect of various steps involved in notifying income tax return forms for a tax year.

    (2) The return form specified in sub rule (2) of rule 34 shall be notified for suggestions from all persons likely to be affected thereby on or before the first day of December of the financial year following the financial year to which the return relates by observing following timelines:

    (a) Inland Revenue Policy Wing shall identify the legal amendments to be incorporated in income tax return forms by thirty-first day of August of the financial year following the financial year to which the return relates;

    (b) preparation of change request form (CRF) shall be finalized by Inland Revenue Policy Wing and Information Technology Wing, in consultation with PRAL, by the fifteenth day of September of the financial year following the financial year to which the return relates;

    (c) analysis and scrutiny of the change request form (CRF) by Chief Income Tax Policy and Chief Business Domain Team shall be conducted by sixteenth day of September of the financial year following the financial year to which the return relates and the same shall be submitted to Member Inland Revenue Policy for approval on the same day;

    (d) PRAL shall complete configuration and development of the approved CRF by thirty first day of October of the financial year following the financial year to which the return relates; and

    (e) User Acceptance Test (UAT) of the amended return forms on testing environment shall be finalized by Inland Revenue Policy Wing and Information Technology Wing, in consultation with PRAL, by fifteenth day of November of the financial year following the financial year to which the return relates and the same shall be submitted to Member Inland Revenue Policy for approval on the same day.

    (3) The return form shall be remain available on the portal for suggestion till seventh day of January of the financial year following the financial year to which the return relates.

    (4) The final return form shall be notified on or before the thirty first day of January of the financial year following the financial year to which the return relates by observing following timelines:

    (a) Inland Revenue Policy Wing and Information Technology Wing shall review the suggestions received from stakeholders by twelfth day of January of the financial year following the financial year to which the return relates;

    (b) a new change request form, if required, shall be finalized by Inland Revenue Policy Wing and Information Technology Wing, in consultation with PRAL, by 15th day of January of the financial year following the financial year to which the return relates and the same shall be approved by Member Inland Revenue;

    (c) PRAL shall complete configuration and development of the approved CRF by 20th day of January of the financial year following the financial year to which the return relates;

    (d) User Acceptance Test (UAT) of the final return forms on testing environment shall be finalized by Inland Revenue Policy Wing and Information Technology Wing, in consultation with PRAL, by 25th day of January of the financial year following the financial year to which the return relates and the same shall be submitted to Member Inland Revenue Policy for approval;

    (e) final income tax return forms shall be available on IRIS by the thirty day of January of the financial year following the financial year to which the return relates;

    (f) in case, any further amendments are made in the financial year to which the return relates that have an impact on the finally notified income tax return forms referred to a clause (e), such amendments shall also be incorporated accordingly; and

    (g) notwithstanding anything contained in this rule, the time so specified may, if requested by the Member Inland Revenue Policy, be extended by the Board to such extent and subject to such conditions and limitations as it may deep proper.

  • Customs launches pilot project of authorized economic operator

    Customs launches pilot project of authorized economic operator

    KARACHI: Pakistan Customs has launched a pilot project of Authorized Economic Operator (AEO) to facilitate trade and industry, a statement said on Friday.

    (more…)
  • FBR amends rules for filing, processing of refund claims

    FBR amends rules for filing, processing of refund claims

    ISLAMABAD: Federal Board of Revenue (FBR) on Thursday amended Sales Tax Rules, 2006 for process and claims of refunds by commercial exporters.

    In this regard the FBR issued SRO 1172(I)/2020 to make changes in the Sales Tax Rules, 2006 regarding filing and processing of refund claims.

    Following rules have been amended:

    Rule 28. Filing and processing of refund claims.−(1) For all the refund claims under section 10 and 8B of the Act, for the tax period July, 2019 and onwards, the data provided in the monthly return shall be treated as data in support of refund claim and no separate electronic data shall be required. The amount specified in column 29 of the return, as prescribed in the form STR-7, shall be considered as amount claimed for the purposes of claim under section 10 of the Act, once the return has been submitted along with all prescribed annexures thereof:

    Provided that, in case of claims arising from zero-rated supplies including exports, the claimant shall be able to submit his return without Annex H and the same may be filed separately at any time but not later than one hundred and twenty days of submission of the return without Annex-H. The date of submission of Annex-H shall be considered as the date of filing of refund claim. In other cases of refund, the date of submission of form STR-7A shall be considered as date of submission of refund claim and the same shall be filed within one hundred and twenty days of submission of relevant return:

    Provided further that in case of a commercial exporter, the claim shall be filed in the aforesaid manner within one hundred and twenty days, either after submission of the return without Annex-H, or after the date of issuance of BCA, whichever is later:

    Provided also that the period of one hundred and twenty days, as aforesaid, may be extended for a period not more than sixty days, by the Commissioner having jurisdiction, if the claimant so requests, thereby providing reasons justifying the delay in submission of claim:

    Following new proviso has been added through the SRO:

    “Provided also that if a claimant is registered as commercial exporter and exporting same state of goods, the period of one hundred and eighty days shall be reckoned from date of filing of return or the date of issuance of BCA, whichever is later.”

    (2) The registered person claiming refund in the aforesaid manner shall maintain and keep all the paper documents relating to the refund claim, such as invoices, credit notes, debit notes, goods declarations, bank credit advice, banking instruments etc. in his office and may not submit the same along with the refund to the concerned Regional Tax Office or Large Taxpayers’ Unit. The same shall be presented to the said offices if so required by the officer-in-charge for processing of the refund claim or post-refund scrutiny.

    Rule 39D. Filing and Processing of refund claims.−The data provided in the monthly return shall be treated as data in support of refund claim and no separate electronic data shall be required to be provided. The amount specified in column 29 of the return, as prescribed in the form STR-7, shall be considered as amount claimed, once the return has been submitted along with all prescribed annexes thereof:

    The first proviso has been amended through the SRO 1172(I)/2020:

    Provided that the claimant may submit his return without Annex-H and the same may be filed separately at any time but not later than one hundred and twenty days or as the case may be not later than one hundred and eighty days for commercial exporters of submission of the return without Annex-H. The date of submission of Annex – H shall be considered as the date of filing of refund claims.

    Provided further that the period of one hundred and twenty days, as aforesaid, may be extended for a period not exceeding sixty days, by the Commissioner having jurisdiction, for reasons to be recorded in writing on the basis of an application made by the claimant.

  • Correction in computerized CVT payment receipt allowed

    Correction in computerized CVT payment receipt allowed

    ISLAMABAD: Federal Board of Revenue (FBR) has allowed correction in computerized payment receipt (CPR) for capital value tax (CVT). In this regard, the FBR amended the procedure.

    The FBR issued an addendum on Thursday to the e-procedure that was notified on December 30, 2019. Previously, the FBR granted correction in CPR for income tax, sales tax and federal excise duty.

    However, through the addendum the FBR said correction of CVT CPR shall only be allowed in respect of CVT paid on immovable property situated within territorial limits of Islamabad Capital Territory.

    Further, the FBR said that heads of account (NAM) shall not be changed in the CPR except for CVT paid on immovable property situated within territorial limits of Islamabad Capital Territory.

    Procedure for making correction in cash payment receipt issued
  • FBR sets up departmental enquiry committee

    FBR sets up departmental enquiry committee

    ISLAMABAD: A departmental enquiry committee of the Federal Boar of Revenue (FBR) has been constituted to ascertain admissibility of financial benefits for officials removed from services but reinstated on court orders.

    An office order issued on Thursday stated that the departmental enquiry committee of FBR had been constituted to ascertain admissibility of financial benefits, during the period of dismissal / removal from service, after reinstatement of officers/officials back into service as per Appellate/court orders.

    Following persons are in the committee:

    Member (Admin), FBR HQ, Islamabad: chairman

    DFA, FBR (HQ), Islamabad: member

    Chief Management (Customs/IR) concerned: member

    Secretary litigation concerned: member

    Secretary management (customs/IR) concerned: member

    The committee shall have the following terms of reference:

    To examine cases of reinstatement into service after dismissal/removal; in light of FR-54

    To make appropriate recommendations under the Rules

  • Sales tax rates updated on services provided by restaurants

    Sales tax rates updated on services provided by restaurants

    KARACHI: Sindh Revenue Board (SRB) has notified sales tax rates on services rendered by restaurants in the province.

    The SRB issued working tariff on November 01, 2020 updating rates of sales tax on services.

    The SRB said that the sales tax rate shall be 13 percent on services provided or rendered by restaurants.

    The provincial revenue authority said that services provided or rendered by restaurants whose turnover does not exceeds 4 million rupees in a financial year shall be exempted from the levy of 13 percent sales tax.

    However, the exemption shall not apply in case of restaurants:-

    (i) which are air-conditioned on any day in a financial year and which are located within the building or premises of air-conditioned shopping malls or shopping plazas;

    (ii) located within the building, premises or precincts of any hotel, motel, guest house or club whose services are liable to sales tax;

    (iii) providing or rendering services in the building, premises, precincts, hall or lawn of any hotel, motel, guest house, marriage hall or lawn or club whose services are liable to sales tax;

    (iv) which are franchisers or franchisees;

    (v) having branches or more than one outlet in Sindh; and

    (vi) whose total utility bills (gas, electricity and telephone) exceed Rs. 40,000/- in any month during a financial year.