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Category: Taxation

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  • Withholding tax rates on sales made to retailers, wholesalers, distributors

    Withholding tax rates on sales made to retailers, wholesalers, distributors

    ISLAMABAD: Federal Board of Revenue (FBR) has issued withholding tax rates on sales made by manufacturers to retailers, wholesalers and distributors during tax year 2021.

    The FBR issued the withholding tax card 2020-2021 (updated up to June 30, 2020) incorporating amendment made to Income Tax Ordinance, 2001 made through Finance Act, 2020.

    Under section 236G of the Ordinance, every manufacture or commercial importer of electronics sugar, cement, iron and steel products, fertilizers, motorcycles, pesticides, cigarettes glass, textile, beverages, paint or foam sector shall collect/deduct withholding tax from distributor, wholesaler and dealer at the time of sale.

    Advance tax has to be collected from wholesaler, distributor and dealers at the time of sales made to them:

    In case of fertilizers the withholding tax rate shall be 0.7 percent of gross amount. The tax rate shall be increased by 100 percent in csae persons are not on the Active Taxpayers List (ATL).

    In case of other than fertilizers the tax rate shall be 0.1 percent of gross amount. The tax rate shall be 0.2 percent of gross amount if persons not on the ATL.

    The tax withheld under this section shall be adjustable.

    Under Section 236H of the Ordinance, every manufacture ,distributor, dealer, wholesaler or commercial importer of electronics, sugar, cement, iron & steel products, motorcycles, pesticides, Cigarettes glass, textile, beverages, paint or foam sector shall collect/deduct from every retailer at the time of sale.

    Advance tax has to be collected from retailers at the time of sales made to them:

    In case of electronics the withholding tax rate shall be 1 percent of the gross amount and the rate shall be 2 percent of gross amount if persons are not on the ATL.

    The withholding tax rate under this section for others shall be 0.5 percent of gross amount and the rate shall be 1 percent in case persons are not on the ATL.

    The tax collected/deducted under this section shall be adjustable.

    Under Section 236HA of the Ordinance, every person selling petroleum products shall collect/deduct withholding tax from every petrol pump operator or distributor, where such operator or distributor is not allowed a commission or discount at the time of sale of such products.

    Advance tax has to be collected on ex-depot sale price of such petroleum products at the rate of 0.5 percent of ex-depot sale price and the rate shall be 1 percent of ex-depot sale price.

    The withholding tax collected/deducted under this section shall be final.

  • FBR asks exporters to resubmit claims for stuck-up refunds

    FBR asks exporters to resubmit claims for stuck-up refunds

    ISLAMABAD: Federal Board of Revenue (FBR) on Thursday offered exporters to resubmit their refund claims which were stuck up due to any reason.

    The FBR said that sales tax refund claims of exporters, which were stuck up at pre-processing stage in Fully Automated Sales Tax e-Refund (FASTER) system due to any reason including erroneous filing stand rolled back to provide an opportunity to exporters to review and resubmit their claims after removing shortcomings by September 20, 2020.

    All such refund claimants have also been informed electronically, the FBR added.

    Two days ago, the FBR issued instructions to all chief commissioners Inland Revenue regarding sales tax refunds.

    The FBR said that it had been observed that sales tax refund claims prior to July 2019 were pending for first processing as well as deferred processing, requiring over-ruling of objections raised by Risk Management System (RMS).

    In order to liquidate the pendency of deferred claims, the FBR has already issued circular No. 01/2020 dated August 04, 2020 for rule-based over-ruling objections. “The purpose of circular is to bring uniformity into the system, and to avoid discretion and delay in processing of refunds,” the FBR added.

    The FBR also informed the chief commissioners that processing of refunds should not be stopped on pretext that some case is pending against the claimant at any adjudication or appellate forum unless there is specific stay against processing of refunds. “In cases where the discrepancies pointed out by the department relating to refund claims are held twice in favor for the claimant, refunds be processed even if field office has preferred further appeal, unless specifically barred by the appellate forum or the board.”

    The FBR directed that field formations should ensure that pending refunds of claimants are processed in routine on the basis of Circular No. 01/2020.

  • FBR exempts sales tax, income tax on sugar import

    FBR exempts sales tax, income tax on sugar import

    ISLAMABAD: Federal Board of Revenue (FBR) on Thursday exempted sales tax and income tax on import of sugar in compliance with the government decision to lower the price of the commodity.

    The FBR issued SRO 750(I)/2020 to exemption income tax and SRO 751(I)/2020 to exempt sales tax.

    Through SRO 750(I)/2020, an amendment has been made to Second Schedule of Income Tax Ordinance, 2001.

    As per the amendment a new clause 12G has been inserted to the second schedule, which states: “(12G) The provisions of Section 148 shall, in pursuance of the Cabinet Decision dated August 04, 2020, not apply on import by the Trading Corporation of Pakistan of 300,000 metric tons of white sugar having PCT heading 1701.9910, 1701.9920, specification B.”

    As per SRO 751(I)/2020, the same specification and PCT heading the import of sugar has been exempted from whole of sales tax.

    The Economic Coordination Committee (ECC) of the Cabinet in its meeting held last week of July 2020 allowed import of up to 300,000 metric tonnes of white sugar to maintain buffer stocks in the country.

    The permission was given at the ECC meeting in Islamabad with Adviser on Finance Dr. Abdul Hafeez Shaikh in the chair.

    The procurement and other modalities of sugar import will be decided by a three-member committee, comprising Secretary Industries and Production, Secretary Commerce and Secretary Finance.

  • FBR to reward for identifying fake, flying invoices

    FBR to reward for identifying fake, flying invoices

    ISLAMABAD: Federal Board of Revenue (FBR) on Wednesday announced to give reward money to those people who identify culprits involved tax evasion through fake and flying invoices.

    A statement issued by the revenue body said that it had encouraged the people to come forward and reveal the identity of the people who are involved in causing tax evasion by using fake and flying invoices.

    “FBR will grant reward to such whistle blowers under its Reward Rules,” it said.

    The name of the whistle blowers will be kept secret.

    The information can be given to the Director Intelligence and Investigation Inland Revenue on office number 0519260167 and fax number 0519260156.

    The FBR announced in the wake of strict action launched against tax evaders involving in fake and flying business.

    In this regard FBR chairman issued directions to all the FBR field offices to expedite operation against tax evasion and play active role to stop the menace of fake and flying invoices.

    Meanwhile, implementing the directions, the Karachi Field Office of FBR has taken action against a fake business unit which was involved in evading duties and taxes at import stage under SRO 1125.

    The said unit was also issuing fake and flying invoices in the market due to which the buyers were claiming input adjustment and refunds.

    The said unit has committed tax fraud and caused heavy loss of Rs. 210 million to the pubic exchequer. The principal accused Mubarak Khan has been arrested.

    Similarly, another case of tax evasion of Rs. 105 million has been unearthed. The tax evasion was taking place by issuance of fake and flying invoices.

    FBR Multan office has confiscated the counterfeit and non-duty paid cigarettes. In another case, FBR Karachi office has received a complaint of Rs. 1 billion money laundering. The investigations are underway.

  • FBR issues draft return forms for tax year 2020

    FBR issues draft return forms for tax year 2020

    ISLAMABAD: Federal Board of Revenue (FBR) on Wednesday issued draft forms for filing income tax returns tax year 2020.

    The FBR issued SRO 745(I)/2020 and invited comments from stakeholders on the draft return forms within seven days from the date of issuance of the draft forms.

    The FBR issued the draft forms filing annual income tax returns electronically by salaried persons, business individuals, association of persons (AOPs) and companies.

    The FBR said that the return form shall be applicable for tax year 2020.

    The draft return forms tax year 2020 can be downloaded here.

  • FBR urges taxpayers to lodge complaints against officials demanding bribe for clearing refunds

    FBR urges taxpayers to lodge complaints against officials demanding bribe for clearing refunds

    KARACHI: Federal Board of Revenue (FBR) has advised taxpayers to lodge complaints against tax officials, who are demanding bribe for clearing stuck up refunds.

    “Immediate action will be taken against the delinquent functionaries,” said Dr. Muhammad Ashfaq Ahmed, Member Inland Revenue Operations, Federal Board of Revenue (FBR) in a meeting with the office bearers of All Pakistan Textile Mills Association (APTMA).

    According to a statement released by the APTMA on Wednesday, the Member also urged the taxpayers to lodge complaints against the harassment by the tax collectors.

    The meeting discussed in detail the issues pertaining to the release of Sales Tax refunds in seventy-two hours, removing irritants of the Annexure-H, issuance of Income Tax exemption on electricity bills, delay in Income Tax refunds and other irritants faced by export oriented industries.

    APTMA delegation comprised of Raza Baqir and Shahid Sattar while the Member Inland Revenue Operations was assisted by concerned chiefs and secretaries of the Board.

    Dr. Ashfaq reiterated the resolve and commitment of the government for expeditious payment of tax refunds and removal of all irritants in doing the business.

    He told APTMA delegation that release of refund claims has been expedited by the Board and it would be ensured that all sales tax refunds are paid within 72 hours.

    He said all the systematic issues relating to Annexure H would be removed within a week which will facilitate exporters in filing of refund claims. He added that Annexure-H would be simplified to facilitate the taxpayers. According to him, the trial test of the changes made in software of Annexure-H is underway and it would be implemented shortly.

    He said the Board was also releasing the outstanding and deferred refund claims of the exporters on war-footing basis.

    Furthermore, he urged the APTMA delegation to convey all member mills to file their Income Tax refunds at the earliest for speedy clearance.

    APTMA delegation appreciated the efforts made by the Board for early disposal of refund claims of the export-oriented industry, saying that the member mills were satisfied with the performance of the tax machinery.

    The delegation further expressed the hope that the Board would start clearing refund claims within 72 hours of their filing by the exporters.

    The delegation further expressed the hope the FBR would soon overcome the inherent loopholes, infirmities and snags in the system and adopt measures to remove all odds which hamper and retard the system.

  • Rescinded SRO 1125: Manufacturers to pay 1pc advance tax on raw material import

    Rescinded SRO 1125: Manufacturers to pay 1pc advance tax on raw material import

    ISLAMABAD: Federal Board of Revenue (FBR) has said that manufacturers, who were covered under rescinded SRO 1125, shall pay one percent advance income tax on imported goods.

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  • FBR decides action against retailers for avoiding mandatory integration

    FBR decides action against retailers for avoiding mandatory integration

    ISLAMABAD: Federal Board of Revenue (FBR) has decided to take action against retailers having huge turnovers for not complying with mandatory integration with the online system of the tax authority.

    In this regard the FBR on Tuesday directed the retailers, who are required to integrate their sales and purchases under Sales Tax Act, 1990, to link their invoicing system by August 31, 2020.

    The FBR has explained that all retailers who have the network of chain stores throughout Pakistan, located in air-conditioned big shopping malls or plazas and their cumulative electricity bill during the immediately preceding twelve consecutive months exceeds twelve hundred thousand rupees and they are engaged in bulk import and supply of consumer good on wholesale basis to the retailers as well as on retail basis in to the consumer and their shop’s size measures one thousand square feet in area or more must integrate their retail outlets with the FBR’s computerized system for real time reporting of sales.

    FBR has warned that the last date for such integration is August 31, 2020 and afterwards those who failed to integrate would be imposed a penalty up to rupees one million and if the offence continued, the business premises of such retailer shall be sealed.

  • FBR updates withholding tax rates on sale, purchase of immovable properties

    FBR updates withholding tax rates on sale, purchase of immovable properties

    ISLAMABAD: Federal Board of Revenue (FBR) has updated the withholding tax rates on sale and purchase of immovable properties for tax year 2021.

    The FBR issued withholding tax card 2020-2021 (updated up to June 30, 2020) incorporating amendment to Income Tax Ordinance, 2001 through Finance Act, 2020.

    Under Section 236C of Income Tax Ordinance, 2001 the withholding tax is to be collected on seller of immovable property.

    Every person registering, recording or attesting or transfer including local authorities, housing authorities, housing society co-operative society and registrar or properties shall collect withholding tax from seller of immoveable property at the time of registering, recording or attesting the transfer.

    The tax rate shall be one percent of the gross amount of the consideration received. In case of person not appearing on the Active Taxpayers list (ATL) the tax rate shall be two percent of the gross amount of the consideration received.

    The withholding tax shall be minimum tax if property is acquired and disposed off within the same tax year; otherwise the tax shall be adjustable.

    Advance tax, under this section, is not be collected if the immovable property is held for a period exceeding four years.

    Under Section 236K of Income Tax Ordinance, 2001 the withholding tax shall be collected from purchaser of immovable property.

    Under Section 236K (1) every person registering, recording or attesting or transfer including local authorities, housing authorities, housing society, co-operative society and registrar or properties shall deduct/collect withholding tax from the purchaser of immovable property at the time of registering, recording or attesting the transfer.

    The withholding tax rate shall be one percent of the fair market value. In case the person is not on the ATL the tax rate shall be two percent of the fair market value.

    The withheld tax shall be adjustable against total payable tax liability.

    Section 236K (3) of the Ordinance deals with advance tax on payment of installment in respect of purchase of allotment of immovable property where transfer is to be effected after making payment of all installments.

    Any person responsible for collection of payment in installment shall deduct/collect from the purchaser or allottee of the immovable property at the time of payment of installment.

    The tax rate shall be one percent of the fair market value. In case the person is not on the ATL the tax shall be two percent of the fair market value.

    The tax shall be adjustable against total tax liability.

  • FBR apologizes diplomat over show cause notice

    FBR apologizes diplomat over show cause notice

    ISLAMABAD: Federal Board of Revenue (FBR) has apologized over sending show cause notice to a foreign diplomat by an adjudication collection.

    In a tweet message, FBR spokesman said that it had been noticed that Customs Collectorate (Adjudication) Islamabad had sent a notice to the foreign diplomat.

    “Sending a notice to a foreign diplomat is against Vienna Convention which provides immunity to the foreign government officials and representatives of an embassy,” the spokesman said.

    On the directives of the FBR the Customs office amending the show cause notice and seizure report.

    The spokesman said that in the due course the FBR apologized the foreign diplomat over the act of the collectorate.