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Category: Taxation

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  • FBR notifies promotion of 49 IRS officers to BS-19

    FBR notifies promotion of 49 IRS officers to BS-19

    ISLAMABAD: Federal Board of Revenue (FBR) on Thursday notified promotion of 49 officers of Inland Revenue Service (IRS) to BS-19 with immediate effect.

    The FBR notified promotion of 41 officers from BS-18 to BS-19 on regular basis and other eight officers have been promoted from BS-18 to BS-19 on acting charge basis.

    The following BS-18 officers of Inland Revenue Service are promoted to BS-19 on regular basis with immediate effect :

    1. Muhammad Asfandyar Janjua

    2. Naveed Khan

    3. Syed Salahuddin Gillani

    4. Azhar Jehangir

    5. Muhammad Aamir Ilyas

    6. Qadir Nawaz

    7. Ms. Sadia Akmal

    8. Ms. Sadia Ali Akram

    9. Muhammad Ali Khan

    10. Ms. Amra Sarwar

    11. Ms. Arooj Mehwish Rizvi

    12. Asad Aziz

    13. Ms. Saba Rehmat

    14. Ms. Neelam Ifzal

    15. Karim Baksh Bughio

    16. Mrs. Saima Kenan Khan

    17. Husnain Ahmad Hali

    18. Kashif Hafeez

    19. Inayat Malik

    20. Akhtar Abbas

    21. Jamil Ahmad

    22. Muhammad Masood Ahmed Gorsi

    23. Kamran Ullah

    24. Laiq Zaman

    25. Naseebullah

    26. Naseer Ahmed

    27. Mrs. Safia Naseer

    28. Muhammad Sajid Ahmad

    29. Zubair Khan

    30. Ms. Sadia Iftikhar

    31. Tarique Aziz

    32. Rashid Javaid Rana

    33. Nasir Khan

    34. Muhammad Farooq Anwar

    35. Khawar Siddique

    36. Syed Zubair Shah

    37. Abdul Rauf

    38. Tariq Javed

    39. Tauqeer Ahmed Sujra

    40. Ms. Amina Batool

    41. Ms. Kiran Maqsood

    The FBR said that the officers at Sr. Nos. 07, 14, 24 and 32 will actualize their promotion from the date of their return from deputation and joining FBR (Hq), Islamabad.

    The officer at Sr. No. 08 is promoted subject to completion of satisfactory PERs, without any adverse entry/remarks, for the period 01.07.2018 to 30.06.2019. The officer at Sr. No. 19 is promoted subject to completion of satisfactory PERs, without any adverse entry/remarks, for the period 01.07.2018 to 31.03.2019.

    The officer at Sr. No. 25 is promoted subject to completion of satisfactory PERs, without any adverse entry/remarks, for the period 28.03.2019 to 30.06.2019 and will actualize his promotion from the date of his return from deputation and joining FBR (Hq), Islamabad.

    The officers already working in BS-19 on acting charge basis or on OPS basis as Additional Commissioner / Additional Director / Secretary FBR (HQ), Islamabad shall actualize promotion at their present place of posting. For actualization of promotion in BS-19 on regular basis of the remaining officers, transfer / posting order shall be notified separately and they shall actualize accordingly.

    Following BS-18 officers of Inland Revenue Service are appointed in BS-19 on acting charge basis with immediate effect:-

    1. Mrs. Sabah Fahad

    2. Zeeshan Asif

    3. Ms. Saba Ijaz

    4. Syed Mashkoor Ali

    5. Shahzad Ali Khan

    6. Muhammad Imran

    7. Soban Ahmad

    8. Ms. Hira Nazir

  • FBR promotes 14 customs officers to BS-19

    FBR promotes 14 customs officers to BS-19

    ISLAMABAD: Federal Board of Revenue (FBR) on Thursday announced promotion of 14 officers of Pakistan Customs Service (PCS) from BS-18 to the post of Additional Collectors BS-19 on regular basis with immediate effect.

    Following officers have been promoted to BS-19:

    1. Ali Raza Turabi

    2. Dr. Imran Rasool Khan

    3. Muhammad Hassan Farid

    4. Ghulam Hyder Mahesar

    5. Muhammad Nauman Tashfeen

    6. Moeen Afzal Ali

    7. Junaid Usman Akram

    8. Rana Irfan Shaukat

    9. Saad Ata Rabbani

    10. Wajid Zaman

    11. Zakir Muhammad

    12. Ihsanullah Shah

    13. Ammara Durrani

    14. Muhammad Qasim Khokhar

    The FBR said that the officers who are already working in BS-19 on OPS basis will actualize their promotion against these posts.

    Posting / Transfer of the remaining officers will be notified separately, and they shall actualize accordingly.

    The officers who were drawing performance allowance prior to issuance of this notification shall continue to draw this allowance on their promotion.

  • Reduction in rental income expense limit to encourage under-reporting

    Reduction in rental income expense limit to encourage under-reporting

    Presently, expenses incurred to the extent of 6 percent of rent chargeable wholly and exclusively for deriving rent are admissible as deduction against rental income.

    The Bill proposed to reduce the limit from 6 percent to 2 percent.

    The experts said that further reducing such limit would deprive a taxpayer for claiming a legitimate expense incurred solely for deriving taxable income and would ultimately lead to higher tax payable by the taxpayer. “It may encourage taxpayers to under-report their taxable income on the grounds that their legitimate expenses are disallowed,” experts at Deloitte Yousuf Adil Chartered Accountants said.

    Presently, income from property derived by an individual or an Association of Persons is subject to tax at the specified slab rates and treated as a separate block of income.

    However, individuals or AOPs whose income from property exceeds Rs 4 million per annum can opt to claim deductions under section 15A of the Ordinance and pay tax at normal rates specified in Division I of Part I of the First Schedule.

    The Bill proposed to abolish such limit of Rs. 4 million and therefore an individual or AOP can now opt for claiming tax deductions and pay tax at normal rates irrespective of amount of income derived from property.

  • Key points of amnesty scheme for real estate sector

    Key points of amnesty scheme for real estate sector

    KARACHI: The federal government has made amnesty granted to real estate sector to the part of Finance Bill, 2020 in order to get approval from the Parliament.

    Deloitte Yousuf Adil Chartered Accountants in their budget explanations said that to stimulate investment in real estate and construction sector, a no-questions-asked amnesty has been introduced.

    Under this amnesty the Federal Board of Revenue (FBR) has been restrained from asking question related to source of investment made into the real estate / construction business.

    Both previous and current federal governments have launched tax amnesty schemes in 2018 and 2019, albeit the scope of this scheme is limited to investment made in construction sector only.

    The proponent of this particular amnesty scheme argues that this would act as a catalyst to increase economic activity in the country thereby improving employment opportunities as number of sub-sectors and small and medium size industries are associated with construction industry.

    The newly introduced scheme provides immunity from the provisions of section 111 of the Ordinance , and no questions will be asked regarding source of funds from investors making capital investment in new construction projects in the form of money or land, either as an individual, as an association of persons or a company, subject to conditions as explained below.

    For individuals:

    Monetary: Investor shall open a new bank account and deposit such amount in it on or before the 31st day of December, 2020

    Land: Investor shall have the ownership title of the land at the time of commencement of the Tax Laws (Amendment) Ordinance, 2020

    Corporate shareholder / Partner:

    Monetary: Such amount shall be invested through a crossed banking instrument deposited in the bank account of such association of persons or company, as the case may be, on or before the 31st day of December, 2020

    Land: Such land shall be transferred to such association of persons or company, as the case may be, on or before the 31st day of December, 2020. Provided that the person shall have the ownership title of the land at the time of commencement of the Tax Laws (Amendment) Ordinance, 2020

    Registration: The Company or AOP shall be a single object company duly registered under the Companies Act, 2017 or Partnership Act, 1932 as the case may be.

    Additional conditions to be met:

    • Prescribed IRIS form shall be submitted by the person making investment.

    • The investments made shall be wholly utilized in a project.

    • Grey structure in case of builders and landscaping in case of developers have been completed on or before September 30, 2022, and duly certified by NESPAK or respective map approving authority.

    • Further, for land developer, the following additional conditions should be met;

    • 50 percent of plots have been booked for sale and 40 percent of sale proceeds thereof have been received by September 30, 2022 as duly certified by specified chartered accountancy firm.
    • 50 percent of the project roads have been laid up to sub-grade level as duly certified by NESPAK.

    • The value or price of the land or building shall be higher of

    a) 130 percent of FBR assessed fair market value; or

    b) At the option of person making investment, lower of the value determined by at least two independent SBP approved valuers.

    Exclusion

    The following incomes or persons are excluded from the relief provided under the amnesty scheme:

    Holder of public office, benamidar or his spouse or dependents; or

    Public Listed Company, real estate investment trust or any company whose income is exempt under the Ordinance.

    Proceeds of crime including money laundering, terror financing excluding tax evasion.

    Restriction of Ownership Changes

    • Under the new amnesty, no change in ownership shall be allowed for incomplete projects except where 50 percent cumulative cost on the project has been incurred as certified by prescribed Chartered Accountants firm, with the exception of legal transmission to heirs.

    • Inclusion of partners or shareholders after December 31, 2020 is permissible; however, such investors shall not be eligible to avail tax amnesty.

    Amnesty to the purchaser

    Provisions of section 111 shall also not apply to:
    the first purchaser of a building or a unit in the building in respect of the purchase price both in case of new project or existing incomplete project where payment is routed through crossed banking instrument between the date of registration of project with the FBR and September 30, 2022.

    The purchaser of plot for building construction where the purchase, the payment thereof and commencement of construction has been made on or before December 31, 2020 subject to construction completion by September 30, 2022 and subject to registration of such purchaser with FBR on IRIS portal.

    Thus no questions would be asked from the purchaser of building or plot regarding source of funds who complies with the above mentioned conditions.

  • FBR to take action against amnesty declarants on failure to make payment

    FBR to take action against amnesty declarants on failure to make payment

    The Federal Board of Revenue (FBR) in Pakistan issued a stern warning on Tuesday, stating that it would invoke provisions related to concealed assets if declarants under the amnesty scheme failed to pay their outstanding dues by June 30, 2020.

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  • FBR constitutes committees to remove anomalies in Finance Bill 2020

    FBR constitutes committees to remove anomalies in Finance Bill 2020

    ISLAMABAD: Federal Board of Revenue (FBR) on Tuesday constituted two committees for identifying and removing anomalies in the Finance Bill, 2020.

    The FBR issued two separate notifications for constituting the committees, which comprise FBR officials and representatives of business community.

    Chairman of the first anomaly committee is Saqib Shirazi of Atlas Group.

    The co-chairmen of the committee are Muhammad Javed Ghani, Member (Customs-Policy) and Dr. Hamid Ateeq Sarwar, Member (IR-Policy).

    The other members of the committee are:

    01. Ehsan Malik, Pakistan Business Council

    02. Agha Shahab Khan, President, Karachi Chamber of Commerce and Industry (KCCI)

    03. President, Khyber Pakhtunkhwa Chamebr

    04. Abdul Samad, former president, Quetta Chamber of Commerce and Industry

    05. Anjum Nisar, President, Federation of Pakistan Chamber of Commerce and Industry (FPCCI).

    06. Zahid Shinwari, former president, Sarhad Chamber

    07. Irfan Iqbal Sheikh, President, Lahore Chamber of Commerce and Industry (LCCI)

    08. Amir Fayyaz, Former Chairman, All Pakistan Textile Mills Association (APTMA).

    The FBR constituted the other technical anomaly committee. Ashfaq Tola, FCA, FCMA has been appointed as chairman of the committee.

    The co-chairmen of the committee will be the same FBR officials of the first committee.

    Other members of the committee are included:

    01. Ali Jameel, FCA

    02. Asif Haroon, FCA

    03. Abdul Qadir Memon, President, Pakistan Tax Bar Association

    04. Syed Yawar Ali, CEO, Pakistan Business Council

    05. Mrs. Robina Ather, Chairperson, National Tariff Commission (NTC)

    06. Muhammad Shahzad, ex-partner, A. F. Ferguson & Co.

    07. Rashid Ibrahim, A. F. Ferguson & Co.

    08. Khurram Mukhtar, Patron in Chief, PTEA.

    The term of reference (TOR) for the committees is: to review the anomalies identified and submitted; and to advise FBR on removal of anomalies.

    The FBR advised both the committees to submit the anomalies by June 19, 2020.

  • Restriction imposed on revising wealth statement

    Restriction imposed on revising wealth statement

    KARACHI: Taxpayers have been barred from revising their wealth statement after expiry of five years.

    An amendment has been proposed to Income Tax Ordinance, 2001 through Finance Bill, 2020.

    According to interpretation of Finance Bill, 2020 by Deloitte Yousuf Adil Chartered Accountants, presently, revision of wealth statement is allowed without a requirement to obtain approval of the Commissioner Inland Revenue, as is otherwise required for revision of return of income.

    It is now proposed that such revision of wealth statement shall be contingent upon the similar approval of the Commissioner, which shall be granted, in case of bona fide omission or misstatement.

    “However, no such revision is allowed after the expiry of five years from the due date of filing of return of return of concerned tax year.”

    Another amendment has been proposed regarding assessment. The chartered accountants explained that currently where a taxpayer has furnished a return of income, the Commissioner Inland Revenue shall be treated to have made an assessment of taxable income and tax due thereon equal to amounts specified in the return.

    Further, such return shall be taken for all purposes to be an assessment order issued by the Commissioner.

    In order to ensure accuracy of the returns filed by taxpayers, automated adjusted assessment mechanism is being proposed.

    Under this mechanism, the return filed shall be subject to an automatic review and adjustment within six months of filing of return for rectification of any numerical errors or incorrect claims, losses, deductible allowances or tax credit, or wrongful carry forward of losses that are apparent from the return of income.

    In this regard, a notice shall be issued to the taxpayer before the adjustments are effected in the return, which is required to be responded within 30 days of the date of notice.

    Further, where no such adjustments are made within the specified period of six months, the return filed shall be deemed to have been automatically adjusted on the day the return is filed and automatic intimation through IRIS shall be forwarded to the taxpayer.

    The existing provisions as to deemed assessment order will now apply to adjusted return rather than the original return filed by the taxpayer.

    For the purposes of this section, the following definition are proposed to be introduced vide Finance Bill 2021:

    “Arithmetical Error” includes any wrong or incorrect calculation of tax payable including any minimum or final tax payable

    “An incorrect claim apparent from any information in the return” shall mean a claim, based on an entry, in the return

    i. of an item, which is inconsistent with another entry of the same or some other item in such return;

    ii. regarding any tax payment which is not verified from the collection system; or

    iii. in respect of a deduction, where such deduction exceeds specified statutory limit which may have been expressed as monetary amount or percentage or ratio or fraction.

    The amended provision does not cater for situations where the tax payers have to make adjustments in the return due to inability of the online return form to cater to unique circumstances of the business of the taxpayer.

    Application of this automated adjustment mechanism may create problems for the tax payers unless the online return is amended to cater for all situations that a tax payer may face in line with the provisions of law.

  • Concealed income to be added under business income

    Concealed income to be added under business income

    KARACHI: The Finance Bill 2020 has proposed amendment to laws pertaining to concealed income. Under the amendment the identified concealed income to be added under head of business income.

    The Finance Bill 2020 proposed amendment to Section 111 of Income Tax Ordinance, 2001.

    As per interpretation of Finance Bill, 2020, Deloitte Yousuf Adil Chartered Accountants explained that as per existing law, suppressed amount of production, sales or any amount chargeable to tax or of any item of receipt liable to tax shall be included in the person’s income chargeable to tax under head “Income from Other Sources” to the extent it is not adequately explained.

    The Finance Bill 2020 proposes to tax such amount under head of “Income from Business”.

    Since, such items pertain to business activities of a person, therefore, the same should be liable to tax under head of Income from Business.

    Consequent to proposed amendments, the relevant expenses incurred would then be allowable.

    However, the amount credited, value of the investment, money, value of the article, or amount of expenditure shall still be included in the person’s income chargeable to tax under the head “Income from Other Sources” to the extent it is not adequately explained.

  • DG Transit Trade Zahid Khokhar dies of COVID

    DG Transit Trade Zahid Khokhar dies of COVID

    KARACHI: Muhammad Zahid Khokhar, a BS-22 officer of the Pakistan Customs Service (PCS) and Director General of Transit Trade, passed away on Monday morning due to complications related to the coronavirus (COVID-19). He was one of the most senior and respected officers in the PCS and had only recently been promoted to the rank of BS-22.

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  • Details of transactions exempted from withholding tax

    Details of transactions exempted from withholding tax

    ISLAMABAD: The Finance Bill, 2020 has proposed to withdraw withholding tax collection on nine different types of transactions under Income Tax Ordinance, 2001.

    According to budget commentary issued by PwC A F Ferguson, as part of reforms for ease of doing business, the government has proposed to withdraw following withholding tax provisions, which in government’s view were not generating enough revenues:

    01. Section 148A – Tax on local purchase of cooking oil or vegetable ghee by certain persons

    Two percent tax was chargeable on the purchase of locally produced edible oil by the manufacturers of cooking oil or vegetable ghee.

    02. Section 156B – Withdrawal of balance under Pension Fund

    A pension fund manager making payment from individual pension accounts, maintained under any approved Pension Fund, was required to deduct tax at the average rate of tax as calculated in section 12, from the amount so withdrawn by the pensioner before or after his retirement.

    03. Section 235B – Tax on steel melters and composite units

    Tax under this section was required to be collected from every steel melter, and composite steel units, registered for the purpose of Chapter XI of Sales Tax Special Procedure Rules, 2007 at the rate of one rupee per unit of electricity consumed for the production of steel billets, ingots and mild steel (MS products) excluding stainless steel.

    04. Section 235D – Advance tax on functions and gatherings

    Advance tax under this section was required to be collected by the prescribed person on the total amount of the bill from a person arranging or holding a function in a marriage hall, marquee, hotel, restaurant, commercial lawn, club, a community place or any other place used for such purpose including the food, service or any other facility is provided by any other person, from the person arranging or holding the function.

    05. Section 235F – Advance tax on cable operators and other electronic media

    Under this section, Pakistan Electronic Media Regulatory Authority was required to collect advance tax, at the time of issuance of licence for distribution services or renewal of the licence to a licencee.

    06. Section 236J – Advance tax on dealers, commission agents and arhatis etc

    Advance tax under this section was required to be collected by every market committee from dealers, commission agents or arhatis, etc. at the time of issuance or renewal of licences

    07. Section 236R – Collection of advance tax on education related expenses remitted abroad

    Advance tax was required to be collected by Banks, financial institutions, foreign exchange companies or any other person responsible for remitting foreign currency abroad for the purpose of education related expenses remitted abroad from the payer of education related expenses.

    08. Section 236U – Advance tax on insurance premium

    Advance tax was required to be collected under this section, by the insurance company at the time of collection of insurance premium from the person in respect of general insurance premium and life insurance premium.

    09. Section 236X- Advance tax on tobacco

    Pakistan Tobacco Board or its contractors, at the time of collecting cess on tobacco, directly or indirectly, shall collect advance tax at the rate of five percent of the purchase value of tobacco from every person purchasing tobacco including manufacturers of cigarettes.