Category: Taxation

Pakistan Revenue delivers the latest taxation news, covering income tax, sales tax, and customs duty. Stay updated with insights on tax policies, regulations, and financial developments in Pakistan.

FBR starts consultation with IR field formation on proposed restructuring

ISLAMABAD: Federal Board of Revenue (FBR) has started consultation with tax officials on proposed reform program following resentment of senior officers on proposed plan of setting up Pakistan Revenue Authority (PRA) and other reforms.

The FBR through an official memorandum invited proposals from all field formation of Inland Revenue on the restructuring of FBR.

In order to address the concerns of the officers and officials of FBR and to make ‘restructuring of FBR’ a more inclusive exercise, the FBR chairman has been pleased to approve the formation of three committees.

The three committees have been formed at Karachi, Lahore and Rawalpindi/Islamabad and these committees are comprised of senior officers of IRS.

The committees formed as:

01. Karachi Committee

Faiz Illahi Memon, Chief Commissioner of Inland Revenue, Large Taxpayers Unit (LTU) Karachi (Head of Committee)

Amir Ali Khan Talpur, CCIR, RTO-III, Karachi

Dr. Aftab Imam, CCIR, CRTO Karachi.

Shahid Iqbal Baloch, CCIR, LTU-II, Karachi.

Badaruddin Ahmed Qureshi, CCIR, RTO-II, Karachi.

Lahore Committee:

Syed Nadeem Hussain Rizvi, CCIR, CRTO Lahore (Head of Committee).

Asim Majeed Khan, CCIR, LTU Lahore.

Ahmed Shuja Khan, CCIR, RTO-II, Lahore.

Rawalpindi/Islamabad Committee:

Asim Ahmad, Director General, Intelligence and Investigation, IR, Islamabad (Head of the Committee).

Bashirullah Khan, CCIR, RTO Rawalpindi

Shamsul Hadi, CCIR, RTO Islamabad

Muhammad Naseer Butt, CCIR, LTU Islamabad.

The FBR chairman advised the Chief Commissioners of remaining RTOs can also frame their recommendations by co-opting officers from BS-17 to BS-20 and BS-16 and below.

The FBR chairman also approved the following Term of References (TORs):

01. Future status of Tax Authority.

a. Under Federal Government as an attached department (as present)

b. Under Federal Government as a Semi-Autonomous Body.

c. Completely autonomous.

02. Human Resource issues such as recruitment, retention, capacity, remuneration etc.

03. Financial Autonomy – its extent and nature.

04. Organizational structure (Qualifications/growth/career path).

05. Work processes.

The FBR chairman advised the committee to ensure engaging officials falling in BS-16 and below and other cadres falling under their jurisdictions so that their input can also be obtained and incorporated in the recommendations framed by the committees.

The FBR has asked the committees to finalize their recommendations by November 18, 2019.

November 9, 2019
Jewelers, real estate agents to maintain register, report suspicious transactions: draft rules issued

ISLAMABAD: Federal Board of Revenue (FBR) has proposed to make mandatory for jewelers and real estate agents to report suspicious transactions. In this regard the FBR issued draft rules through SRO 1320(I)/2019 to make amendments in Income Tax Rules, 2002.

As per the draft rules, the designated persons as jewelers and real estate agents should maintain documents and records, where the value of transaction exceeds Rs2 million in case of immovable properties and Rs one million in other cases.

The FBR said that the designated persons would require to obtain and maintain the following relating to its buyers and sellers, namely:

In case of an individual any of the following documents should be obtained by jewelers and real estate agents:

i. copy of computerized National Identity Card (CNIC) issued by National Database and Registration Authority (NADRA).

ii. copy of National Identity Card for Overseas Pakistanis (NICOP) issued by NADRA.

iii. copy of Pakistan Origin Card (POC) issued by NADRA.

iv. copy of Alien Registration Card (ARC) issued by NADRA, and

v. copy of passport, having valid visa on it or any other proof of legal stay along with the passport (foreign nationals only).

The jewelers and real estate agents also required to keep a list of all such customers where the business transaction was refused or needed to be closed either on account of failure of the customer to provide the relevant documents or the original documents for viewing as required.

Regarding furnishing of information, according to the draft rules, the sale and purchase register for the immediately preceding calendar month shall be uploaded by the designated persons on the IRIS online system within 15 days of the end of the preceding calendar month for transactions.

The draft rules said that the designated persons would mark a transaction as suspicious in the IRIS online system if the person has reason to believe that the transaction or a pattern of transactions of which the transaction is a part:

(a) involves funds derived otherwise than from the business activity or assets declared to the income tax authorities;

(b) is designed to evade any requirement of the Income Tax Ordinance, 2001 or to conceal the beneficial owner or his activity.

(c) has no apparent economic or lawful purpose after examining the available facts, including the background and possible purpose of the transaction; or

(d) involves financing of terrorism, including fund collected, provided, used or meant for, or otherwise linked or related to, terrorism, terrorist acts or organization and individual concerned with terrorism.

According to the draft rules, the designated persons have also been asked to mark as suspicious transaction if the buyer or seller –

(a) frequently changes bank accounts;

(b) uses a bank account other than an account maintained in the name of beneficial owner;

(c) makes or receives payment in cash or primarily in cash; or

(d) maintains a creditor or debtor account with the designated person and instructs the designated person to adjust the balance of his account against a creditor debtor account of another buyer or seller.

November 9, 2019
FBR withdraws 3pc value addition tax on imported consumer items
ISLAMABAD: Federal Board of Revenue (FBR) has withdrawn three percent minimum value addition tax on import of consumer items on which sales tax is paid on retail basis.

The FBR on Friday issued SRO 1321(I)/2019 and amended the Twelfth Schedule of Sales Tax Act, 1990 under which three percent minimum value addition sales tax has been imposed on all imported goods subject to exclusions.

As per the amendment the FBR withdrew the imposition of minimum value addition tax on import of goods specified in the Third Schedule of the Sales Tax Act, 1990.

Following is Third Schedule to Sales Tax in which consumer items are mentioned for collection of sales tax on the basis of printed retail price:
- Fruit juices and vegetable juices.
- Ice Cream.
- Aerated waters or beverages.
- Syrups and squashes.
- Cigarettes.
- Toilet soap
- Detergents
- Shampoo
- Toothpaste
- Shaving cream
- Perfumery and cosmetics.
- Tea
- Powder drinks
- Milky drinks
- Toilet paper and tissue paper
- Spices sold in retail packing bearing brand names and trade marks
- Shoe polish and shoe cream
- Fertilizers
- Cement sold in retail packing
- Mineral/bottled water
- Household electrical goods, including air conditioners, refrigerators, deep freezers, televisions, recorders and players, electric bulbs, tube-lights, electric fans, electric irons, washing machines and telephone sets.
- Household gas appliances, including cooking range, ovens, geysers and gas heaters.
- Foam or spring mattresses and other foam products for household use.
- Paints, distempers, enamels, pigments, colours, varnishes, gums, resins, dyes, glazes, thinners, blacks, cellulose lacquers and polishes sold in retail packing
- Lubricating oils, brake fluids, transmission fluid, and other vehicular fluids sold in retail packing.
- Storage batteries excluding those sold to
- Automotive manufacturers or assemblers
- Tyres and tubes excluding those sold to automotive manufacturers or assemblers
- Motorcycles
- Auto rickshaws
- Biscuits in retail packing with brand name
- Tiles
- Auto-parts, in retail packing, excluding those sold to automotive manufacturers or assemblers.
Procedure and conditions under the Twelfth Schedule has been defined as:

(1) The sales tax on account of minimum value addition as payable under this Schedule (hereinafter referred to as value addition tax), shall be levied and collected at import stage from the importers on all taxable goods as are chargeable to tax under section 3 of the Act or any notification issued thereunder at the rate specified in the Table in addition to the tax chargeable under section 3 of the Act or a notification issued thereunder:

Prior to the latest amendment the value addition tax under this Schedule shall not be charged on:

(i) Raw materials and intermediary goods meant for use in an industrial process which are subject to customs duty at a rate less than 16% ad valorem under First Schedule to the Customs Act, 1969;

(ii) The petroleum products falling in Chapter 27 of Pakistan Customs Tariff as imported by a licensed Oil Marketing Company for sale in the country;

(iii) Registered service providers importing goods for their in-house business use for furtherance of their taxable activity and not intended for further supply;

(iv) Cellular mobile phones or satellite phones;

(v) LNG / RLNG;

(vi) Second hand and worn clothing or footwear (PCT Heading 6309.000);

(vii) Gold, in un-worked condition; and

(viii) Silver, in un-worked condition.”
November 9, 2019
FBR officials display banners against proposed layoff plan

KARACHI: The officials of Federal Board of Revenue (FBR) have protested against new reform program planned by the government, which may result in layoff in the revenue body.

The officials at the Income Tax Building Karachi on Friday displayed protest banners around the building to express their resentment against the reform plan, which can cause surpluses of staff.

The officials through banners expressed their displeasure against IMF linked policy in Pakistan.

The officials are protesting against news reports which said around 10,500 IRS officials would become surplus in the new system.

The sources in the tax office said that for the past many years the government had banned new appointment in the FBR and the many of the existing staff were on verge of retirement.

November 8, 2019
FBR proposed to collect sales tax on services

ISLAMABAD: The federal government is planning to takeover right to collect sales tax on services from the provinces as it was felt the true potential of collection was not realized.

According to minutes of the meeting chaired by the prime minister to review proposed restructuring of Federal Board of Revenue (FBR) and domestic resource mobilization, held last month, it is discussed that revenue potential of General Sales Tax (Services) is not being fully realized owing to jurisdiction issues between FBR and provincial revenue authorities.

It is also discussed that cross provincial jurisdictional and conflict of interest issues also stifles collection of GST on services.

The sales tax on services needs to be collected centrally by FBR as per rates legislated by provincial governments.

Tax proceeds of GST on services can be transferred directly to provinces as per delineated jurisdiction and share.

In this regard it is decided that a joint committee comprising representatives of ministry of finance, FBR and provincial revenue authorities would be constituted to finalize proposal for central collection of GST on Services by the FBR.

It is further decided mechanism of transfer of tax proceeds of GST on services be worked out by the ministry of finance.

It is worth mentioning that prior the 18th Amendment to the Constitutions, the FBR was collecting sales tax on services. However, after the amendment the Sindh government was the first to establish a separate entity to collect sales tax on services arising within the jurisdiction of the province.

The other provinces also followed the same and set up their revenue collecting agencies.

Experts believed that the plan of the federal government would be reversal of such transfer of rights to the provinces.

November 8, 2019
IR officers oppose proposed setup of Pakistan Revenue Authority

KARACHI: Senior officers of Inland Revenue Service (IRS) has strongly opposed the formation of planned Pakistan Revenue Authority (PRA) and said it will have negative effect on revenue collection.

The concerns were raised at a meeting of IRS Officers Association held on Thursday, which was attended by more than 120 IRS officers.

It was unanimously agreed that the officers were in support of a meaningful and transparent reforms aimed at creating a viable automated and effective revenue organization.

However, they showed their concerns over the discreetly and secretly approved haphazard reform plans which has apparently been prepared by non-service elements.

It is neither any detailed plan nor it is legal in the strict sense of the constitutional and statutory impediments in the federal setup of the country, according to a statement.

It said that the IRS is the largest service rank and is equipped with on-job training with necessary professional skills for effective tax collection given the country’s socio-economic ground realities.

The reforms in revenue or in any state body, if experimented without involving the stakeholders as well as being oblivious of the ground realities, are bound to fail.

In this backdrop, the concerns were raised that the under discussion reforms cannot be perceived to bring any betterment rather are to end up in creating confusion and uncertainty.

It would frustrated the pace of tax collection which is much needed for defence and development of the country,” it said, adding that it would also frustrate the documentation and revenue drive in place by IRS against the Benami transactions/properties, to tax assets held abroad and weaken the case of Pakistan in the FATF proceedings.

The meeting agreed that these reforms are aimed at creating a controversial authority wherein non-civil servants could be hired representing business communities and professional organization which might encourage tax avoidance and evasion instead of revenue collection.

The reforms were perceived as a kind of coup against the willing, professional, sound and hands on experienced professionals of IRS who, despite business friendly tax policies, have raised tax revenues to five times in last ten years and that too with limited / meager resources, with no financial autonomy.

They found that reforms under discussions conveyed the impression of some conspiracy hatched by non-professionals in a conniving and shabby manner which would lead to further deformation and deterioration of the service as well as the national economy.

The participants showed unflinching support and solidarity with the chief commissioners for conveying the IRS community’s concerns to the Chairman FBR during the Chief Commissioners Conference held recently in Islamabad.

Simultaneously, the house also expressed solidarity and support to the lower pay scale employees of IRS and assured them their concerns with regard to service conditions in the proposed reforms programme would be conveyed to the higher ups with the suggestion that representatives of these employees should also be made part of the consultative/inclusive process.

The meeting ended with the resolution reiterating that the IRS officers and employees are not against reforms but the process should be inclusive giving due weightage to the concerns of all the stakeholders.

November 7, 2019
FBR assigns additional charge of International Tax Operations to IRS officers

ISLAMABAD: Federal Board of Revenue (FBR) on Thursday assigned additional charge to the officers of Inland Revenue Service (IRS) posted at Automatic Exchange of Information (AEOI) Zones of the post at International Tax Operation.

The following officers of IRS BS-17-20 are assigned the additional charge of the posts mentioned against each with immediate effect and until further orders:-

01. Irshad Hussain (IRS/BS-20) is posted as CIR (AEOI Zone), Lahore has been assigned additional charge of Director, Directorate of International Tax Operations, Lahore.

02. Shakeel Ahmad Kasana (IRS/BS-20) is posted as CIR (AEOI Zone), Karachi has been assigned additional charge of Director, Directorate of International Tax Operations, Karachi.

03. Zulfiqar Ahmad (IRS/BS-20) is posted as CIR (AEOI Zone), Islamabad has been assigned additional charge of Director, Directorate of International Tax Operations, Islamabad.

04. Irfan Ali (IRS/BS-19) is posted as ADCIR (AEOI Zone), Karachi has been given additional charge of Additional Director, Directorate of International Tax Operations, Karachi.

05. Waqas Rashid Ch. (IRS/BS-19) is posted as ADCIR (AEOI Zone), Lahore has been assigned additional charge of Additional Director, Directorate of International Tax Operations, Lahore.

06. Zubair Khan (IRS/BS-18) is posted as DCIR (AEOI Zone), Lahore has been assigned additional charge of Deputy Director, Directorate of International Tax Operations, Lahore.

7. Ms. Qayyum Rani (IRS/BS-18) is posted as DCIR (AEOI Zone), Lahore has been assigned additional charge of Deputy Director, Directorate of International Tax Operations, Lahore.

08. Khurshid Alam (IRS/BS-18) is posted as DCIR (AEOI Zone), Islamabad has been assigned additional charge of Deputy Director, Directorate of International Tax Operations, Islamabad.

09.Yaser Hussain Bhutto (IRS/BS-18) is posted as DCIR (AEOI Zone), Karachi has been assigned additional charge of Deputy Director, Directorate of International Tax Operations, Karachi.

10. Imran Mehmood (IRS/BS-18) is posted as DCIR (AEOI Zone), Karachi has been assigned additional charge of Deputy Director, Directorate of International Tax Operations, Karachi.

11. Raja Israr (IRS/BS-17) is posted as ACIR (AEOI Zone), Karachi has been assigned additional charge of Assistant Director, Directorate of International Tax Operations, Karachi.

12. Zia Ahmad Butt (IRS/BS-17) is posted as ACIR (AEOI Zone), Islamabad has been assigned additional charge of Assistant Director, Directorate of International Tax Operations, Islamabad.

November 7, 2019
FBR allows raids against unregistered manufacturers, suppliers

ISLAMABAD: Federal Board of Revenue (FBR) has given go ahead to directorate of intelligence and investigation for conducting raids against manufacturers and suppliers not registered under sales tax laws.

In this regard the Directorate of Intelligence and Investigation, Inland Revenue carried out raids against three unregistered units in Gujranwala, said a statement issued by Federal Board of Revenue (FBR) on Thursday.

The statement said that in continuation of a drive against un-registered persons involved in making taxable supplies who are liable to be registered under the Sales Tax Act, 1990, the Directorate of Intelligence and Investigation-Inland Revenue, Lahore has carried out action under Section 38 and 40 of the Sales Tax Act, 1990 after obtaining search warrants from the Area magistrate against the manufacturing/business premises of three un-registered units in Gujranwala on November 05, 2019.

The three unregistered units were involved in manufacture and supply of taxable goods i.e. sanitary ware, detergents and household gas appliances.

During the search carried out available record was resumed which is under scrutiny and further investigation in this regard is underway.

“The Directorate General Intelligence and Investigation-Inland Revenue shall continue such operations in order to unearth unregistered units/businesses which are making taxable supplies without payment of due amount of sales tax and causing huge loss to the national exchequer,” the FBR said.

November 7, 2019
Import of used vehicles: changes to payment of duty, taxes approved

ISLAMABAD: The government has approved changes to payment of duty and taxes system for clearance of used vehicles, which are allowed to import under three different schemes.

The Economic Coordination Committee (ECC) of the Cabinet on Wednesday on a proposal by the Commerce Division, took up the import of used vehicles under personal baggage, transfer of residence and gift schemes which require the payment of duties and taxes to be paid out of foreign exchange arranged by Pakistani nationals themselves or local recipients producing proof of conversion of foreign remittance to local currency, and allowed the importers to meet any shortfall in arrangement of required foreign remittance for payment of duties and taxes through local sources in case of a scenario where the Pak rupee depreciates or government increases the import duties and/or taxes after the receipt of remittance and before the filing of the good declaration, which results in shortfall of remitted amount vis-a-vis payable duties and taxes.

The ECC decision would help clear up a total of 1017 vehicles currently stuck at Karachi port because either no foreign remittance had been received or the remitted amount had been rendered insufficient due to depreciation of PKR before the filing or goods declaration or increase in the rate of duty in the Finance Act 2019.

On another proposal by the Commerce Division, the ECC accorded ex-post approval to an SRO issued by Commerce Division on August 21, 2019 for extending till August 31, 2019 the implementation of quality standards on the import of solar PV equipment into Pakistan under an SRO issued by the Commerce Division on May 28, 2019.

The Commerce Division had issued the SRO in late August following instructions from the Prime Minister to resolve the issue of several containers stuck up at ports due to lack of clarity amongst stakeholders, pre-shipment companies and border agencies regarding documents required for observance and implementation of the quality standards introduced on May 28, 2019 as per a decision of the federal cabinet.

November 7, 2019
FBR officials, taxpayers interaction restricted to Bar Code based communication

ISLAMABAD: Tax officials have been restricted taxpayers interaction to barcode-based communication only, officials said on Tuesday.

The Federal Board of Revenue (FBR) has imposed a bar on officials of Inland Revenue and Pakistan Customs for direct communication with taxpayers effective from November 01, 2019.

However, the FBR authorized the officials to communicate taxpayers in legal notice or official communication with QR code/Bar code or any other code/manner prescribed under the law.

The FBR issued an official memorandum on October 28, 2019 prohibiting officials for personal interaction with taxpayers/business.

The FBR said that in view of prevailing perception of the FBR and also in order to do away with fake communication from some quarters and order to build confidence level of taxpayers, it has been decided that no officer/official of the FBR Headquarters or its field formation will contact with any taxpayer or businessman in any form i.e. physical visit, telephonic / mobile calls, SMS or email etc. except when legally authorized to do so, which in every case is to be a legal notice or official communication with QR code/Bar code or any other code/manner as may be prescribed under the law.

“This policy shall come into force from November 01, 2019 and any officer/official found indulged in such activity shall be proceeded against strictly under the Government Servants (Conduct) Rules, 1964 read with Government Servants (E&D) Rules, 1973.”

These directions shall apply to all formations of FBR being Inland Revenue (Income Tax, Sales Tax and Federal Excise Duty) and Customs.

Taxpayers, business community and trade bodies have been asked to assist in implementing the policy by reporting to FBR any contravention of these directions.

The FBR circulated this memorandum to heads of departments, included: Members (FBR); Chief Commissioner (Inland Revenue); Chief Collectors (Customs); Director General (Inland Revenue); and Director General (Customs).

November 5, 2019