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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.

  • Taxpayers can make payment in installments

    Taxpayers can make payment in installments

    KARACHI: Taxpayers have option to pay due liability in installments on explaining plausible reasons to the concerned Commissioner of Inland Revenue.

    Sources in Federal Board of Revenue (FBR) Monday said that the tax payable by a taxpayer on the taxable income of the taxpayer including the tax payable under section 113 or 113A of Income Tax Ordinance, 2001 for a tax year shall be due on the due date for furnishing the taxpayer’s return of income for that year.

    However, where any tax is payable under an assessment order or an amended assessment order or any other order issued by the commissioner under the Ordinance, a notice shall be served upon the taxpayer in the prescribed form specifying the amount payable and thereupon the sum so specified shall be paid within thirty days from the date of service of the notice:

    Provided that the due date for payment of tax payable under sub- section (7) of section 147 shall be the date specified in sub-section (5) or sub-section (5A) or first proviso to sub-section (5B) of section 147.

    “Upon written application by a taxpayer, the Commissioner may, where good cause is shown, grant the taxpayer an extension of time for payment of tax due under sub-section (2) or allow the taxpayer to pay such tax in instalments of equal or varying amounts as the Commissioner may determine having regard to the circumstances of the case.”

    Where a taxpayer is permitted to pay tax by instalments and the taxpayer defaults in payment of any instalments, the whole balance of the tax outstanding shall become immediately payable.

    The grant of an extension of time to pay tax due or the grant of permission to pay tax due by instalments shall not preclude the liability for default surcharge arising under section 205 from the due date of the tax under sub-section (2).

  • FBR withdraws 40% regulatory duty on sugar import

    FBR withdraws 40% regulatory duty on sugar import

    ISLAMABAD: The government has withdrawn 40 percent regulatory duty on import of sugar and sugar products.

    The FBR issued SRO 127(I)/2020 dated February 24, 2020 to withdraw the regulatory duty of 40 percent on import of commodities falling under Customs Harmonized Code Chapter of 17.01.

    The government imposed 40 percent regulatory duty on import of sugar through SRO 680(I)/2019.

    However, through the latest SRO 127(I)/2020 the regulatory duty has been withdrawn.

    It is worth mentioning that the recently the retail prices in the local markets surged abnormally. Some quarters had suggested the government to import the commodity to meeting the local demand and discourage hoarding.

    However, the Economic Coordination Committee in its latest meeting had rejected the proposal to import sugar as sufficient quantity was available in the country.

    Industry sources said that importers would able to import sugar from international market without levy of regulatory duty.

  • How to check ATL status?

    How to check ATL status?

    KARACHI: Appearance of name on active taxpayers list (ATL) has become very important especially after the introduction of 10th Schedule to Income Tax Ordinance, 2001 through Finance Act, 2019.

    The filing of income tax return is mandatory for persons driving taxable income or specified under Section 114 of Income Tax Ordinance, 2001.

    The appearance of names on the ATL is only possible after filing income tax returns within due date. In case persons are not on the ATL then the rate of withholding tax shall be increased by 100 percent on various transactions.

    Persons fail to file their returns by due date but file after the date will also not qualify to enlist their name on the ATL until fine is not paid to the Federal Board of Revenue (FBR).

    Currently the ATL is in applicable on the basis of income tax returns filed for tax year 2018. The FBR will issue new ATL on the basis of returns filed for tax year 2019 on March 01, 2020.

    The last date for filing of income tax returns for tax year 2019 is February 28, 2020. The new ATL shall carry the names of those taxpayers who filed their income tax returns up to February 28, 2020.

    A taxpayer should check his/her status on the ATL before making transactions in order to avail reduced rate of tax rates.

    CHECK ACTIVE TAXPAYER STATUS

    Active Taxpayer status can be checked in the following three (3) ways:

    VERIFICATION THROUGH ONLINE PORTAL

    The ATL status check allows you to confirm your Active Taxpayer status.

    CHECK ACTIVE TAXPAYER STATUS BY SMS

    Check Individual’s Active Taxpayer status by SMS through the following procedure:

    Type “ATL (space) 13 digits Computerized National Identity Card (CNIC)” and send to 9966.

    Check Active Taxpayer status of AOP and Company by SMS through the following procedure:

    Type “ATL (space) 7 digits National Tax Number (NTN)” and send to 9966.

    Check AJ&K Active Taxpayer status by SMS through the following procedure:

    For Individual, type AJKATL (space) CNIC (without dashes). Send it to 9966.

    Having NTN AJKATL (space) 11 digit NTN (without dashes). Send it to 9966.

    CHECK ACTIVE TAXPAYER STATUS BY DOWNLOADING ATL

    You can also download ATL from:

    Active Taxpayer List (Income Tax)

    The Active Tax Payer’s List of AJK is to be considered at par with the ATL (Income Tax) after amendment in the Income Tax Ordinance 2001 through Finance Act 2018.

  • No service charges allowed for collecting withholding tax

    No service charges allowed for collecting withholding tax

    KARACHI: Federal Board of Revenue (FBR) has not allowed deduction of service charges by withholding agents for collecting/deducing withholding tax on behalf of the federal tax authority.

    According to an official document, under the Income Tax Ordinance, 2001 the withholding agents are not entitled to receive any service charges for collection or deduction of tax as a withholding agent.

    However, it has been noticed that certain withholding agents including provincial governments and other autonomous organizations are claiming service charges for acting as withholding agents.

    In order to expressly disallow such claims, new sub-section (6) and (7) have been inserted in section 168 which provides that notwithstanding anything contained in any other law or any rules, for the time being in force, no amount is to be deducted on account of service charges from the tax withheld or collected by any person under the provisions of this Ordinance.

    As provided in sub-section (7) in case any amount is deducted on account of service charges by the person, the said person will be liable to pay this amount to the Federal Government and all the provisions of the Ordinance shall apply in so far as they apply to the recovery of tax.

  • Commercial importers, traders require filing annual returns, maintain complete record

    Commercial importers, traders require filing annual returns, maintain complete record

    KARACHI: Commercial importers and individual traders are required to file income tax return and maintain complete records of transactions, a tax analyst said.

    Murtaza Qurban, Executive Manager, EY Ford Rhodes highlighted the application of minimum tax on commercial importers and individual traders in an event recently organized by Karachi Tax Bar Association (KTBA).

    He said that commercial importers / traders are now required to prepare financial statements / accounts. Further filing of return of income is also mandatory instead of statement under section 115 of Income Tax Ordinance, 2001.

    Maintenance of proper and complete records (earlier no expense was being claimed therefore there was no risk of disallowance of expenses), he said.

    The tax authorities may raise questions regarding transfer pricing (earlier tax paid on assessed value of goods was final tax – largely applicable on multinationals). While, payment of advance tax under section 147 in respect will also applicable, he added.

    H e said that the Finance Act, 2019, however, again introduced amendments through which tax collection at import stage is made minimum tax instead of final tax. As a result of this change, Commercial Importers are now required to compute their financial results for comparison of tax on profits with minimum tax.

    He said that sale by commercial Importer would still not be subject to withholding tax in terms of section 153(5) where tax at import stage has already been collected.
    Two regimes of minimum tax would be applicable:

    Under section 113

    Under section 148

    If minimum tax liability under 148 > minimum tax liability under 113 > tax liability under Normal Tax Regime. Carry forward of minimum tax under 113 would be available, he questioned.

    Alternative Corporate Tax would also be applicable. Thereafter, carryforward under ACT will be available, if ACT under section 113C is > minimum tax under section 148, he further questioned?

    Similar to the implications as discussed above, contractors and service providers would also be required to prepare financial statements / accounts and file return of income.

    However, one major problem that is being faced is that since tax deductible under section 153(1)(b) and (c) is minimum tax, whether it would be computed on actual receipts or its accrual would also entail such income to be offered under MTR. Specially in case of companies, where accrual method of accounting is mandatorily followed, he said.

    If tax under MTR is worked out on accrual basis, actual receipts would also be subjected to withholding of tax, which would not be refundable being minimum tax. In other words, such tax may be lapsed if income in subsequent year is less than the prior year, he added.

  • FBR starts examining incomes of debt, credit card holders

    FBR starts examining incomes of debt, credit card holders

    ISLAMABAD: Federal Board of Revenue (FBR) has started examining incomes of persons making payments through debt and credit cards.

    Sources in the FBR said that banks had provided details of persons, who made payments through debit and credit cards above Rs200,000 in a month.

    The banks have provided information of transactions made through payment cards during July 01 – December 31, 2019.

    The sources said that the banks are required to file bi-annual statement included a list of payments made by any person against bills raised in respect of a credit card issued to that person, aggregating to rupees two hundred thousand or more during the preceding calendar month.

    The banks are also provide of withholding tax deducted on persons remitting amounts abroad through credit or debit or prepaid cards.

    According to Section 236Y of Income Tax Ordinance, 2001, every banking company shall collect advance tax at the rate of one percent at the time of transfer of any sum remitted outside Pakistan, on behalf of any person who has completed a credit card transaction, a debt card transaction, or a prepaid card transaction with a person outside Pakistan.

    The tax collected under this head is adjustable against the payable tax by a person filing income tax return.

  • Customs stops export consignments of onion after ban decision

    Customs stops export consignments of onion after ban decision

    KARACHI: Pakistan Customs stopped export consignments of onion to comply with government decision to impose ban on the vegetable to meet local demand.

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  • FBR considers transfer back customs officials

    FBR considers transfer back customs officials

    The Federal Board of Revenue (FBR) is actively reviewing requests for the transfer back of Pakistan Customs officials who were posted to outstations in 2019. This move comes in response to a significant number of appeals submitted by affected officials over the years.

    (more…)
  • FBR chairperson to inaugurate International Tax Operations directorate on Feb 22

    FBR chairperson to inaugurate International Tax Operations directorate on Feb 22

    KARACHI: Ms. Nausheen Amjad, Chairperson, Federal Board of Revenue (FBR) will inaugurate directorate of international tax operations in Karachi on Saturday February 22, 2020.

    Member Inland Revenue (IR) and Director General Offshore Taxation will also accompany the FBR chairperson.

    Office of the Directorate of International Tax Operation Karachi (Sindh) located at PNSC building.

    The directorate of international tax operations has mandate to receive and send information from other jurisdictions under spontaneous, automatic and on demand exchange of information under exchange of information agreements.

    The directorate has been authorized to levy and recover tax by passing an assessment order under section I23 (1A) of Income Tax Ordinance, 2001 in case of undeclared off-shore assets and incomes.

    It has also been authorized to receive, transmit and exchange country reports to the jurisdictions that are parties to international by country agreements with Pakistan.

    Further the FBR has empowered the directorate to conduct transfer pricing audit in cases selected for such audit.

  • Audit cases should be assigned to tax officials on basis of skills

    Audit cases should be assigned to tax officials on basis of skills

    KARACHI: Tax managers have suggested that audit cases should be assigned to tax officials on the basis of skills and experience.

    “Cases should be assigned on the basis of skill and experience of the officers as it reduces no change monitoring and enhance productivity,” according to an official document on monitoring of withholding taxes.

    If a pre-monitoring analysis is conducted by the officers, they will be in a position to ascertain the true potential of specific cases, sectors and their overall impact on the revenue generating activities of the department.

    For this purpose, they should examine:

    — nature and extent of business entities;

    — past compliance behaviour, tax fraud activities;

    — group activities as to compliance of tax laws;

    — results of previous monitoring and tax audits by the Income Tax and the Sales Tax departments;

    — overall declarations and amended Returns, etc, penalties, refunds and corporate status can give a good guidance for selection or otherwise of a case for detailed monitoring of withholding taxes;

    — Past information about surveys and special/sectoral studies can also be helpful;

    — Taxpayer’s complete particulars are important for follow-up;

    For the sake of transparency, it is always good for the tax department to state the following;

    — Scope of the monitoring process;

    — Process to be followed by the departmental officers for monitoring of a specific case;

    — The taxpayers should be informed as to how they will be contacted;

    — How the case is to be discussed and who will represent the department;

    — How the record will be examined;

    — How to convey the findings of the examination/discussions on the cases to the taxpayers;

    — Mechanism for submitting replies by the taxpayers;

    — Writing the reports about monitoring; and

    — To determine future course of action under the relevant provisions of law in the light of the findings of the report, wherever requiring further action.