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.

  • SRB suspends sales tax registration of Wateen Telecom

    SRB suspends sales tax registration of Wateen Telecom

    The Sindh Revenue Board (SRB) has suspended the sales tax registration of Wateen Telecom Limited due to the company’s failure to remit collected sales tax to the provincial treasury. The decision came after an audit revealed significant lapses in tax payments by the telecom provider.

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  • Late return filers may get ATL status after payment of surcharge

    Late return filers may get ATL status after payment of surcharge

    ISLAMABAD: Persons, who fail to file their income tax return by due date, may be included into the Active Taxpayers List (ATL) after payment of surcharge.

    Inclusion in ATL is mandatory to avail reduced rate of withholding tax. Through Finance Act, 2019 the rates of withholding tax have been increased 100 percent for those persons who have either failed to file annual return or filed return after due date.

    This means only those individuals or companies will get ATL status who filed their annual income tax returns by due date.

    The FBR said that a person’s name will be part of the current ATL, if the Tax Return filed pertains to the Tax year of the relevant ATL.

    For example, to be part of the ATL published on 1st March 2018, a person must have filed a Tax return for the Tax year 2017.

    Similarly, to be a part of the ATL published on 1st March 2019, a person must have filed a Tax Return for the Tax year 2018.

    Restriction on including a person’s name on ATL, if the person has not filed Tax Return by the due date specified by Income tax authorities was introduced through Finance Act, 2018.

    For example, to be part of the ATL published on 1st March 2019, a person must file a Tax Return by the specified due date for the Tax year 2018.

    However, through Finance Act, 2019 a person’s name can be part of ATL, even if the person has filed Tax Return after the due date specified by Income Tax authorities.

    Furthermore, a surcharge for placement on ATL after due date of filing of Tax Return will be charged as under:

    Company Rs20,000

    Association of Persons: Rs10,000

    Individuals: Rs1,000

    The FBR said a that company or an AOP shall be included in the ATL, whose return is not to be filed due to incorporation or formation after 30th day of June relevant to the Tax year pertaining to the ATL.

    Joint account holders as an entity shall be deemed to be part of ATL if any of the persons in the joint account have met the criteria of being included in the ATL.

    Bank account held in the name of a minor shall be considered part of ATL if the parents, guardians of the minor or any person who has deposited money in minor’s account are deemed to have met the criteria of being included in the ATL.

    The FBR said that the late filers of Income Tax Return for Tax Year 2018 can pay “Surcharge for ATL” as defined under section 182(A) of Income Tax Ordinance 2001 by clicking on Tax Payment Nature “Misc” head in the PSID.

    Only after the payment of surcharge will the name of the late filer become part of ATL.

  • FBR launches simplified wizard for income tax return filing

    FBR launches simplified wizard for income tax return filing

    KARACHI: Federal Board of Revenue (FBR) has introduced a simplified wizard based income tax return filing mechanism to its Tax Asaan mobile application.

    This feature will help taxpayer to proceed step by step utilizing interactive questions for return filing, even familiarizing the taxpayer with the various issues related to tax and giving the best possible experience to file IT Return.

    The FBR said that the wizard based solution takes care of Salaried Individual Income Tax Return for resident/non-Resident taxpayers.

    The mobile application enables the taxpayer to draft the return offline giving them freedom and flexibility to file their return at their own convenience anywhere and at any time however to perform calculations and in order to submit the IT Return, internet connectivity is required by the application.

    The FBR said that Tax Asaan is available for both Android and iOS platforms for free download and gets installed on one tap. Once installed, you can find the application icon under your mobile Apps list. Simply tap on the application icon to get started and view the home screen as shown below:

    Signing On

    “Income Tax Return’ module can only be used after successful login. Registered user can Sign-In to application by using their valid account credentials to file Income Tax Return.

    Following are the steps to login/Sign-In Tax Asaan mobile application:

    Click on the hamburger button provided on the top right corner of the home screen to view the main menu. The application will load a left panel with list of all available features along with the option to sign-in.

    Tap on “Sign in” option from the left panel to navigate to the Sign in screen as shown below:

    Enter “User Name” and “Password” then click on Login button to sign in as shown below:

    Please note that you will need to use Login ID and Password as that of Iris. If you are not registered with FBR on Iris then use Iris Web portal for New Registration.

    Income Tax Return

    On successful sign in, the registered user name will appear on left panel replacing the “Sign In” option along with the available option of “Income Tax Return” for the signed in user as shown below:

    User can reach Income Tax Return page either from click on “Income tax Return” menu option from the left panel or can directly click on “Income Tax Return” tile from main dashboard as shown below:

    Income Tax Return for Resident Pakistani Taxpayers
    After successful login to Tax Asaan mobile application, follow these easy steps to file Income Tax Return:

    Tap on Income Tax Return tab, Application will redirect user on Income Tax Return year selection page as shown below:

    Click on any of the provided Tax year options shown on the screen to file income tax return for the selected tax year. Application will mark the tax year selection by highlighting the tax year and will redirect user on resident status screen as shown below:

    Click on “Resident” (or “Non-Resident”) tile to select the desired category, application will load sources of income page as residence status selection as shown below:

    To enter data under relevant source of income click on desired source tile i.e. “I have salary” as shown below:

    [Please note that in case no source of income or to skip this step enable the check provided as “I don’t have any source of income” and click continue to move to next step.]

    As soon as taxpayer click on any of the provided source of income options, the application will redirect taxpayer on data entry page of selected source as shown below:

    Enter details in provided fields and click “Ok”, application will save provided data and redirect user back to source of income page. You can add data against multiple source of income by repeating the same process and selecting each source of income one by one. Once you add data under any source of income, the application will load edit and delete option to modify or remove the data entered under that category / source as shown below:

    To edit data added under the specific source of income click on edit button, the application will redirect taxpayer on edit source of income information page. Similarly you can edit or delete specific records under the source by using the edit option provided in front of each record added as shown below:

    To delete all information under a specific source of income click on delete button as shown below, the application will remove all records added under the selected source.

    [Please note that the system will not show edit/delete buttons for a source if there is NO record added under the selected category.]

    After adding all information for the source of income click on “continue” button to move on next step for return filing as shown below:

    [Please note that you can go back to previous step i.e. source of income page by using back button.]

    Next step after adding source of income is to add Tax deductions. Click on desired option to enter tax deductions detail as shown below:

    Application will redirect user on details page of selected tax deduction option i.e. Vehicle Token as shown below:

    Add details of tax deduction under selected option. You can click on “Add Another” button to add multiple records. After adding details click on “Back” button to go back to the tax deductions main page. You can add data against multiple tax deduction options by repeating the same steps. you can click on “Save and Back” button to move back to Tax Deductions page.

    After adding all details under tax deductions, click on “Continue” button to move on to the next step for filing tax return as shown below:

    Application will redirect user on “Wealth Statement” page as shown below:

    Tap on Assets icon, Application will redirect the tax payer to Assets Declaration page as shown below:

    Click on “Net Assets Previous Years” icon to enter net worth of your Assets for previous years, the application will open following page:

    Enter Net amount (in PKR) of previous year assets in provided field for Amount.

    Click on OK button to add the amount, the application will redirect taxpayer back to assets declaration screen.

    Edit and Delete buttons will now appear below “Net Assets Previous Years” icon as shown below:

    In order to edit the saved details click on Edit Button below Net Assets Previous Years icon the application will redirect tax payer to Edit Net Assets Previous Years page.

    Edit the amount as needed and to save the updates click on OK button.

    To cancel the updated details click on Cancel Button.

    To delete all the saved details click on Delete button below Net Assets Previous Years icon.

    Click on Inflows icon to enter net worth of your Assets for current year, the application will open following page:

    Enter Net amount (in PKR) of Inflows in Text field labelled Amount.

    Click on OK button to add the amount, the application will redirect taxpayer back to assets declaration screen.

    Just like “Assets” click on “Expenses” icon to add details of expenses as shown below:

    Application will redirect user on add expenses page. Add the total amount of expenses for the selected Tax year and click “OK” button to save the value as shown below:

    After adding details of Assets and expenses, click on Continue button to reconcile assets. Application will load reconciliation page as shown below:

    [Please note that if application load reconciliation error then click on back button to edit and correct assets record in order to remove error and process again.]

    On successful reconciliation, click on continue button to move to next step for filing return. Application will redirect user on declaration screen as shown below:

    Click on “Submit” button to submit return. Please note that once submitted, you will not be able to do any further modification in return. On successfully submitting return application will redirect user on return summary report with a success message as shown below:

    You can also view the summary at any stage (during Return preparation) by Clicking the icon.

    Income Tax Return for Non-Resident Pakistani Taxpayers

    To file Income Tax Return as Non-resident taxpayer, the process of return filing will remain same as of resident taxpayer. Only the tax payer has to select the option as “Non-resident” from the application screen after selection of Tax Year as shown below:

    [Please note the all steps of return filing are pre-configured and will appear accordingly as per user’s selected option.]

    View Income Tax Return Summary

    Tax payer can view the summary of all entered information in income tax return at any time or step during the return filing process. To view return summary, click on the expand options icon on top left corner of the screen as shown below:

    Attach Payments

    In case the taxpayer has some income tax due i.e. payable at the time of reconciling Assets, then application will redirect user on “Attach Payments” screen before submitting the return as shown below:

    Taxpayer can attach multiple CPRs against the due amount however application will only allow taxpayer to submit return after attaching CPRs equivalent or greater than the due tax amount.

    Special Instructions for ERROR Correction

    In case user is unable to view all menu options in left panel or only “Sign In” option is listed in left panel then there must be some issue with the internet connectivity. To resolve this error, check internet connectivity and Close and Re-Run Tax Asaan mobile application.

    Reporting

    This system does not support any reporting capability right now however users can only view information specific to provided NTN/Registration Numbers as per available inquiry features in Tax Asaan mobile application.

  • Income tax return filing must for person owns above 1000CC motor vehicle

    Income tax return filing must for person owns above 1000CC motor vehicle

    KARACHI: A person owns a motor vehicles having engine capacity above 1000CC is mandatorily required to filing of income tax return for tax year 2019.

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  • Persons committing fiscal fraud liable to 10 years jail under Customs laws

    Persons committing fiscal fraud liable to 10 years jail under Customs laws

    KARACHI: A person is liable to jail punishment up to 10 years in case of committing fiscal fraud under Customs Act, 1969.

    The Federal Board of Revenue (FBR) recently updated Customs Act, 1969 under which if a person commits and offence of fiscal fraud under Section 32A of the Act then such person is liable to penalty and imprisonment.

    According to the Customs Act, 1969:

    If any person commits an offence under section 32A such person shall be liable to a penalty not exceeding three times the value of the goods in respect of which such offence is committed and such goods shall also be liable to confiscation and upon conviction by a Special Judge he shall further be liable to imprisonment for a term which may extend to ten years but shall not be less than five years or to fine, or to both.

    The act explained the fiscal fraud as:

    32A. Fiscal fraud.- (1) If any person, in connection with any matter related to customs-

    (a) causes to submit documents including those filed electronically, which are concocted, altered, mutilated, false, forged, tempered or counterfeit to a functionary of customs;

    (b) declares in the goods declaration electronically filed customs declaration, the name and address of any exporter or importer which is physically non-existent at the given address;

    (c) declares in the goods declaration electronically filed customs declaration, an untrue information regarding payment of duties and taxes through self-assessment, description, quantity, quality, origin and value of goods;
    (d) alters, mutilates or suppresses any finding of the customs functionary on any document or in the computerized record; or (e) attempts, abets or connives in any action mentioned in clauses (a), (b), (c) and (d) above, he shall be guilty of an offence under this section.

    (2) Where, by any reason as referred to in sub-section (1) as aforesaid, any duty or tax charged or fee or fine and penalty levied under any provision of law has not been levied or has been short levied or has been refunded, the person liable to pay any amount on that account shall be served with a notice within a period of 180 days of the date of detection of such custom duty and tax fraud, requiring him to show cause as to why he should not pay the amount specified in the notice along with any other amount imposed as fine or penalty under the provisions of this Act.

    (3) The appropriate Adjudicating Officer, after considering the written or verbal representation of such person, may determine the amount of duty or tax chargeable or fee payable by such person which shall in no case exceed the amount specified in the notice and such person shall pay the amount so determined besides the fine or penalty or both.

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  • Filing wealth statement mandatory along with annual return for Tax Year 2019

    Filing wealth statement mandatory along with annual return for Tax Year 2019

    KARACHI: The filing of wealth statement has been made mandatory for persons filing annual income tax return for tax year 2019.

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  • FBR notifies adjudication benches for Benami cases

    FBR notifies adjudication benches for Benami cases

    The Federal Board of Revenue (FBR) has taken a decisive step in addressing Benami cases by establishing dedicated adjudication benches in three major cities across the country.

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  • Customs officers authorized business access for audit

    Customs officers authorized business access for audit

    KARACHI: Customs officers have been authorized under customs laws to enter business premises to access records necessary for the purpose of audit.

    Federal Board of Revenue (FBR) issued Customs Act, 1969 updated up to June 30, 2019 incorporating amendments introduced through Finance Act, 2019.

    The Section 26B of the Act authorizes customs officers to access record for the purpose of audit.

    Section 26B: Access for the purposes of audit.-

    Sub-Section (1): The appropriate officer of Customs, after giving a notice in writing specifying the date of visit, shall have access to business or manufacturing premises, registered office or any other place where any goods, stocks, documents or records relating to the ongoing audit are kept or maintained. Such officer may inspect the goods, stocks, documents, records, data, correspondence, accounts, statements, utility bills, bank statements, information regarding nature and sources of funds or assets with which his business is financed, and any other records or documents required under any Federal or Provincial laws, maintained in any form or mode. Such an officer may take into his custody such documents, records or any part thereof, in such form as he may deem fit, against a signed receipt.

    Sub-Section (2): In all cases, except where it would defeat the purpose of the audit, a reasonable advance notice regarding a visit shall be given to the person concerned.

    Sub-Section (3): Whosoever causes any obstruction or fails to provide any documents, record, statement etc, as required under subsection (1), with an intention to defeat the purpose of the Act by way of destroying, altering or concealing any books, documents or records required to be maintained under this Act, shall be guilty of an offence under this section.

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  • KTBA highlights glitches, lacunas in income tax return forms

    KTBA highlights glitches, lacunas in income tax return forms

    KARACHI: Karachi Tax Bar Association (KTBA) on Friday pointed out glitches and lacunas in income tax return forms which resulted in difficulties in filing tax returns for tax year 2019

    The tax bar wrote a letter to the chairman of Federal Board of Revenue (FBR) regarding its previous communication on August 27, 2019 about the draft income tax return forms for for individuals and AOPs for the tax year 2019 were issued on August 23rd, 2019 through SRO 951 of 2019.

    Through our above letter we communicated our serious concern as to the shortage of time period allowed in terms of number of days, for going through the entire SRO which contained 56 pages of returns of income and their annexures, which were only seven days and that too were issued in the evening of Friday followed by Saturday and Sunday, the next days.

    The shortage of time was coupled with the fundamental drawback, which was also duly highlighted in our above referred correspondence that the return forms were neither issued in offline/demo mode, with the formulas, nor in the Excel format, at the least, so as to enable the user to have any clue as to what changes have actually been made.

    “This, you [FBR chairman] would appreciate can only be done by feeding the data in the forms so as to evaluate whether the form is correctly performing the computation/ working out the income and the tax liability.”

    It is an admitted norm that where suggestions are genuinely intended to be solicited, these are facilitated not only in terms of ample time but in the right desired format as well, which the Bar and its members have been deprived of completely this year.

    The forms were not rolled out either in Excel form or on the IRIS till the last day.

    Despite our genuine request what came out as a startling fact that the Draft Returns were finalized on the eve of September 02, 2019 through SRO 979 of 2019, without any modicum of change, let alone any suggestion.

    Up till now since the issuance of the forms, more than seventeen (17) days have been passed on and it is now not a much unknown fact that return forms are filled with glitches and lacunas, which are factually deterring any bona fide filing of a tax return by an individual, whether Salaried or Business; resident or a non-resident.

    Needless to mention that Individuals constitute the largest class of tax filers out of 2.5 million club of taxpayers.

    Few of these flaws are being narrated hereunder for your necessary attention as filing of tax returns has been seriously jeopardized by these anomalies:

    i. Statement of Final Taxation for Individuals, Salaried Individuals and AOPs is not accompanied with Wealth Statement, which is a separate requirement under Section 116 of the Income Tax Ordinance, 2001;

    ii. Non-residents are not required to file Wealth Statement. On the other hand, the IRIS is invalidating their filing at the portal without a Wealth Statement;

    iii. The IRIS is also asking for details of Personal Expenses in cases of Non-resident, without which the return cannot be submitted.

    iv. Tax Return of a Salaried Individual contains only Reconciliation of Wealth without any details of assets/ Wealth Statement which is not in accordance with Section 116 of the Ordinance;

    v. In the Wealth Reconciliation which is accompanied with the Tax return, the detail from the last year Amnesty is being included in the inflows of the total. All those who filed Asset Declaration last year are now unable to file return as of now.

    vi. Person who is required to file statement under Section 115(4) of the Ordinance has no option left to file Wealth Statement as no separate tab is appearing in IRIS module.

    vii. There is a single field/ column for foreign income only contrary to the requirements of section 103(8) read with section104 of the Ordinance that provides computation of foreign income/ loss and adjustment and carry forward of losses;

    viii. There is no option to declare foreign income with their respective heads of income and instead only figure sums it all which does not give the fair picture of the foreign income;

    ix. Tax on income from Bahbood Certificates/ Pensioners Benefit account is not being properly worked out.

    x. There is no provision for adjustment or claim of capital loss in return form after NCCPL issues the annual certificate

    Besides the above lacunas, what needs emphasis here is that legal and permissible time period for filing a return is 90 days under section 118 of the Ordinance, while on the contrary, only 27 days have been given here between September 2nd and September 30, 2019.

    The tax bar said that the obnoxious condition imposed on them September 5, 2019 vide C.No.2(I)Cond./I.Tax/2018 dated September 05, 2019 whereby the instruction was given to the Commissioners to ensure the payment of due tax before allowing any extension.

    “It means the taxpayer has to pay for the income tax first if one has to apply for extension, beyond the dead line of September 30th, 2019 which he should not be needed to beg for in the first place. It is not only a disgrace to a bonafide taxpayer to succumb to an unwarranted condition of tax payment but also tantamounts to make him suffer through the encroachment in his legal space under the Ordinance, which allows him necessary time period to file his return of income with respect and without getting his legal right vitiated. It need not to be emphasized that the Commissioner is otherwise independently empowered to grant extension to a taxpayer in terms of section 119(3) of the Ordinance if such a request is made to him without regard to any instructions from the Board.”

    At the same time, the bar is cognizant of the fact the FBR’s campaign to increase the number of returns/ compliant taxpayers should not be sabotaged merely on the ground of short time period given firstly to understand the forms and again to file the returns of income.

    It is, therefore, all befitting that the due number of days, which are ninety (90) from the issuance date of the final return forms are allowed to the taxpayers and is not compromised on any pretext.

  • Sales tax registration made mandatory for buyers of ginned cotton

    Sales tax registration made mandatory for buyers of ginned cotton

    ISLAMABAD: Federal Board of Revenue (FBR) has made sales tax registration mandatory for persons buying ginned cotton.

    The FBR issued SRO 1087(I)/2019 and said that the person receiving ginned cotton shall pay sales tax and shall discharged the liability in the following manner:

    (a) the recipient of the supply of ginned cotton shall be duly registered under the Sales Tax Act, 1990, and the ginner shall not make any supply of ginned cotton to any person who is not so registered;

    (b) the ginner shall issue a tax invoice on the supply of taxable goods under Section 23 of the Sales Tax Act, 1990 indicating the value of taxable supply and the amount of tax due on such supply, along with other particulars as prescribed therein. The ginner shall also file the monthly return in accordance with the rules prescribed under the Act;

    (c) the tax invoice shall be issued of the date on which the ginned cotton was dispatched;

    (d) the recipient of ginned cotton shall deposit the tax due thereon under a payment challan indicating the name and registration number of supplier, along with the return for tax period in which invoice is issued for the relevant supply;

    (e) if the recipient fails to deposit sales tax payable on ginned cotton purchased by him by the due date for the relevant tax period, besides any other action which may be taken against him under the said Act, he shall not be entitled to claim adjustment or refund of input tax in respect of such purchase unless he pays the amount of additional tax or penalties chargeable on such late deposit under Section 33 and 34 of the said Act;

    (f) in case the ginner fails to declare the supply of ginned cotton in his return and same is detected during the course of an audit or otherwise, the amount due on such supply shall be recoverable from the ginner in accordance with the provisions of the said Act and the rules made thereunder;

    (g) the cases involving non-payment or short-payment of sales tax by a ginner or a recipient on supplies of ginned cotton made under the provisions of this notification shall be adjudicated by the officer having jurisdiction in the area where the contravention is made; and

    (h) in case a ginner deposits the tax due on the supply of ginned cotton, the same shall absolve the recipient from liability to pay tax on such supply under this notification.