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  • CNIC condition not to apply on purchases by end consumers

    CNIC condition not to apply on purchases by end consumers

    KARACHI: The requirement of Computerized National Identity Card (CNIC) is not applicable on purchases above Rs50,000 made by end consumers, tax officials said on Friday.

    They said that the condition of CNIC will be applicable from February 01, 2020 on sales by registered persons to unregistered persons.

    Every registered person is required to collect information of buyer making purchases above Rs50,000.

    The officials said that the condition of CNIC shall not apply on ordinary consumer, which means a person who is buying the goods for his own consumption and not for the purpose of re-sale or processing.

    Through Finance Act, 2019, it was made mandatory that a registered person making a taxable supply shall issue a serially numbered tax invoice at the time of supply of goods containing the following particulars, in Urdu or English language, namely: –

    The condition of CNIC or NTN was made mandatory from August 01, 2019.

    However, on opposition from small traders the government after an agreement on October 30, 2019, postponed the applicability of CNIC till January 31, 2020.

    The FBR on October 04, 2019 issued definition / rules related to condition of CNIC.

    The FBR said that keeping in view the problems reported by the registered persons is ensuring proper identity of the buyer to fulfil the requirement of reporting NTN/NIC of the buyer in terms of section 23 of the Sales Tax Act, 1990, it is directed that the NIC/NTN of the buyer with respect to taxable supplies to an unregistered person shall be deemed to have been reported in good faith by the supplier provided that:

    (a) The tax invoice complies with the requirements of section 23(b) of the Act.

    (b) Payment made by or on behalf of the unregistered purchaser of the amount of the tax invoice, inclusive of sales tax and applicable further tax, is deposited into the supplier’s declared business bank account.

    (c) The NIC provided by the purchaser is found authenticated by the National Data and Registration Authority (NADRA).

    (d) The NIC/NTN provided is not of the employee of the seller or of his associates as defined under the Income Tax Ordinance, 2001.

    The issuance of a show cause notice to a registered person being a seller on account of any matter arising out of the NIC provided by a purchaser shall not be made without the prior approval of the Member (IR-Operations), FBR after providing an opportunity to be heard.

  • SRB suspends sales tax registration of Arabia Sea Country Club

    SRB suspends sales tax registration of Arabia Sea Country Club

    KARACHI: Sindh Revenue Board (SRB) has suspended sales tax registration of Arabian Sea Country Club for tax fraud.

    In a notice for suspension of registration of M/s. Arabia Sea Country Club, the SRB said that the taxpayer had collected the amount of tax on services provided but did not deposit to the provincial exchequer.

    The SRB said that the taxpayer provided services to M/s. Aisha Steel Mills Limited, M/s. Master Motors, M/s. Novartis Pharma (Pakistan) Limited, M/s. Naveena Steel Mills (Pvt) Limited, M/s. Yamaha Motor Pakistan (Pvt) Limited, M/s. L’oreal Pakistan Pvt Limited amounting to Rs11,615,885 involving Sindh sales tax of Rs1,510,067 for the tax period January 2019 to October 2019.

    “It is inform you that the aforesaid act of non-payment/short payment of Sindh sales tax is covered under the ‘tax fraud’ as defined under the provision of Section 2(94) of the Act, 2011.”

    The SRB has given deadline of January 28, 2020 to the taxpayer:

    To discharge all the due Sindh sales tax liability along with default surcharge; and

    To e-file the true and correct monthly Sales Tax return for the said tax periods.

    “In case of non-satisfactory response or failure to take remedial measures as suggested above on or before January 28, 2020, the case shall be processed for cancellation of registration.”

  • FBR not to compromise integrity of automated refund system

    FBR not to compromise integrity of automated refund system

    KARACHI: Federal Board of Revenue (FBR) has told the legislators that it will not compromise the integrity of automated sales tax refund system despite pressures from various quarters.

    The FBR made a presentation before the standing committee of National Assembly on Finance, Revenue and Economic Affairs on Thursday. The officials of Large Taxpayers Unit (LTU) Karachi explained in detail about the newly launched Fully Automated Sales Tax e-Refund (FASTER).

    The standing committee had asked the FBR to explain the automated sales tax refund system following hue and cry from the business community that their refunds under the newly launched system were stuck up and they were facing liquidity problems.

    The FBR officials informed the standing committee the automated system was fully transparent and all doors had been closed for issuance of refunds on fake and flying invoices.

    It was informed that in the last budget the zero rating of sales tax was abolished which was related to five export oriented sectors.

    After withdrawal of SRO 1125(I)/2011, the items in the SROs had become subject to normal sales tax at 17 percent on import and local supply.

    In this scenario all the inputs of exporters have become taxable which gave rise to refunds and liquidity issues.

    However, the government resolved the issue of sales tax refunds of exporters through introduction of FASTER system, which applied from July 01 onwards.

    It is informed that data provided in monthly returns is treated as data in support of refund claim and no separate electronic data is required. “The only requirement is filing of Annexure-H with 120 days of the filing of sales tax return.”

    After filing, the claim is routed through processing module FASTER. Refund claim data is verified by the system and Refund Payment Order (RPO) of the amount found admissible is generated.

    The FBR officials told that RPO was electronically communicated to the State Bank of Pakistan within 72 hours.

    The standing committee was informed that refund claims, which were not verified through validation checks, are processed under STARR.

    In order to resolve issues related to FASTER system, the FBR deputed focal persons in all field formations. Besides, chief automation and PRAL team is available through cell phones/ helpline to assist taxpayers.

    Further, filing date of annexure – H has been extended up to February 15, 2020.

    After the launch of FASTER system the issuance of refund payment registered unprecedented growth of 165 percent. According to the briefing the FBR released Rs36.82 billion during July 01- January 21 2019/2020 as compared with Rs13.9 billion in the corresponding period of the last fiscal year.

    The issuance of refunds by LTU Karachi registered phenomenal growth of 317 percent to Rs7.89 billion during July 01 – January 21 2019/2020 as compared with Rs1.89 billion in the corresponding period of the last year.

  • Income above Rs400,000 must file annual return: FBR

    Income above Rs400,000 must file annual return: FBR

    ISLAMABAD: Federal Board of Revenue (FBR) on Friday said that individuals having income above Rs400,000 must file their income tax return for tax year 2019.

    The FBR issued advice as one week remaining for due date the filing income tax return for tax year 2019.

    The FBR urged people to file their annual income tax returns for documentation of economy and become active taxpayers.

    The revenue body said that salaried persons have been facilitated in return filing through ‘Tax Asaan’ smart phone application.

    It further said that the taxpayers have been facilitate in tax payment through ATM, Internet banking, debit card and direct debt from bank account.

    The FBR reminded that the last date for filing income tax return for tax year 2019 is January 31, 2019.

    The FBR has estimated around 2.77 million income tax returns for tax year 2019 to be filed by January 31, 2020.

    The FBR extended the date for filing income tax returns for tax year 2019 up to January 31, 2020 for all type of taxpayers.

    The FBR received around 2.17 million income tax returns for tax year 2019 by December 31, 2019.

    Syed Shabbar Zaidi, Chairman, FBR in his meeting with Finance Advisor Dr. Abdul Hafeez Shaikh disclosed that the FBR had received 2.17 million income tax returns for tax year 2019. While another 600,000 returns likely to be received by extended date i.e. January 31, 2020.

    The actual return filing date for tax year 2019 was September 30, 2019 for taxpayers including salaried persons, business individuals, persons falling in final tax regimes and companies having special tax year.

    While, for corporate taxpayers the last date for filing income tax returns was December 31, 2019.

    The FBR extended return filing date for other than corporate taxpayers around five times up to January 31, 2020. The FBR also extended the last date for corporate taxpayers up to January 31, 2020.

    The FBR is expecting around 3.5 million income tax returns for tax year 2019, which may be filed after due date but with payment of fine and penalties.

    Through Tenth Schedule of Income Tax Ordinance, 2001 the benefit of reduced withholding tax rates can only be availed by persons on the Active Taxpayers List (ATL).

    Those persons failed to file their income tax returns by due date and file their returns after due date without payment of fine will not be able to find their place on the ATL.

    The FBR will issue ATL for tax year 2019 on March 01, 2020.

    The number of income tax return has increased to 2.7 million for tax year 2018. The ATL for tax year 2018 will expire on February 29, 2020.

  • Insurance agents liable to pay 13% sales tax on services

    Insurance agents liable to pay 13% sales tax on services

    KARACHI: Sindh Revenue Board (SRB) has said that insurance agents are liable to pay 13 percent sales tax on services provided or rendered to their clients.

    The SRB issued updated working tariff for tax year 2020 and notified sales tax rate for various services. According to the working tariff the insurance agents are liable to pay 13 percent sales tax on services provided or rendered.

    However, a reduced rate of five percent is available to insurance agents with condition that input tax credit shall not be admissible.

    The SBR also notified sales tax rate for other services such as electric power transmission services liable to 13 percent sales tax on services.

    The provincial revenue body said that vehicle parking and valet services liable to 13 percent sales tax on services. However, a reduced rate of five percent also available with condition that input tax credit shall not be admissible.

    The rate of 13 percent sales tax applicable on: actuarial services; services of mining of mineral and allied and ancillary services in relation thereto; site preparation and clearance, excavation and earth moving and demolition services; waste collection and management services; warehouse or depots for storage or cold storages; supply chain management or distribution, including delivery) services.

    The services provided or rendered by cab aggregator and the services provided or rendered by the owners of drivers of the vehicles using the can aggregator services are liable to 13 percent sales tax. A reduced rate of 5 percent of such services is also available with condition that the input tax credit shall not be admissible.

  • CNIC is must on purchases above Rs50,000 from Feb 01

    CNIC is must on purchases above Rs50,000 from Feb 01

    ISLAMABAD: The mandatory requirement of Computerized National Identity Card (CNIC) on purchases of above Rs50,000 to apply from February 01, 2020.

    Sources in Federal Board of Revenue (FBR) on Wednesday said that the condition of CNIC on purchases above Rs50,000 will be applicable from February 01, 2020.

    The FBR will take legal action against those who violate the mandatory requirement, they added.

    Through Finance Act, 2019, it was made mandatory that a registered person making a taxable supply shall issue a serially numbered tax invoice at the time of supply of goods containing the following particulars, in Urdu or English language, namely: –

    (a) name, address and registration number of the supplier;

    (b) name, address and registration, number of the recipient and NIC or NTN of the unregistered person, as the case may be, excluding supplies made by a retailer where the transaction value inclusive of sales tax amount does not exceed rupees fifty thousand, if sale is being made to an ordinary consumer.

    Explanation. – For the purpose of this clause, ordinary consumer means a person who is buying the goods for his own consumption and not for the purpose of re-sale or processing.

    The condition of CNIC or NTN was made mandatory from August 01, 2019.

    However, on opposition from small traders the government after an agreement on October 30, 2019, postponed the applicability of CNIC till January 31, 2020.

    The FBR on October 04, 2019 issued definition / rules related to condition of CNIC.

    The FBR said that keeping in view the problems reported by the registered persons is ensuring proper identity of the buyer to fulfil the requirement of reporting NTN/NIC of the buyer in terms of section 23 of the Sales Tax Act, 1990, it is directed that the NIC/NTN of the buyer with respect to taxable supplies to an unregistered person shall be deemed to have been reported in good faith by the supplier provided that:

    (a) The tax invoice complies with the requirements of section 23(b) of the Act.

    (b) Payment made by or on behalf of the unregistered purchaser of the amount of the tax invoice, inclusive of sales tax and applicable further tax, is deposited into the supplier’s declared business bank account.

    (c) The NIC provided by the purchaser is found authenticated by the National Data and Registration Authority (NADRA).

    (d) The NIC/NTN provided is not of the employee of the seller or of his associates as defined under the Income Tax Ordinance, 2001.

    The issuance of a show cause notice to a registered person being a seller on account of any matter arising out of the NIC provided by a purchaser shall not be made without the prior approval of the Member (IR-Operations), FBR after providing an opportunity to be heard.

  • Sales tax rates on services provided by goods transportation

    Sales tax rates on services provided by goods transportation

    KARACHI: Sindh Revenue Board (SRB) has issued updated working tariff for tax year 2020 and notified sales tax rates on services provided or rendered by persons engaged in inter-city transportation.

    According to the SRB, the sales tax shall be 13 percent on services provided or rendered by persons engaged in inter-city transportation or carriage of goods by road or through pipeline or conduit.

    However, this rate shall be reduced at 8 percent with the condition that input tax credit/adjustment shall not be admissible.

    The sales tax rate shall be 13 percent on services provided or rendered by persons engaged in inter-city transportation or carriage of goods by road through truck addas or through bus/wagon stands excluding road transportation or carriage of goods through addas or through bus/wagon stands excluding road transportation of

    (i) petroleum oils through oil tankers;

    (ii) automotive vehicles, classified under tariff headings of Chapter 87 of the First Schedule to the Customs Act, 1969, as are transported or carried through specialized vehicle carriers; and

    (iii) Goods and cargo through vehicles operated by Fleet Logistic Companies having not less than 25 vehicles in its fleet

    The reduced rate of three percent is allowed with condition that input tax credit shall not be admissible.

    These services are also exempt from sales tax on following:

    Services provided or rendered by persons engaged in inter-city transportation of goods by road during the period from July 01, 2014 to the June 30 ,2015, provided that :

    (a) Such person has neither billed /involved/ charged the service recipient any amount of tax nor collected or received any amount of tax from the service recipient on account of such transportation or carriage services as were provided during the said Period;

    Provided further that the amounts of tax billed or invoiced or charged or received or collected, if any, by the such person for the services provided or rendered during the period from the 1st July,2014 to the 30th June, 2015, are e-deposited in Sindh, Government’s head of account “B-02384” in the prescribed manner on or before the 15th day of July, 2015.

    (b) Such person gets e-registered with the SRB on or before 25th day of July, 2015, in accordance with the provisions of section 24 of the Act, read with the rules prescribed thereunder; and

    (c) this exemption shall not entitle any exemption benefit or any claim for refund of the amount of tax already deducted or withheld or paid or deposited by any person in relation to the services provided or rendered or received or procured during the period from 01st day of July, 2014 to the 30th day of June, 2015. Such amount shall be deemed to be the tax under section 16 of the Act and shall be e-deposited in Sindh Government head of account “B-02384” in the prescribed manner on before the 15th day of July, 2015, failing which it shall be recovered alongwith penalty and surcharge as prescribed in the Act.

  • FBR estimates 2.77 million returns for tax year 2019 by January 31

    FBR estimates 2.77 million returns for tax year 2019 by January 31

    ISLAMABAD: Federal Board of Revenue (FBR) has estimated around 2.77 million income tax returns for tax year 2019 to be filed by January 31, 2020, sources said on Wednesday.

    The FBR extended the date for filing income tax returns for tax year 2019 up to January 31, 2020 for all type of taxpayers.

    The FBR received around 2.17 million income tax returns for tax year 2019 by December 31, 2019.

    Syed Shabbar Zaidi, Chairman, FBR in his meeting with Finance Advisor Dr. Abdul Hafeez Shaikh disclosed that the FBR had received 2.17 million income tax returns for tax year 2019. While another 600,000 returns likely to be received by extended date i.e. January 31, 2020.

    The actual return filing date for tax year 2019 was September 30, 2019 for taxpayers including salaried persons, business individuals, persons falling in final tax regimes and companies having special tax year.

    While, for corporate taxpayers the last date for filing income tax returns was December 31, 2019.

    The FBR extended return filing date for other than corporate taxpayers around five times up to January 31, 2020. The FBR also extended the last date for corporate taxpayers up to January 31, 2020.

    The FBR is expecting around 3.5 million income tax returns for tax year 2019, which may be filed after due date but with payment of fine and penalties.

    Through Tenth Schedule of Income Tax Ordinance, 2001 the benefit of reduced withholding tax rates can only be availed by persons on the Active Taxpayers List (ATL).

    Those persons failed to file their income tax returns by due date and file their returns after due date without payment of fine will not be able to find their place on the ATL.

    The FBR will issue ATL for tax year 2019 on March 01, 2020.

    The number of income tax return has increased to 2.7 million for tax year 2018. The ATL for tax year 2018 will expire on February 29, 2020.

  • Voluntary tax system fails to generate revenue: FBR

    Voluntary tax system fails to generate revenue: FBR

    ISLAMABAD: Syed Shabbar Zaidi, Chairman, Federal Board of Revenue (FBR) has said that voluntary compliance failed to generate revenue.

    “The voluntary tax system has failed to deliver and such system cannot run on a sustained basis,” the chairman said on Tuesday while addressing All Pakistan Chambers Presidents Conclave.

    The chairman said that the existing taxation system as ‘extortionist’ and said the FBR was collecting 90 percent taxes in the shape of withholding taxes and deduction at source while only 5 – 10 percent was coming through voluntary compliance.

    He said that total wholesale and retail traders are contributing Rs 9 billion from all over the country. He further added that Sundar Industrial Estate, which is not exempted from registration of sales tax, is contributing ‘very negligible’ amount to the national kitty.

    Zaidi also pointed out that the FBR was collecting 45 percent on imports. He also added that the FBR cannot be fixed with sacking and transfers of officers but it will have to be automated to minimize human interaction as much as possible.

    The chairman said that the tax authority had so far collected Rs 2,085 billion in first half (July-December) of 2019-2020.

    He stated that the FBR is facing one major problem on customs side as there is still difference of $1.7 billion in bilateral trade figure, which shows that under-invoicing is still continuing that once stood in the range of $6 billion per annum.

    He said it is not possible for any human to check 8,000 containers daily so the solution is the installation of the latest scanners. “We need to place automation as there is no other solution,” he added.

    The chairman FBR said that there are four major sectors contributing to the country’s GDP growth and economy including manufacturing, agriculture, services and retail trade and wholesale.

    There should have been 25 percent burden on each of these four sectors but in Pakistan manufacturing sector is bearing this burden by contributing 70 percent to national kitty. This tax burden, he said, is resulting into de-industrialization.

    Ideally, he said the tax burden should have distributed equally on four major contributors of the GDP growth.

    He said that the government is the partner of 25 percent in the shape of collection of taxes from the private businesses.

  • Criminal proceeding initiated in sales tax refunds issuance on bogus invoices

    Criminal proceeding initiated in sales tax refunds issuance on bogus invoices

    KARACHI: Regional Tax Office (RTO)-II Karachi has initiated criminal proceeding against persons involved in obtaining sales tax refunds on fake and flying invoices.

    According to statement on Tuesday, the tax office had unearthed a gang of fraudsters who were engaged in tax fraud on the strength of bogus/fake/flying invoices and claimed dubious/bogus Rs230 million sales tax refunds.

    The declared business activity of the units does not match with the nature of goods/raw materials against which purchases / imports have been shown and subsequently bogus inputs have been claimed.

    As per chain inquiry, there were dummy buyers and only doing paper transactions.

    The RTO-II Karachi lodged FBR against units included: M/s Oriental Chemcial Industries; M/s. Premier Industries/Paramount Industries; M/s. Younus Enterprises/Escord Industries.

    The tax office said that the accused/owners of these bogus units were not available in the declared business address. However following measures were taken to retrieve loss of revenue by RTO-II Karachi:

    (a) FIRs have been lodged against the all three accused persons/owners before special judge (customs and taxation) Karachi and criminal proceedings have been initiated under Section 37A of the Sales Tax Act, 1990.

    (b) Names of owners of M/s. Oriental Chemical Industries, M/s. Paramount Industries and M/s. Escord Industries have been sent for Exit Control List (ECL).

    The tax office said that all the three cases had been suspended / blacklisted under Section 21(2) of the Sales Tax Act, 1990.

    It further said that the bank accounts have been attached for recover under Section 48 of the Sales Tax Act, 1990.

    “Letters to all banks have also been written for getting information about the beneficiary bank accounts, whereby, cheques issued as result of the generated RPOs were deposited.”

    Letters to registrar offices, Bahria Town and DHA Karachi have also been written to get information about properties/assets for recovery purpose.