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 issues notices to 350 Sindh bureaucrats for non-filing

KARACHI: Federal Board of Revenue (FBR) has issued notices to 350 senior bureaucrats of Sindh government for non-filing of income tax returns.

The notices have been issued by Regional Tax Office (RTO) –II Karachi on identification of expenditures through various sources by those provincial government officers.

The FBR sources said that these government officers had never filed their annual income tax returns and asset declarations with the income tax departments.

They said that the expenditures details had been obtained through their air travels, banking transactions, purchase of property purchase etc.

The information of those provincial government officers were obtained from their salary disbursements.

They said that the tax department would first enforce income tax returns and then would initiate proceedings of concealment.

The sources said that besides taking action against bureaucrats of Sindh government the RTO –II Karachi was also taking action against 3,000 more salary persons in the private sector to bring them into tax net.

The sources said that many of these salary persons had never filed income tax returns despite having taxable income as well as other source of income.

April 7, 2019
Sales Tax Act 1990: deduction of input tax by registered persons

KARACHI: A sales tax registered person is allowed to deduct input tax against output tax for determination of taxable supplies made during a period.

According to updated Sales Tax Act 1990 issued by Federal Board of Revenue (FBR), Section 7 explained the procedure of deduction of input tax by sales tax registered persons.

Section 7: Determination of tax liability.

Sub-Section (1): Subject to the provisions of section 8 and, for the purpose of determining his tax liability in respect of taxable supplies made during a tax period, a registered person shall, subject to the provisions of section 73, be entitled to deduct input tax paid or payable during the tax period for the purpose of taxable supplies made, or to be made, by him from the output tax excluding the amount of further tax under sub-section (1A) of section 3 that is due from him in respect of that tax period and to make such other adjustments as are specified in Section 9:

Provided that where a registered person did not deduct input tax within the relevant period, he may claim such tax in the return for any of the six succeeding tax periods.

Sub-Section (2): A registered person shall not be entitled to deduct input tax from output tax unless,-

(i) in case of a claim for input tax in respect of a taxable supply made, he holds a tax invoice in his name and bearing his registration number in respect of such supply for which a return is furnished:

Provided that from the date to be notified by the Board in this respect, in addition to above, if the supplier has not declared such supply in his return or he has not paid amount of tax due as indicated in his return;

(ii) in case of goods imported into Pakistan, he holds bill of entry or goods declaration in his name and showing his sales tax registration number, duly cleared by the customs under section 79, section 81 or section 104 of the Customs Act, 1969 (IV of 1969);

(iii) in case of goods purchased in auction, he holds a treasury challan, in his name and bearing his registration number, showing payment of sales tax;

Sub-Section (3): Notwithstanding anything in sub-sections (1) and (2), the Federal Government may, by a special order, subject to such conditions, limitations or restrictions as may be specified therein allow a registered person to deduct input tax paid by him from the output tax determined or to be determined as due from him under this Act.

Sub-Section (4): Notwithstanding anything contained in this Act or rules made there under, the Federal Government may, by notification in the official Gazette, subject to such conditions, limitations or restrictions as may be specified therein, allow a registered person or class of persons to deduct such amount of input tax from the output tax as may be specified in the said notification.

April 6, 2019
Increase in refund claims by registered persons selected for audit

KARACHI: Federal Board of Revenue (FBR) has selected sales tax audit of those sales tax registered persons whose refund claims increased in a month over the corresponding month last year.

According to risk parameters for selection of audit under Audit Policy 2018, the FBR selected audit cases through computerized balloting of those registered persons whose refund claim increase during a month over the corresponding month last year.

The FBR also randomly selected those cases where decline in value of supplies as compared to corresponding months of previous year.

Besides consistent increase in input tax/output tax ratio over corresponding months of previous three years were also selected through random balloting.

Other risk parameters are included:

Decrease in taxable supplies to total supplies ratio as compared to corresponding months of previous year.

Difference in declared value of sales as compared to declared turnover in Income Tax Return.

Persons declaring reduced rate sales.

Manufactures showing inadequate value addition.

Declared sales are less than imports

Decrease in payment of tax as compared to corresponding months of previous year.

Increase in refund claimed as compared to corresponding months of previous year.

Unclaimed purchase to declared purchases ratio is high.

Utilities to sales ratio is high.

Discrepancy identified by CREST.

April 6, 2019
KTBA asks FBR to clarify filing withholding statements after amendment

KARACHI: Karachi Tax Bar Association (KTBA) has asked Federal Board of Revenue (FBR) to issue clarification regarding filing withholding tax statement following amendment made through Finance Supplementary (Second Amendment) Act, 2019.
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April 5, 2019
FBR promotes customs officers to BS-17

ISLAMABAD: Federal Board of Revenue (FBR) on Friday notified promotions of Superintendents, Principal Appraiser, and Superintendent Preventive of Customs Department are promoted to the post of Assistant Collector (BS-17) in Pakistan Customs Service (PCS) with immediate effect and until further orders.

The promotions of following officers of PCS have been notified:

01. Nadeem Ahmad, Superintendent, LTU, Karachi

02. Mumtaz Khan, Superintendent, MCC, Peshawar

03. Muhammad Nazar-ul-Hassan, Superintendent, LTU, Karachi

04. Muhammad Zahid Khan, Superintendent, MCC, Peshawar

05. Muhammad Javed Mahmood, Superintendent, MCC, Faisalabad

06. Muzafar Ali Rizvi, Principal Appraiser, MCC, Appraisement-East, Karachi.

07. Israr Hussain, Principal Appraiser, MCC, Islamabad.

08. Syed Shahid Hussain Rizvi, Principal Appraiser, MCC, Gwadar.

09. Riaz Hussain Bhatti, Principal Appraiser, MCC, Appraisement, Lahore.

10. Salim Yousaf, Principal Appraiser, Directorate of Intelligence & Investigation-Customs, Karachi.

11. Ishtiaq Ahmed, Principal Appraiser (Valuation), MCC, Islamabad.

12. Muhammad Saleem, Superintendent Preventive, MCC, Preventive, Karachi.

The FBR said that on their promotion the existing posts of Superintendent/ Principal Appraiser/ Superintendent Preventive held by them are up-graded to BS-17 as personal to them till their posting against regular posts of Assistant Collector.

Their promotion will take effect from the date of their charge assumption.

The FBR further said that they will be on probation for a period of one year, extendable for further period, not exceeding one year, provided that if no order is issued by the day following the termination of probationary period, the appointment shall deem to be held until further order.

The officers already drawing Performance Allowance equal to 100 percent of basic pay will continue to draw it on their promotion.

April 5, 2019
Sales Tax Act 1990: rate in force to apply at time of supply

KARACHI: Any change in the rate of sales tax shall apply at the time of supply or clearance of imported goods, as clarified by Section 5 of the Sales Tax Act, 1990, updated by the Federal Board of Revenue (FBR). This section outlines the specific rules for applying sales tax when rates are adjusted and provides detailed guidelines for taxable supplies and imports.
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April 5, 2019
FBR excludes salary persons from audit selection

ISLAMABAD: Federal Board of Revenue (FBR) on Thursday issued Audit Policy 2018 and excluded salary persons from selection of audit.

The following exclusions have been identified and approved by the Board under relevant rules where selection for audit by the Board is not required.

Income Tax

i. All cases already selected for audit by the Commissioners Inland Revenue or Director I&I (IR) under section 177 of the Income Tax Ordinance for any of the preceding three Tax Years i.e 2014, 2015, 2016

ii. All cases already selected for audit under section 214D of the Income Tax Ordinance, 2001, for any of the preceding three Tax Years i.e 2014, 2015, 2016

iii. All cases where income chargeable to tax under the head salary exceeds 50% of taxable income, except cases having business income. Directors of companies do not qualify for this exclusion.

iv. All cases where entire income is covered under Final Tax Regime (FTR)

Sales Tax

All cases already selected under section 25 and 38 of Sales Tax Act, 1990 by the Commissioner Inland Revenue or Director I&I (IR) for tax periods corresponding to the accounting period adopted for the purpose of return of income under the Income Tax Ordinance, 2001 for Tax Year 2016

Provided that where only a part of the said accounting period had been audited already, the relevant authority may select the remaining period for audit.

ii. All cases already selected for audit under section 72B through computer ballot held under Taxpayers’ Audit Policy, 2017

iii. All cases of Steel Melters and Steel Re-rollers who are paying sales tax under the Sales Tax Special Procedure Rules, 2007.

iv. Federal, Provincial and Local Government Departments.

Federal Excise

i. All cases already selected under section 46 of the Federal Excise Act, 2005 by the Commissioner Inland Revenue or Director I&I (IR) for tax periods corresponding to the accounting period adopted for the purpose of return of income under the Income Tax Ordinance, 2001 for tax year 2016.

Provided that where only a part of the said accounting period had been audited already, the relevant authority may select the remaining period for audit.

ii. All cases already selected for audit under section 42B through computer ballot held under Taxpayers’ Audit Policy, 2017

iii. Federal, Provincial and Local Government Department.

April 4, 2019
FBR selects 14,164 audit cases through computerized balloting

ISLAMABAD: Federal Board of Revenue (FBR) on Thursday selected total 14,164 audit cases through computerized balloting in income tax, sales tax and federal excise duty cases.

The FBR selected 10,982 audit cases under Section 214C of Income Tax Ordinance, 2001.

The revenue body selected around 3,126 sales tax cases under Section 72B of Sales Tax Act, 1990.

Further, 56 cases have been selected under Section 42B of Federal Excise Act, 2005.

April 4, 2019
Sales Tax Act 1990: zero rating on export, supply of goods

KARACHI: The sales tax laws have allowed zero rating of sales tax on exports or supply of goods.

According to updated Sales Tax Act, 1990 issued by Federal Board of Revenue (FBR), the Section 4 of the Act explained the zero rating.

Section 4: Zero rating

Notwithstanding the provisions of section 3 except those of sub-section (1A), the following goods shall be charged to tax at the rate of zero per cent:

(a) goods exported, or the goods specified in the Fifth Schedule;

(b) supply of stores and provisions for consumption aboard a conveyance proceeding to a destination outside Pakistan as specified in section 24 of the Customs Act, 1969 (IV of 1969);

(c) such other goods as the Federal Government may, by notification in the Gazette, specify:

Provided that nothing in this section shall apply in respect of a supply of goods which –

(i) are exported, but have been or are intended to be re-imported into Pakistan; or

(ii) have been entered for export under Section 131 of the Customs Act, 1969 (IV of 1969), but are not exported; or

(iii) have been exported to a country specified by the Federal Government, by Notification in the official Gazette:

Provided further that the Federal Government may by a notification in the official Gazette, restrict the amount of credit for input tax actually paid and claimed by a person making a zero-rated supply of goods otherwise chargeable to sales tax.

(d) such other goods as may be specified by the Federal Board of Revenue through a general order as are supplied to a registered person or class of registered persons engaged in the manufacture and supply of goods supplied at reduced rate of sales tax.

April 4, 2019
FBR to conduct balloting for audit selection

ISLAMABAD: Federal Board of Revenue (FBR) to conduct balloting for selection of audit cases on Thursday, April 04, 2019.

The balloting will be conducting for audit selection of income tax returns filed for tax year 2017.

Around 1.84 million tax returns were filed for the tax year 2017 by salary persons, business individuals, Association of Persons and corporate entities.

The audit selection would be made in income tax, sales tax and federal excise duty.

The FBR conduct balloting to select audit cases under Section 214C of Income Tax Ordinance, 2001.

April 3, 2019