ISLAMABAD: Federal Board of Revenue (FBR) has reduced sales tax on imported mobile phones by 85 percent in order to promote digital economy in the country.
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Return filing for tax year 2019 must for salary income above Rs400,000
KARACHI: Persons having salary income above Rs400,000 are required to file income tax returns for tax year 2019 as slabs revised through Finance Act, 2019 will be applicable for tax year 2020, officials said on Thursday.
The officials said that there were misconceptions about the filing of income tax returns for tax year 2019 by the salary persons due to changes brought in Income Tax Ordinance, 2001 through Finance Act, 2019.
As per the amendment the minimum threshold for filing income tax returns for tax year 2020 has been increased to Rs600,000 for which the return filing will be due in September 2020. However, the salary persons are required to file income tax returns on the basis of minimum threshold of Rs400,000.
The date for filing of income tax return has been extended to January 31, 2020. The actual date for filing of income tax returns for tax year 2019 was September 30, 2019. However, since then the FBR extended the date for five times.
The tax officials said that the persons required to file income tax returns before the applicable of new tax rates should discharge their liabilities in order to avoid penal action.
The tax rates for salary persons under Income Tax Ordinance, 2001 prior to amendments through Finance Act, 2019 are as follow:
Where the income of an individual chargeable under the head “salary” exceeds fifty per cent of his taxable income, the rates of tax to be applied shall be as set out in the following table, namely:—
01. Where the taxable income does not exceed Rs400,000: the tax rate shall be zero percent
02. Where the taxable income exceeds Rs400,000 but does not exceed Rs800,000: the tax rate shall be Rs1,000
03. Where the taxable income exceeds Rs800,000 but does not exceed Rs1,200,000: the tax rate shall be Rs2,000
04. Where the taxable income exceeds Rs1,200,000 but does not exceed Rs2,500,000: the tax rate shall be 5 percent of the amount exceeding Rs1,200,000
05. Where the taxable income exceeds Rs2,500,000 but does not exceed Rs4,000,000: the tax rate shall be 65,000 + 15 percent of the amount exceeding Rs. 2,500,000
06. Where the taxable income exceeds Rs4,000,000 but does not exceed Rs8,000,000: the tax rate shall be 290,000 + 20 percent of the amount exceeding Rs4,000,000
07. Where the taxable income exceeds Rs. 8,000,000: the tax rate shall be Rs1,090,000 + 25 percent of the amount exceeding Rs8,000,000
Provided that where the taxable income exceeds eight hundred thousand rupees the minimum tax payable shall be two thousand rupees.
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Sales tax rates for services rendered on immovable properties
The Sindh Revenue Board (SRB) has recently announced the sales tax rates applicable to services related to the sale and purchase of immovable properties within the province for the tax year 2020.
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FBR directs withholding agents to clearly mention CNIC of non-ATL persons
KARACHI: Withholding agents have been directed to clearly mention the Computerized Identity Card Number (CNIC) of persons whose amounts have been withheld under various transactions.
The withholding agents have been directed to provide CNIC particularly those persons who are not appearing on the Act Taxpayers List (ATL).
Sources in Federal Board of Revenue (FBR) said that withholding agents will submit biannual statement related to transactions for the period July – December 2019 during this month.
The FBR officials said that the withholding agents will clearly specify the names, CNIC or any other identification of such persons in the withholding statement so that legal provisions to enforce return can come into effect.
Where a withholding agent is of the opinion that hundred percent increased tax is not required to be collected on the basis that the person was not required to file return, the withholding agent shall furnish an intimation to the Commissioner setting out the basis on which the person is not required to file return.
The Commissioner shall accept or reject the contention on the basis of existing law. In case the Commissioner fails to respond within thirty days, permission shall be deemed to be granted to not deduct tax at hundred percent increased rate.
Where the person’s tax has been deducted or collected at hundred percent increased rate and the person fails to file return of income for the year for which tax was deducted, the Commissioner shall make a provisional assessment within sixty days of the due date for filing of return by imputing income so that tax on imputed income is equal to the hundred percent increased tax deducted or collected from such person and the imputed income shall be treated as concealed income.
The provisional assessment shall be of no effect if the person files return within forty five days of completion of provisional assessment and the provisions of the Ordinance shall apply accordingly.
Where return is not filed within forty five days of provisional assessment, it shall be treated as final assessment and the Commissioner shall initiate penalty proceedings for concealment of income.
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Income tax return filing hits new record high
KARACHI: Income tax return filing has increased to a new record high of 2.76 million as people making compliance to avoid 100 percent additional tax on persons not appearing on Active Taxpayers List (ATL).
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Uniform income tax rate applied on dividend income
ISLAMABAD: The income tax rates on dividend income on various shares of companies have been increased to make an uniform rate applicable for tax year 2020 and onwards.
Sources in Federal Board of Revenue (FBR) said that the various rates of dividend rates had been uniformed at 15 percent.
Prior to budget 2019/2020 dividend income is not part of income under normal tax regime and is subject to separate taxation. The standard rate of tax on dividend income is now 15 percent.
The previous tax rate of 7.5 percent on dividend received on shares of a company set up for power generation or on shares of a company supplying coal exclusively to power generation projects has been increased to 15 percent.
Further, tax rate of dividend which was charged at 25 percent for persons receiving dividend from companies which enjoy exemption of tax on income or where no tax is payable due to availability of tax credits or due to brought forward business or depreciation losses.
Previously the rate of tax on dividend received by a person from a mutual fund was 10 percent and 12.5 percent. Persons those were receiving dividend from stock fund is also taxed 12.5 percent.
Furthermore dividend received by a person from a development REIT scheme was reduced by 50 percent of the normal rate.
Now all these rates are being enhanced to 15 percent, the FBR said.
For withholding tax on dividend also a standard rate of 15 percent is being applied for persons receiving income.
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FBR upgrades data entry operators to BS-14
ISLAMABAD: Federal Board of Revenue (FBR) has upgraded the post of Data Entry Operators (DEOs) to BS-14 from BS-12 following the approval of the finance ministry.
The FBR on Tuesday issued an office order stating that in pursuance of Finance Division letter dated December 17, 2019 wherein to standardize the pay scale of DEOs the Finance Division had given concurrence to the upgradation of the post of Data Entry Operators from BS-12 to BS-14 under the federal government as per NOC contained in Establishment Division letter dated September 23, 2019; the post of DEOs of Inland Revenue Department in the field formations and FBR Headquarters stands upgraded to BS-14.
The competent authority is pleased to appoint all incumbent DEOs (BS-12) to the upgraded post of DEO (BS-14) with effect from December 17, 2019.
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FBR to impose penalty for not printing retail price on imported goods
ISLAMABAD: Federal Board of Revenue (FBR) on Tuesday said that printing of retail price on imported consumer items is mandatory and any violation by importer/manufacturer will attract fine and penalty.
Through recent Tax Laws (Second Amendment) Ordinance, 2019, penalty has been introduced for importers and manufacturers violating the provision of printing retail price.
The FBR said that it had received queries from various Customs Clearing Agents and Customs Collectorates regarding application of newly inserted Serial No.26 in Section33 of the Sales Tax Act, 1990, related to penalty.
In this regard it is clarified that at import stage the mechanism of clearing of goods already defined in STGO 103 of 2019 is to be followed.
The STGO recognizes that in some situations, the printing of retail price is not possible and allows clearance of goods on payment of Sales Tax in the manner as provided therein subject to furnishing of an undertaking that the retail price shall be duly printed.
Therefore, the provisions of the STGO be followed by the Customs Authorities.
However, the aforesaid undertaking shall mention that the importer shall print the retail price within ten days of release/clearance of the consignment and intimate the Commissioner concerned for inspection before further supply.
However, if inspection is not made within ten days after intimation the importer/manufacturer will be free to supply in the market.
The newly inserted penal provisions shall be invoked if the manufacturer/importer violates the undertaking or is otherwise non-compliant with requirement of retail price taxation.
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LTU Karachi collects Rs688 billion in first half
KARACHI: Large Taxpayers Unit (LTU) Karachi has collected Rs688 billion during first six months (July – December) of 2019/2020 as against Rs598 billion in the corresponding period of the last fiscal year, showing 15 percent growth, a statement said on Tuesday.
So far as December 2019 is concerned, LTU Karachi collected Rs160 billion as compared with Rs144 billion in the same month of the last year.
The rise in collection has been attributed to various tax facilitation and enforcement projects during the last six months by the LTU Karachi.
The unit issued Rs17.8 billion as sales tax refunds during the period in order to effectively address liquidity problems of the manufacturing sector.
In ongoing Broadening of Tax Base (BTB), the LTU Karachi retrieved data of unregistered commercial and industrial gas consumers and shared with the territorial regional tax offices for issuance of notices and registering the non-filers on income tax returns. This effort resulted in substantial increase in return filers.
The statement said that pursuing proactive policy of Federal Board of Revenue (FBR), various steps had been taken for the purpose of early disposal of litigation cases pending with the courts. On this account, senior officers have been specifically deployed for assistance of the High Court of Sindh for early disposal of cases.
The LTU Karachi said that strong enforcement as well as on site monitoring of production had been steadily reinforced and the exercise had brought growth in revenue especially in sugar and cement sectors.
The unit further said that strong internal accountability mechanism had been strengthened at Chief Commissioner Secretariat, whereby activities of officers and staff were being personally monitored by the Chief Commissioner himself.
All major taxpayers of LTU Karachi were actively engaged and appreciated for their substantial revenue contribution. In order to educate and enlighten the taxpayers regarding new tax measures and procedures, numerous taxpayer education and facilitation seminars were held during this period.
These endeavors brought significant improvement in taxpayer’s voluntary compliance besides creating congenial atmosphere between taxpayers and tax collectors.
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Profit on debt above Rs36 million to be treated as normal tax
KARACHI: The rate of tax on profit on debt above Rs36 million shall be treated as normal tax rate, tax officials said on Tuesday.
Sources in Federal Board of Revenue (FBR) said that the tax rates were revised through Finance Act, 2019.
The revised tax rates for profit on debt not exceeding Rs 5 million have be increased from 10 percent to 15 percent, between Rs5 million and Rs25 million tax rates have been increased from 12.5 percent to 17.5 percent and from Rs25 million to Rs36 million tax rates are being increased from 15 percent to 20 percent.
The rate of advance withholding tax on payment of profit on debt has also been enhanced from 10 percent to 15 percent.
Furthermore, the separate rates mentioned above would be applicable for profit on debt up to Rs.36 million and for amounts exceeding Rs36 million the profit on debt will be made part of the total income and taxed at normal rates.
Previously the profit on debt is taxed separately and is not part of the income in normal tax regime.
The tax rates were 10 percent, 12.5 percent and 15 percent for slabs up to five million rupees, between five million to twenty five million rupees and above twenty five million rupees, respectively.
The FBR sources said that due to changes the tax collection under this head registered phenomenal growth during first six months of current fiscal year. The sources estimated that the collection from profit on debt had been increased by around 150 percent during July – December of 2019/2020.
The sources said that persons not appearing on Active Taxpayers List (ATL) are also liable to pay around 30 percent as withholding tax.
The FBR collects profit on debt under Section 7B and Section 151 of Income Tax Ordinance, 2001.
The sources said that high interest rates attracted investment towards deposits of banking system. This factor has also contributed the high growth of tax from profit on debt.