KARACHI: The number of active taxpayers has surged to 1.88 million for the tax year 2018 as of April 07, 2019, according to an official document released on Monday. This marks a significant increase from the previous year, reflecting a growing compliance among taxpayers in Pakistan.
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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.
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Sales Tax Act 1990: buyer, seller jointly responsible for unpaid tax
KARACHI: Where an amount of tax unpaid in supply chain then registered buyer and seller are both responsible for paying to national exchequer.
According to updated Sales Tax Act, 1990 issued by Federal Board of Revenue (FBR), the Section 8A explained joint and several liability regarding unpaid tax.
Section 8A: Joint and several liability of registered persons in supply chain where tax unpaid.
Where a registered person receiving a taxable supply from another registered person is in the knowledge or has reasonable grounds to suspect that some or all of the tax payable in respect of that supply or any previous or subsequent supply of the goods supplied would go unpaid, of which the burden to prove shall be on the department such person as well as the person making the taxable supply shall be jointly and severally liable for payment of such unpaid amount of tax:
Provided that the Board may by notification in the official gazette, exempt any transaction or transactions from the provisions of this section.
Section 8B: Adjustable input tax.
Sub-Section (1): Notwithstanding anything contained in this Act, in relation to a tax period, a registered person shall not be allowed to adjust input tax in excess of ninety per cent of the output tax for that tax period:
Provided that the restriction on the adjustment of input tax in excess of ninety percent of the output tax, shall not apply in case of fixed assets or Capital goods:
Provided further that the Board may by notification in the official Gazette, exclude any person or class of persons from the purview of sub-section (1).
Sub-Section (2): A registered person, subject to sub-section (1), may be allowed adjustment or refund] of input tax not allowed under sub-section (1) subject to the following conditions, namely:
(i) in the case of registered persons, whose accounts are subject to audit under the Companies Ordinance, 1984, upon furnishing a statement along with annual audited accounts, duly certified by the auditors, showing value additions less than the limit prescribed under sub-section (1) above; or
(ii) in case of other registered persons, subject to the conditions and restrictions as may be specified by the Board by notification in the official Gazette.
Sub-Section (3): The adjustment or refund of input tax mentioned in sub-sections (2), if any, shall be made on yearly basis in the second month following the end of the financial year of the registered person.
Sub-Section (4): Notwithstanding anything contained in sub-sections (1) and (2), the Board may, by notification in the official Gazette, prescribe any other limit of input tax adjustment for any person or class of persons.
Sub-Section (5): Any auditor found guilty of misconduct in furnishing the certificate mentioned in sub-section (2) shall be referred to the Council for disciplinary action under section 20D of Chartered Accountants, Ordinance, 1961 (X of 1961).
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Customs to auction huge quantity of vehicles, motor bikes on April 09
KARACHI: Pakistan Customs has announce public auction of used motor vehicles and heavy bikes to be held on April 09, 2019 at Bay West, West Wharf Road, Karachi.
Auction of fresh vehicles under schedule No. 04/ 2019 to be held on April 09, 2019:
01. Nissan Moco Car, Chassis No. MG33S-1434760, year 2014
02. Honda-N car, Chassis No. JGI-1208909, year 2016
03. Toyota Aqua Hybrid Car, Chassis No. NHP10-6492089, year 2016, capacity 1496ml
04. Toyota Passo, Chassis No. M700A-0068740, Year 2017, Capacity 996cc
05. Toyota Aqua Hybrid Car, Chassis No. NHP10-6675744, year 2017, capacity 1496ml
06. Daihatsu Move Car, Chassis No. LA160S-0022740, year 2016, capacity 658cc
07. Honda Vezel Hybrid Car, Chassis No. RU3-1009600, Year 2014
08. Suzuki Alto, Chassis No. HA36S-318639, year 2019-04-07
09. Toyota Prius Hybrid car, chassis no. ZVW50-6057948, capacity 1797ml, year 2016
10. Suzuki Wagon-R, chassis no. NH34-535805, year 2016
11. Suzuki Alto, Chassis No. HA36S-283360, year 2016
12. Toyota Prius Hybrid Car, Chassis No. AVW50-6040670, year 2016, capacity 1797cc
13. Toyota Aqua Hybrid Car, chassis No. NHP10-6489786, year 2016, capacity 1496ml
14. Suzuki Alto Lapin Car, Chassis No. HE33S-114646, year 2015
15. Suzuki Every Wago, Chassis No. DA17W-160902, Year 2018
16. Honda-N WGN Car, Chassis No. JHI-1399120, year 2018, milage 562kms
17. Honda Fit Hybrid Car, Chassis No. GP5-3313188, year 2016
18. Suzuki Every Van, Chassis No. Da64V-827933, year 2013
19. Toyota Aqua Hybrid Car, Chassis No. NHP10-6537080, year 2016, Capacity 1496ml
20. Nissan Dayz Car, Chassis No. B21W-0473466, Year 2017
21. Honda Vezel Hybrid Car, Chassis No. RU3-1129894, year 2016
22. Suzuki Wagon-R Car, Chassis No. MH35S-109600, year 2017
23. Nissan Dayz Roox Car, Chassis No. B21A-0346728, year 2017
24. Daihatsu Hijet Cargo Van, Chassis No. S331V-0119751, year 2014, Capacity 658cc
25. Honda Fit Hybrid Car, Chassis No. GP5-1213366, Year 2016
26. Toyota CH-R Hybrid, Chassis No. ZYX10-2030563, year 2017, capacity 1797ml
27. Daihatsu Mira E:S, Chassis No. La350S-0087051, year 2018, capacity 658cc
28. Toyota Aqua Hybrid Car, Chassis No. NHP10-2545720, year 2016, capacity 1496ml
29. Suzuki Alto Car, Chassis No. HA36S-339803, year 2017, capacity 658cc
30. Daihatsu Move Car, Chassis No. LA160S-0029143, year 2017, capacity 658cc
31. Toyota Voxy Van, Chassis No. ZWR80-0035138, year 2014, capacity 1794ml
32. Suzuk Wagon-R, Chassis No. NH34S-532308
33. Honda Vezel Hybrid, Chassis No. RU3-1202746, year 2016
34. Suzuki Singray Wagon-R, Chassis No. MH44S-509107, Year 2016
35. Suzuki Alto Car, Chassis No. HA36S-367262, year 2017
Auction of leftover vehicles:
01. Suzuki Audi, Chassis No. WAUZZZGAIJ018984, mileage 3664km
02. Suzuki Bandit Car, Chassis No. MA36S-609297, year 2015
03. Toyota Passo Car, Chassis No. M710A-0005138, year 2016, capacity 998cc
04. Toyota Prius Hybrid Car, Chassis No. ZVW41-0037004, year 2016, capacity 1797
05. Toyota Aqua Hybrid Car, Chassis No. NHP10-6360564, year 2014, capacity 1496ml
06. Range Rover Evoque, Chassis No. SALVA2AG70H828587, year 2013
07. Suzuki Lapin Car, Chassis No. HE33S-179190, year 2017
08. Daihatsu Copen Car, Chassis No. LA400K-0007555, year 2014, capacity 658cc
09. Mitsubishi Mirage Car, Chassis No. A03A-0034375, year 2015
10. Daihatsu Move Car, Chassis No. LA150S-0119262
Used motor bikes:
i. New Arctic Cat ATV Bike, Chassis No. RFB14ATV3EK6T0888, year 2014, Capacity 90cc
ii. New Arctic Cat ATV Bike, Casssis No. RFB14ATVXEK6T0905, year 204, capacity 90cc
iii. New Arctic Cat ATV Bike, Chassis No. RFB14ATVXEK6T0919, year 2014, capacity 90cc
iv. New Arctic Cat ATV Bike, Chassis No. RFB14ATV2EK6T0896, year 2014, capacity 90cc
v. New Arctic Cat ATV Bike, Chassis No. RFB14ATV9EK6T0928, year 2014, capacity 90cc
vi. New Arctic Cat ATV Bike, Chassis No. RFB14ATV9EK6T0894, year 2014, capacity 90cc
vii. New Arctic Cat ATV Bike, Chassis No. RFB14ATV3EK6T0910, year 2014, capacity 90cc
viii. New Arctic Cat ATV Bike, Chassis No. RFB14ATV3EK6T0938, year 2014, capacity 90cc
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Accountability framework for FBR officials suggested to make tax audit transparent
KARACHI: Pakistan Tax Bar Association (PTBA) has said that there should be accountability framework for tax officers in order to make audit transparent.
Abdul Qadir Memon, President, PTBA in a message to PTBA Tax Journal outlined eight-point recommendations to tax authorities for making audit system more transparent in order to boost confidence of taxpayers on the authorities.
Memon said that the accountability framework and service standards should be introduced for the employees of Federal Board of Revenue (FBR), more particularly for the revenue officers in respect of quality of assessment order and standing of their orders in the test of appeal including but not limited to final revenue generated by the exchequer.
The PTBA said that laws should be formulated in such a manner that there is a clarity, certainty and finality of an assessment, which has been universally recognized as hallmark of audit and an assessment.
Following are suggestions for effective audit selection mechanism and amendment of assessment based on cogent, honest, justifiable with reasoning and intelligible nexus with the tax affairs of the taxpayers and capacity to pay tax:
— To place sophisticated tax intelligence system to gather data from withholding collection of taxes and third party information collected on the basis of transactions conducted through computerized national identity cards (CNICs).
— Cases are selected by the FBR only on the basis of defined risk areas or red flags trigger tax audit. The field forces are restricted to conduct audit of only such cases.
— The amendment of assessment is framed by the field forces under the following circumstances guided the rules of justice, equity and judicial conscious:
i. Any income chargeable to tax or sales has escaped assessment, under assessed, assessed at low rate or has been misclassified on the basis of definite information.
ii. The deemed assessment is erroneous in so far as it is prejudicial to the interest of revenue.
— In line with global practice (USA, UK, New Zealand, Australia, Canada) to provide a more supportive legislative and administrative environment for existing self-assessment arrangements and to make the taxation system fairer and more certain, it is imperative that a system of Binding Public and Private Ruling for Resident and Non-Residents be introduced.
— The commissioner should not be empowered to amend the assessment as many times as may be necessary on the same issue or point, which has already been subject matter of reassessment or further assessment proceedings.
— The time limit for amendment of assessment should be reduced to two years from the end of the financial years in which the commissioner has issued the original order to the taxpayer and one year in case of amended assessment; whichever is later.
— Relevant laws under the provisions of Direct and Indirect Taxes should be amended in a manner that:
i. Once the audit for any tax year is conducted/completed under Section 177 read with Section 214C of Income Tax Ordinance, 2001; there should not be any audit of monitoring of withholding/collection of taxes and amendment of assessment unless ‘definite information’ comes into the possession of the commissioner.
ii. Once the sales tax audit for any year is conducted in respect of registered taxpayer under the Section 72B there should not be audit under Section 25 of the Sales Tax Act, 1990.
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Sales Tax Act 1990: tax credit not allowed under various conditions
KARACHI: A registered sales tax person is not allowed to entitle to reclaim or deduct input tax paid on various activities of manufacturing / supplies.
The Section 8 of updated Sales Tax Act, 1990 issued by Federal Board of Revenue (FBR) explained where tax credit is not allowed.
Section 8: Tax credit not allowed
Sub-Section (1): Notwithstanding anything contained in this Act, a registered person shall not be entitled to reclaim or deduct input tax paid on –
(a) the goods or services used or to be used for any purpose other for taxable supplies made or to be made by him;
(b) any other goods or services which the Federal Government may, by a notification in the official Gazette, specify;
(c)] the goods under sub-section (5) of section 3:
(ca) the goods or services in respect of which sales tax has not been deposited in the Government treasury by the respective supplier;
(caa) purchases, in respect of which a discrepancy is indicated by CREST or input tax of which is not verifiable in the supply chain;
(d) fake invoices;
(e) purchases made by such registered person, in case he fails to furnish the information required by the Board through a notification issued under sub-section (5) of section;
(f) goods and services not related to the taxable supplies made by the registered person.
(g) goods and services acquired for personal or non-business consumption;
(h) goods used in, or permanently attached to, immoveable property, such as building and construction materials, paints, electrical and sanitary fittings, pipes, wires and cables, but excluding pre-fabricated buildings and such goods acquired for sale or re-sale or for direct use in the production or manufacture of taxable goods;
(i) vehicles falling in Chapter 87 of the First Schedule to the Customs Act, 1969 (IV of 1969), parts of such vehicles, electrical and gas appliances, furniture furnishings, office equipment (excluding electronic cash registers), but excluding such goods acquired for sale or re-sale;
(j) services in respect of which input tax adjustment is barred under the respective provincial sales tax law;
(k) import or purchase of agricultural machinery or equipment subject to sales tax at the rate of 7 percent under Eighth Schedule to this Act;
(l) from the date to be notified by the Board, such goods and services which, at the time of filing of return by the buyer, have not been declared by the supplier in his return or he has not paid amount of tax due as indicated in his return; and
(m) import of scrap of compressors falling under PCT heading 7204.4940.
Sub-Section (2): If a registered person deals in taxable and non-taxable supplies, he can reclaim only such proportion of the input tax as is attributable to taxable supplies in such manner as may be specified by the Board.
Sub-Section (3): No person other than a registered person shall make any deduction or reclaim input tax in respect of taxable supplies made or to be made by him.
Sub-Section (4): omitted
Sub-Section (5): Notwithstanding anything contained in any other law for the time being in force or any decision of any Court, for the purposes of this section, no input tax credit shall be allowed to the persons who paid fixed tax under any provisions of this Act as it existed at any time prior to the first day of December, 1998.
Sub-Section (6): Notwithstanding anything contained in any other law for the time being in force or any provision of this Act, the Federal Government may, by notification in the official Gazette, specify any goods or class of goods which a registered person cannot supply to any person who is not registered under this Act.
Sub-Section (7): Omitted.
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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.
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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.
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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.
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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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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.