The Federal Board of Revenue (FBR) has reinforced the importance of maintaining meticulous records for professionals, such as medical practitioners, legal practitioners, accountants, auditors, architects, and engineers, in accordance with the Income Tax Rules, 2002, as updated on September 08, 2020.
The move aims to enhance transparency, streamline financial reporting, and ensure compliance with tax regulations within the professional services sector.
Under the updated rules, professionals are required to adhere to specific record-keeping criteria, as outlined by the FBR:
1. Patient/Client Transactions:
• Professionals, including medical practitioners, legal practitioners, accountants, auditors, architects, and engineers, must issue serially numbered and dated patient/client slips, invoices, or receipts for each transaction. The documents should include:
• Taxpayer’s name or the name of the business or profession.
• Address and national tax number or CNIC.
• Sales tax registration number, if applicable.
• Description, quantity, and value of services provided or goods supplied.
• Details of treatment/case/services rendered, ensuring confidentiality.
• Amount charged for the services.
• Name and address of the patient/client.
• A provision exempts general medical practitioners from recording the patient’s address on the patient slip.
2. Daily Appointment and Engagement Diary:
• Professionals are required to maintain a daily appointment and engagement diary, documenting interactions with clients and patients. However, this requirement does not apply to general medical practitioners.
3. Daily Record of Financial Transactions:
• Professionals must keep a daily record of receipts, sales, payments, purchases, and expenses. A single entry summarizing daily financial activities under different heads will suffice for compliance.
4. Vouchers for Purchases and Expenses:
• Professionals should retain vouchers for purchases and expenses as part of their record-keeping obligations.
The FBR’s emphasis on record keeping aligns with broader efforts to enhance tax compliance and transparency in professional services. By requiring professionals to maintain detailed records, the FBR aims to facilitate accurate reporting, discourage tax evasion, and ensure that professionals fulfill their tax obligations.
These record-keeping requirements are essential for professionals to effectively demonstrate the legitimacy of their financial transactions, allowing tax authorities to assess income accurately. The regulations aim to create a standardized and accountable system that promotes fair taxation practices within the professional services sector.
It is crucial for professionals to familiarize themselves with these updated rules and integrate them into their daily financial practices. This proactive approach will not only ensure compliance with the law but also contribute to building a robust and transparent financial system that benefits both professionals and the broader economy.
