FBR Notifies Mandatory Record-Keeping for Salaried Individuals

FBR Notifies Mandatory Record-Keeping for Salaried Individuals

Karachi, December 7, 2023 – The Federal Board of Revenue (FBR) has announced the mandatory requirement of record keeping for salaried individuals as part of the updated Income Tax Rules, 2002 for the tax year 2024.

The revised regulations detail specific documentation obligations for individuals deriving income from various sources. Here’s a breakdown of the mandatory record-keeping requirements for different types of income:

(1) Taxpayers Deriving Income from Salary: Salaried individuals are now required to maintain a salary certificate that indicates the amount of salary received and the corresponding tax deducted. This measure is expected to streamline the reporting process and facilitate accurate tax assessments.

(2) Taxpayers Deriving Income from Property: For those earning income from property, documentation includes:

• (a) Tenancy agreement, if executed

• (b) Tenancy termination agreement, if executed

• (c) Receipts for rent received

• (d) Evidence of deductions claimed, such as premium payments for building insurance, local rates, taxes, charges, ground rent, profit/interest, or shares in rent on borrowed money, as well as expenditures on rent collection, legal services, and unpaid rent.

(3) Taxpayers Deriving Income from Capital Gains: Individuals with capital gains are required to maintain evidence of the cost of acquiring the capital asset, evidence of deductions for any other costs claimed, and evidence of consideration received upon the disposal of the capital asset.

(4) Taxpayers Deriving Income from Other Sources: For various sources of income, the required documentation includes:

• (a) Dividends: Dividend warrants

• (b) Royalty: Royalty agreement

• (c) Profit on debt: Evidence of profit-yielding debt, evidence of profit on debt, and proof of Zakat deducted, if applicable

• (d) Ground rent, rent from sub-lease, lease of building with plant or machinery, and consideration for vacating possession: Lease agreements and lease termination agreements

• (e) Annuity or Pension: Evidence of the amount received

• (f) Prize money, winnings from a raffle, lottery, or crossword puzzle: Evidence of income and tax deducted

• (g) Provision use or exploitation of property: Agreement

• (h) Loan, advance, deposit, or gift: Evidence of the mode of receipt, such as a crossed cheque or through a banking channel

• (i) General: Evidence of deduction for any other claimed expenditure.

This directive from the FBR emphasizes the importance of accurate and comprehensive record-keeping to ensure smooth tax compliance for salaried individuals and those deriving income from various sources. Taxpayers are advised to familiarize themselves with these requirements and maintain the necessary documentation to avoid any potential issues during the tax assessment process.