Karachi, August 2, 2024 – The Federal Board of Revenue (FBR) has announced it will soon disclose the values of imported goods for the purpose of collecting advance income tax.
This move is in line with amendment made through the Finance Act, 2024, which mandates the FBR to establish the minimum value of goods for the collection of advance tax under Section 148 of the Income Tax Ordinance, 2001.
As per the Circular No. 1 of 2024-25, the FBR explained the Collector of Customs is required to collect advance tax from every importer on the value of goods at the rate specified in the Income Tax Ordinance, 2001. This collection process is to be conducted under the provisions of the Customs Act, 1969, where applicable, ensuring a streamlined approach.
The value of goods, as defined in sub-section (9) of Section 148, refers to the value determined under the Customs Act, 1969. This includes the ad valorem duty increased by customs duty, federal excise duty, and sales tax payable on the import of goods. However, for goods taxed at retail price under the Third Schedule of the Sales Tax Act, 1990, the value is defined as the retail price increased by the sales tax payable on the import and taxable supply of such goods.
Through the Finance Act, 2024, a new sub-section (6A) has been introduced in Section 148. This empowers the FBR to determine the minimum value of goods for advance tax collection via notification in the official Gazette. Additionally, Clause (c) has been added to sub-section (9), which stipulates that the value of goods will be the minimum value notified by the FBR under sub-section (6A), as if the goods were subject to ad valorem duty, inclusive of customs duty, federal excise duty, and sales tax payable on the import.
The FBR’s initiative to announce the values of imported goods aims to bring clarity and uniformity to the tax collection process. Importers will now have a clearer understanding of the minimum values applicable, ensuring compliance and aiding in the efficient collection of advance income tax.
This regulatory update is expected to have significant implications for importers and the broader trade sector. The standardized valuation process will likely reduce disputes and streamline tax collection, enhancing revenue generation for the government.
In conclusion, the FBR’s forthcoming announcement marks a critical step towards refining the taxation framework for imported goods. Importers are advised to stay informed about the upcoming notification and prepare for the adjustments in the tax collection process.