Section 206 of Income Tax Ordinance, 2001 has explained the powers of the Federal Board of Revenue (FBR) to issues circulars for tax authorities. However, these circulars shall not be binding on a taxpayer.
TheFederal Board of Revenue (FBR)issued theIncome Tax Ordinance, 2001updated up to June 30, 2021. TheOrdinanceincorporated amendments brought throughFinance Act, 2021.
Following is the text of Section 206 of theIncome Tax Ordinance, 2001:
206. Circulars. —(1) To achieve consistency in the administration of this Ordinance and to provide guidance to taxpayers and officers of the Board, the Board may issue Circulars setting out the Board’s interpretation of this Ordinance.
(2) A circular issued by the Board shall be binding on all Income Tax Authorities and other persons employed in the execution of the Ordinance, under the control of the said Board other than Commissioners of Income Tax (Appeals).
(3) A Circular shall not be binding on a taxpayer.
206A. Advance ruling.— (1) The Board may, on application in writing by a non-resident taxpayer, issue to the taxpayer an advance ruling setting out the Commissioner’s position regarding the application of this Ordinance to a transaction proposed or entered into by the taxpayer.
(2) Where the taxpayer has made a full and true disclosure of the nature of all aspects of the transaction relevant to the ruling and the transaction has proceeded in all material respects as described in the taxpayer’s application for the ruling, the ruling is binding on the Commissioner with respect to the application to the transaction of the law as it stood at the time the ruling was issued.
(3) Where there is any inconsistency between a circular and an advance ruling, priority shall be given to the terms of the advance ruling.
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