Karachi, December 5, 2023 – The Federal Board of Revenue (FBR) in Pakistan has introduced crucial updates to the Income Tax Rules, 2002, stipulating mandatory maintenance of books of accounts, documents, and records for taxpayers during the tax year 2024.
The move aims to enhance transparency and streamline financial reporting in businesses across the country.
According to the updated rules, every taxpayer deriving income under the head “Income from Business” is obligated to maintain comprehensive books of account, documents, and records. The specified requirements encompass a range of financial aspects, ensuring a thorough and accurate representation of the taxpayer’s economic activities.
The mandated records include:
(a) Receipts and Expenditures: The taxpayer must document all sums of money received and expended, providing detailed information about the nature and purpose of each transaction.
(b) Sales and Purchases: Comprehensive records of all goods sold and purchased, along with details of services provided and obtained by the taxpayer, must be maintained to facilitate a comprehensive audit trail.
(c) Assets: A detailed inventory of all assets owned by the taxpayer, ensuring a clear picture of the financial standing and capital investments.
(d) Liabilities: The taxpayer is required to document all liabilities, providing insights into the financial obligations and debts incurred during the tax year.
(e) Cost Items for Specific Activities: For taxpayers engaged in assembly, production, processing, manufacturing, mining, or similar activities, a breakdown of all costs related to materials, labor, and other inputs must be maintained.
Furthermore, if a taxpayer utilizes fiscal electronic cash registers or computerized accounting software, they have the option to issue cash-memo invoices/receipts generated by these systems. Duplicate copies and electronic or computer records of such documents are to be retained by the taxpayer and will form an integral part of the records to be maintained as per the chapter.
The FBR emphasizes the importance of maintaining these records for six years after the conclusion of the tax year to which they relate. This stipulation ensures that adequate documentation is available for future reference and auditing purposes, aligning with international best practices for financial transparency and accountability.
The move by the FBR reflects a commitment to strengthening the tax administration system in Pakistan, fostering an environment of compliance and responsible financial management. Taxpayers are encouraged to familiarize themselves with these updated regulations and take the necessary steps to ensure strict adherence to the outlined requirements. Failure to comply with these regulations may result in penalties and legal consequences.
As businesses and individuals adapt to the evolving regulatory landscape, the FBR’s initiative is expected to contribute significantly to the overall economic integrity and fiscal responsibility in Pakistan.
