Tag: concealment

Finance Bill amends concealment of income definition

ISLAMABAD: The Finance Bill, 2021 has proposed to redefine the concealment of income by including suppression of receipts liable to tax.

According to budget 2021/2022 documents, the Finance Bill 2021 proposed to make amendment in the Income Tax Ordinance, 2001 regarding concealment of income.

The proposed amendment explains concealment of income includes –

“(a) the suppression of any item of receipt liable to tax in whole or in part, or failure to disclose income chargeable to tax;

(b) claiming any deduction or any expenditure not actually incurred; and

(c) any act referred to in sub-section (1) of section 111 of Income Tax Ordinance, 2001.

Explanation.- For the removal of doubt, it is clarified that where any item of receipt declared by the taxpayer is claimed as exempt from tax, or where any deduction in respect of any expenditure is claimed, mere disallowance of such claim shall not constitute concealment of income or the furnishing of inaccurate particulars of income, unless it is proved that the taxpayer deliberately claimed exemption from tax in respect of the aforesaid item of receipt or claimed deduction in respect of such expenditure not actually incurred by him.”

June 12, 2021
Commissioner empowered to make assessment of concealed income

KARACHI: A commissioner of Inland Revenue has been empowered to make assessment of income detected as concealed income by Federal Board of Revenue (FBR) or any other agency.

FBR officials said that under Section 123 of the Income Tax Ordinance, 2001, the commissioner has been authorized to make assessment of income on amount / assets identified as concealed or undeclared.

The Section 123 of the Ordinance stated as follow:

123.Provisional assessment in certain cases.—(1) Where a concealed asset of any person is impounded by any department or agency of the Federal Government or a Provincial Government, the Commissioner may, at any time before issuing any assessment order under section 121 or any amended assessment order under section 122, issue to the person a provisional assessment order or provisional amended assessment order, as the case may be, for the last completed tax year of the person taking into account the concealed asset.

(1A) Where an offshore asset of any person, not declared earlier, is discovered by the Commissioner or any department or agency of the Federal Government or a Provincial Government, the Commissioner may at any time before issuing any assessment order under section 121 or amended assessment order under section 122, issue to the person a provisional assessment order or provisional amended assessment order, as the case may be, for the last completed tax year of the person taking into account the offshore asset discovered.

(2)The Commissioner shall finalise a provisional assessment order or a provisional amended assessment order as soon as practicable.

(3) In this section, “concealed asset” means any property or asset which, in the opinion of the Commissioner, was acquired from any income subject to tax under this Ordinance.

December 29, 2019
Tax authorities to determine values of immovable properties, motor cars on discovery of concealment

ISLAMABAD: The tax authorities shall determine value of immovable properties and motor cars for tax purpose on discovery of concealment by a person or a company.

Officials in Federal Board of Revenue (FBR) said that under Section 111 of Income Tax Ordinance, 2001 any disclosed income or assets will be taken as concealed income and leviable to tax and prevailing fine and penalties.

Income Tax Rules, 2002 has outlined the determination of assets that are concealed by a person or a company.

(1) The valuation of immovable property for the purposes of section 111 shall be taken to be-

(a) the fair market value of immovable property shall be the value notified by the Board under sub-section (4) of section 68, in respect of area or areas specified in the said notifications;

(b) if the fair market value of any immovable property of any area or areas has not been determined by the Board in the notification referred to in sub-section (4) of section 68, the fair market value of such immovable property shall be deemed to be the value fixed by the District Officer (Revenue) or provincial or any other authority authorized in this behalf for the purposes of stamp duty; and

(c) in the case of agricultural land, the value shall be equal to the average sale price of the sales recorded in the revenue record of the estate in which the land is situated for the relevant period or time;

(d) if in a case sale price recorded in the instrument of sale of any property is higher than the fair market value as determined under clauses (a), (b) and (c), the applicable price shall be higher of the two; and

(e) in the case of sale price of any auctioned property or the fair market value as determined under clauses (a), (b) and (c), the higher price shall be applicable.

(2) For the purposes of section 111 and subject to sub-rule (2), the value of motor cars and jeeps shall be determined in the following manner, namely:-

(a) the value of the new imported car or jeep shall be the C.I.F. value of such car or the jeep, as the case may be, plus the amount of all charges, customs-duty, sales tax, levies, octroi fees and other duties and taxes leviable thereon and the costs incurred till its registration;

(b) the value of a new car or jeep purchased from the manufacturer or assembler or dealer in Pakistan, shall be the price paid by the purchaser, including the amount of all charges, customs-duty, sales tax and other taxes, levies, octroi, fees and all other duties and taxes leviable thereon and the costs incurred till its registration;

(c) the value of used car or jeep imported into Pakistan shall be the import price adopted by the customs authorities for the purposes of levy of customs-duty plus freight, insurance and all other charges, sales tax, levies octroi, fees and other duties and taxes leviable thereon and the costs incurred till its registration;

(d) the value of a car or jeep specified in clause (a), (b) and (c) at the time of its acquisition shall be the value computed in the manner specified in the clause (a), (b) or (c), as the case may be, as reduced by a sum equal to ten percent of the said clause for each successive year, upto a maximum of five years; or

(e) the value of a used car or jeep purchased by an assessee locally shall be taken to be the original cost of the car or the jeep determined in the manner specified in clause (a), (b) or (c), as the case may be, as reduced by an amount equal to ten percent for every year following the year in which it was imported or purchased from a manufacturer.

(3) In no case shall the value be determined at an amount less than fifty percent of the value determined in accordance with clause (a), (b) or (c) or the purchase price whichever is more.

(4) For the purposes of section 61, the value of any property donated to a non-profit organization shall be determined in the following manner, namely:-

(a) the value of articles or goods imported into Pakistan shall be the value determined for the purposes of levy of customs duty and the amount of such duty and sales tax, levies, fees, octroi and other duties, taxes or charges leviable thereon and paid by the donor;

(b) the value of articles and goods manufactured in Pakistan shall be the price as recorded in the purchase vouchers and the taxes, levies and charges leviable thereon and paid by the donor;

(c) the value of articles and goods which have been previously used in Pakistan and in respect of which depreciation has been allowed, the written down value, on the relevant date as determined by the Commissioner;

(d) the value of a motor vehicle shall be the value as determined in accordance with rule; and

(e) the value of articles or goods other than those specified above, shall be the fair market value as determined by the Commissioner.

November 2, 2019