The Federal Board of Revenue (FBR) has made it mandatory for companies and Associations of Persons (AOPs) to make disclosure of their beneficial ownership.
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FBR, Pakistan’s national tax collecting agency, plays a crucial role in the country’s economy. Pakistan Revenue is committed to providing readers with the latest updates and developments regarding FBR activities.
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KTBA highlights pharmaceutical industry’s reporting issues
Karachi Tax Bar Association (KTBA) on Friday highlighted difficulties faced by pharmaceutical industry in reporting of sales after implementation of Finance Act, 2022.
KTBA President Syed Rehan Hasan Jafri in a letter to Asim Ahmad, Chairman of Federal Board of Revenue (FBR) apprised about the implications faced by the bar members after amendments introduced in the Sales Tax Act, 1990 through Finance Act, 2022, in respect with pharmaceutical industry.
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The KTBA pointed that through the Finance Act, 2022 the Serial No.19 of the Fifth Schedule to the Act containing “substances registered as drugs” was omitted and new serial Nos. 81 and 82 were introduced in Table-1 of the Eighth Schedule to the Act.
The whole text of the new entries is being reproduced hereunder to facilitate a quick reference:
81. Manufacture or import of substances registered as drugs under the Drugs Act, 1976 shall charge one per cent sales tax subject to the conditions that:
(i) Tax charged and deposited by the manufacturer or importer, as the case may be, shall be final discharge of tax in the supply chain.
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(ii) No input tax shall be adjusted by the manufacturer or importer.
82. Active Pharmaceutical ingredients, excluding excipients, for manufacture of drugs registered under the Drugs Act, 1976 or raw materials for the basic manufacture of pharmaceutical active ingredients. The sales tax shall be charged at one per cent subject to the conditions that:
(i) DRAP shall certify item-wise requirement of manufacturers of drugs and APIs and in case of import shall furnish all relevant information to Pakistan Customs Computerized System; and
(ii) No input tax shall be adjusted by the manufacturer or importer.
The KTBA interpreted the amendments as the manufacturer/importer of drugs shall charge and pay 1 per cent sales tax, which would be final discharge of their sales tax liability in the entire supply chain of pharma products.
“This clearly implies that if a manufacturer or an importer has paid the above 1 per cent sales tax on supply or import of finished goods (drugs), respectively, then no sales tax would be applicable on the subsequent supply of such pharma goods,” it added.
READ MORE: KTBA recommends changes in IRIS for calculating deemed income on properties
The tax bar highlighted the issue, which are being faced by the pharmaceutical industry due to the recent amendments.
Reference of serial No.19 of Fifth Schedule to the Act is not being appeared at the time of declaring sales returns/cancellation through credit/debit notes at Annexure-C (uploaded through invoice management system). Consequently, sales returns pertaining to January 2022 to June 2022 made at zero per cent, are not being declared in the tax periods of July 2022 and August 2022.
Option for reporting exempt sales made by pharmaceutical distributors is not available at Annexure-C (uploaded through invoice management system) for the tax period of July 2022 due to which, pharmaceutical distributors are unable to file their monthly sales tax return.
The tax bar also complained that multiple queries have already been raised vide emails at FBR helpline by the bar members but till to date no solution or a guideline has been provided or explained.
READ MORE: KTBA demands suspending further tax due to practical issues
In view of the above, the FBR chairman has been requested to make necessary amendments in IRIS so that the pharmaceutical distributors are enabled to file their monthly sales tax returns in timely manner.
Meanwhile, till the issue highlighted above remains unresolved, your office is requested to intervene and condone the due date for filing monthly sales returns for the industry.
The KTBA urged the FBR chairman to provide redressal to the taxpayers connected with Pharma Industry and their distributors as these taxpayers are contributing their due share into the government exchequer as their moral and legal obligation.
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FBR directs speedy clearance of flood relief goods
The Federal Board of Revenue (FBR) has issued directives to customs authorities, emphasizing the need for expeditious clearance of goods related to flood relief operations.
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FBR directs 81 retailers to integrate with POS system
ISLAMABAD: The Federal Board of Revenue (FBR) on Thursday directed 81 retailers to integrate with the online system by September 10, 2022 otherwise action will be taken as per law.
The FBR issued Sales Tax General Order (STGO) No. 3 of 2023 related to Tier-1 retailers for integration with FBR’s Point of Sale (POS) system.
READ MORE: 101 retailers given July 10 as deadline for integration
The Finance Act, 2019 added sub-section (6) to section 8B of the Sales Tax Act, 1990 whereby a Tier-1 Retailers who did not integrate its retail outlet in the manner prescribed under sub-section (9A) of section 3 of the Sales Tax Act, 1990 during a tax period, its adjustable tax for that period would be reduced by 15 per cent. The figure of 15 per cent has been raised to 60 per cent vide Finance Act, 2021.
READ MORE: FBR issues list of 113 retailers for mandatory integration
In order to operationalize this important provision of law, a system-based approach has been adopted whereby all Tier-1 Retailers who are liable to integrate but have not yet integrated, with effect from July-2021 (Sales Tax Returns filed in August, 2021) are to be dealt with as per the procedure laid down in STGO No/ 1 of 2022 issued on August 3, 2021.
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Vide the instant Sales Tax General Order, a list of 101 identified Tier-1 Retailers has been placed on FBR’s web portal allowing them to integrate with FBR’s system by July 10, 2022 an the procedure of exclusion from this list of 101 identified Tier-1 Retailers shall apply as laid down in STGO 17 of 2022 dated May 13, 2022.
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Upon filing of Sales Tax Return for the month of June, 2022 for all hereby notified Tier-1 Retailers not having yet integrated, their input tax claim would be disallowed as above, without any further notice or proceedings, creating tax demand by the same amount.
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How to change personal details for filing income tax return
Many taxpayers are worried about changing their personal details in the registration information with Federal Board of Revenue (FBR).
The information is key to file income tax return. Any wrong information may lead to serious problem in future.
READ MORE: KTBA recommends changes in IRIS for calculating deemed income on properties
However, those taxpayers who are registered with the FBR and want to change their personal details they must read the entire article.
According to the FBR, a person can change registration information recorded for filing Income Tax Return in three (3) possible ways.
Changing information through Iris, a person can change/update information by logging into Iris.
READ MORE: KTBA demands suspending further tax due to practical issues
Following information can be updated by the person through Registration Form 181 (filed for modification) Income Tax: Mobile number; Email; Personal/Residential Address; Business Address; Addition of Business Branches; Legal Representative u/s 87 of Income Tax Ordinance 2001; Bank Account.
Changing information through FBR helpline, a person can also change or update information through FBR helpline via phone or email.
READ MORE: FBR gets 3.38 million active taxpayers by August 28, 2022
Following information can be updated through the helpline: Name; Date of Birth; Gender; Disability Status; Senior Citizen Status; Changing Information by visiting Regional Tax Office (RTO).
For changes in registration regarding the following issues, the person will have to visit their relevant RTO: Discontinuance of business; Jurisdiction for Income Tax Return assessment; Deregistration; Updating CNIC number; Updating Pakistan Origin Card (POC).
A person will have to take relevant documents to RTO in order to successfully change details regarding Income Tax Registration.
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KTBA recommends changes in IRIS for calculating deemed income on properties
KARACHI: Karachi Tax Bar Association (KTBA) has recommended the tax authorities to make changes in IRIS – return filing portal – to determine the fair market value of immovable properties to pay tax on deemed income.
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FBR transfers 153 IRS officers in major reshuffle
The Federal Board of Revenue (FBR) has undertaken a significant reshuffle in the Inland Revenue Service (IRS), announcing the transfers and postings of 153 officers in the latest round of administrative changes.
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FBR transfers 45 senior customs officers of BS-19-20
The Federal Board of Revenue (FBR) of Pakistan has undertaken a major reshuffle, transferring and posting 45 senior officers from grades BS-19 and BS-20 of the Pakistan Customs Service (PCS).
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FED on tobacco to promote documentation: experts
KARACHI: Tax experts believed that newly imposed federal advance excise duty (FED) on tobacco purchase will not impact farmers but manufacturers and would dent the massive tax theft in the tobacco sector.
They said that tax evaders are pressurizing the FBR through farmers for withdrawal of this major documentation measure and creating a false impression of farmers being taxed.
Recently, Khyber Pakhtunkhwa Farmers Rights Protection Association (KPFRPA) has opposed the advance excise duty and wrongly associated it with farmers.
READ MORE: Pakistan Tobacco’s profit falls on high taxes
Spokesperson of FBR clarifies that, “FED on un-manufactured Tobacco has been enhanced from Rs 10/per kg to Rs 390/per kg w.ef 23.08.2022, through promulgation of Tax Laws (Second Amendment) Ordinance,2022, in terms of S.No 7 of Table 1 of First Schedule to the Federal Excise Act 2005.”
He added that the FED is chargeable on unmanufactured Tobacco for manufacturers of cigarettes by the Green LEAF Threshing Units (GLT Units) after processing and conversion of tobacco green leaf as defined under sub-section (2A) of section 2 of the Federal Excise Act 2005.
He said that the amount of FED is adjustable in terms of section 6 of the Federal Excise Act 2005, from the amount of duty collected. Therefore, the main purpose of imposition of FED on unmanufactured tobacco is the documentation dormant undocumented segments of Tobacco industry.
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Furthermore, he added that no FED is imposed or chargeable on raw tobacco leaf supplied by the tobacco growers/farmers to the GLT Units.
Experts believe that the imposition of advance excise duty has been instrumental in documentation of the purchase of tobacco by manufacturers of cigarettes and other tobacco products as all manufacturers who purchase tobacco from farmers must process tobacco through GLT plants.
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It is pertinent to mention that the previous government had increased the tax on tobacco from Rs. 10 per kg to Rs. 300 per kg, however, it had to retract the decision due to pressure from lobby sitting in power corridors, related to illegal cigarette producers.
The government must take a strong stand on this decision. Otherwise, it may help the rise in illicit trade as it will once again give these illegal manufacturers the opportunity to hide their actual tobacco purchases and channel the unlawfully gained revenues from this evasion into marketing and fiscal violations.
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FBR invites proposals for new retailers tax scheme
ISLAMABAD: The Federal Board of Revenue (FBR) is formulating new tax scheme for retailers and in this regard the authority has invited proposals from stakeholders.
The Chairman FBR invited proposals regarding the features of the proposed tax scheme that would serve the purpose of facilitating filing of income tax returns as well as ensuring revenue for the country.
READ MORE: Pakistan amends laws to tax retailers
The government has withdrawn the fixed tax on retailers through the recently promulgated Ordinance. Any new scheme of tax on retailers will be planned and implemented in consultation with the traders.
The Chairman FBR held a detailed meeting with the representatives of traders from all across the country at the FBR House Islamabad on Thursday afternoon. About 21 representatives of Markazi Tanzeem e Tajiraan Pakistan attended the meeting and some participants joined through video link.
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The traders appreciated the initiative of active consultative approach taken by the FBR and put forth various suggestions on the issue.
Earlier on August 25, a meeting with the representatives from all across Pakistan under All Pakistan Anjuman e Tajiraan was also held by the Chairman FBR in Islamabad.
READ MORE: Pakistan decides to roll back fixed tax scheme
While addressing the participants of the two meetings, the Chairman FBR resolved to keep follow-up meetings at the FBR headquarters and also at the regional level so that, through consultation and consensus, a feasible and workable scheme of taxation for retailers & traders is evolved.
The traders were requested to make in-house deliberations amongst themselves and firm up their suggestions for the future tax scheme to be rolled out next month.
The next round of meetings will be held with the traders’ bodies next week.
READ MORE: FTO investigates tax collection through electricity bills