The Federal Board of Revenue (FBR) has instituted a significant change in the tax structure for the supply of food items by restaurants, bakeries, caterers, and sweetmeat shops, imposing a 17% sales tax.
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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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Committee formed to hunt tax evaders in supply chain
ISLAMABAD: The Federal Board of Revenue (FBR) on Thursday constituted a committee to hunt for tax evaders in supply chain i.e. manufacturers, importers, distributors, retailers etc.
According to a FBR notification, the committee shall identify wholesalers, distributors, small, medium and large manufacturers/importers who potentially have taxable income but neither, they have been brought into the tax base of Pakistan nor being part of the tax base but are evading and suppressing taxes and invoices.
READ MORE: Retail sector’s sales worth Rs16 trillion not in tax net: Tarin
It will define the potential target market and quantify the size of the target market.
The committee shall develop a business plan comprising of budget pertaining to project plan, human, IT and infrastructure resources required to bring the potential target market into the tax base, in order to generate incremental tax revenue.
It will obtain legal and regulatory protection, facilitation and support of stakeholders in order to achieve the objective in collaboration and support of the FBR.
READ MORE: FBR enhances tax rates on motor vehicle registration
The committee shall have mandate to define policy and rules for a licensing framework for appointment of intermediaries who will coordinate and facilitate the integration of supply chain to capture and report all sales transactions.
It will coordinate with various associations and trade bodies to facilitate the integration of supply chains.
The committee shall have powers of controlling, monitoring and implementation of supply chain capture integration program in coordination with the IRS Operations.
READ MORE: FBR increases income tax to 15% on cellular services
It will develop a correlation between invoice and digital/electronic payments for the purpose of audit, in coordination with necessary stakeholders including but not limited to State Bank of Pakistan (SBP).
The committee shall have mandate to leverage software to capture the entire supply chain from manufacturer, distributor, wholesaler, retailer and customers to capture transactions, withholding tax information and use the developed database to capture potential taxpayers.
READ MORE: FBR issues new FED rates on motor vehicles
It further have mandate to leverage data analytics to capture sales tax demand on the input/output at each stage of supply chain from manufacturer to end consumer, thereby bringing unregistered distributors, sub-distributors and retailers into the tax net.
The committee will develop organizational structure required to deliver on the above Terms of Reference (TORs) based on size of potential target market, physical dispersion of potential target market, and committed time lines for achieving TORs.
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FBR enhances tax rates on motor vehicle registration
ISLAMABAD: The Federal Board of Revenue (FBR) on Thursday notified the enhanced rates of advance tax on those vehicles, which sold prior to first registration.
The tax rates have been enhanced through Finance (Supplementary) Act, 2022 through making amendment in Section 231(B)(2A) of Income Tax Ordinance, 2001.
The FBR said that advance tax on vehicle registration under Section 231(B)(2A) of the Ordinance has been increased for the persons who register such motor vehicles which have been sold prior to their first registration.
READ MORE: FBR increases income tax to 15% on cellular services
The FBR issued Circular No. 12 of 2012 to explain amendments in the Income Tax Ordinance, 2001 made through Finance (Supplementary) Act, 2022.
The purpose is to discourage huge ‘on money’ on such vehicles which are booked by investors as a result of which the vehicles remain unavailable to the genuine buyers.
READ MORE: FBR issues new FED rates on motor vehicles
New rates under Division VII of Part IV of First Schedule to the Ordinance shall be as following:
01. Motor vehicle with engine capacity up to 1000CC, the advance tax has been increased to Rs100,000 from Rs50,000.
02. Motor vehicle with engine capacity between 1001cc to 2000cc, the advance tax has been increased to Rs200,000 from Rs100,000.
03. Motor vehicle with engine capacity 2001cc and above, the advance tax has been increased to Rs400,000 from Rs200,000.
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FBR increases income tax to 15% on cellular services
ISLAMABAD: The Federal Board of Revenue (FBR) on Thursday said the advance income tax on cellular services has been increased to 15 per cent from 10 per cent.
The FBR issued Circular No. 12 of 2022 to explain amendments to Income Tax Ordinance, 2001 made through Finance (Supplementary) Act, 2022.
The increase in advance tax rate on cellular service would generate additional 4.5 billion for the FBR.
READ MORE: FBR issues new FED rates on motor vehicles
The changes in the withholding tax regime on usage of internet and mobile phones services were introduced through the Finance (Supplementary) Bill, 2021, which was later approved by the national assembly.
The FBR said that through the Finance Act, 2021 federal excise duty (FED) was levied on telecom services. However, telecom companies challenged the duty and got a favourable decision.
“A marginal increase in adjustable advance tax has been proposed from 10 per cent to 15 per cent to make up for revenue loss from telecos,” the FBR added.
READ MORE: Banks to share business account details to FBR
The FBR collects the advance tax on telephone and internet users under Section 236 of Income Tax Ordinance, 2001.
According to the ordinance:
“Telephone and internet users.- (1) Advance tax at the rates specified in Division V Part IV of the First Schedule shall be collected on the amount of – (a) telephone bill of a subscriber; (b) prepaid cards for telephones; (c) sale of units through any electronic medium or whatever form ; and (d) internet bill of a subscriber; and (e) prepaid cards for internet.
(2) The person preparing the telephone or internet bill shall charge advance tax under sub-section (1) in the manner telephone or internet charges are charged.
READ MORE: Debt, credit card machines must for POS retailers: FBR
(3) The person issuing or selling prepaid cards for telephones or the internet shall collect advance tax under sub-section (1) from the purchasers at the time of issuance or sale of cards.
(3A) The person issuing or selling units through any electronic medium or whatever form shall collect advance tax under sub-section (1) from the purchaser at the time of issuance of sale of units.
(4) Advance tax under this section shall not be collected from the Government, a foreign diplomat, a diplomatic mission in Pakistan, or a person who produces a certificate from the Commissioner that his income during the tax year is exempt from tax.”
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FBR issues new FED rates on motor vehicles
ISLAMABAD: The Federal Board of Revenue (FBR) on Thursday issued new rates of Federal Excise Duty (FED) on imported and locally assembled motor vehicles.
The FBR revised upward the FED rates after the implementation of Finance (Supplementary) Act, 2022. In this regard the FBR issued Circular No. 06 of 2022.
Through S. No. 55, 55B, 55C and 55D of Table-1 of the First Schedule to the Federal Excise Act, 2005, the rates of FED on imported, locally manufactured motorcars/SUVs, imported and locally manufactured double cabin are provided respectively.
READ MORE: Banks to share business account details to FBR
In order to rationalize the existing rates of FED on vehicles, the following increase in the various slabs has been made:
Imported motor cars, SUVs and other motor vehicles:
(a) of cylinder capacity up to 1000cc the FED rate has been kept unchanged at 2.5 per cent ad valorem.
(b) Of cylinder capacity from 1001cc to 1799cc the FED rate has been increased to 10 per cent ad valorem from 5 per cent.
(c) Of cylinder capacity 1800cc to 3000cc the FED rate has been increased to 30 per cent ad valorem from 25 per cent.
READ MORE: Debt, credit card machines must for POS retailers: FBR
(d) Of cylinder capacity exceeding 3001cc the FED rate has been increased to 40 per cent ad valorem from 30 per cent
Locally manufactured or assembled motor cars, SUVs:
(a) Of cylinder capacity up to 1300cc has been rationalized at 2.5 per cent. Previously, the FED was zero per cent on up to 1000cc and was 2.5 per cent on 1001cc to 2000cc.
(b) Of cylinder capacity from 1301cc to 2000cc the FED rate has been increased to 5 per cent ad valorem from 2.5 per cent.
(c) Of cylinder capacity 2001cc and above the FED rate has been enhanced to 10 per cent ad valorem from 5 per cent.
READ MORE: FBR slashes sales tax rates on petrol, HSD
Imported double cabin (4X4) pickup vehicles, the FED has been increased to 30 per cent ad valorem from 25 per cent.
Locally manufactured double cabin (4X4) pickup vehicles except the vehicles booked on or before June 30, 2020 subject to the restriction or conditions specified by the FBR, the FED has been increased to 10 per cent ad valorem from 7.5 per cent.
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Banks to share business account details to FBR
KARACHI: It has been made mandatory for banks to provide details of business accounts every month to the Federal Board of Revenue (FBR), official sources said on Wednesday.
This is the additional information to be submitted by the banks along with details already mandatory for the financial institutions.
READ MORE: Digital payments defined through Finance Supplementary Act 2022
To make the requirement mandatory, Section 165A of the Income Tax Ordinance, 2001 has amended through Finance (Supplementary) Act, 2022.
A new clause (f) has been inserted to the Section 165A under which the banks shall provide a list of persons containing particulars of their business accounts opened or re-designated during each preceding calendar month.
READ MORE: Digital tax monitoring yields Rs32.43bn from sugar sector
The Section 165A of the Income Tax Ordinance, 2001 deals with furnishing of information by banks:
“(1) Notwithstanding anything contained in any law for the time being in force including but not limited to the Banking Companies Ordinance, 1962 (LVII of 1962), the Protection of Economic Reforms Act, 1992 (XII of 1992), the Foreign Exchange Regulation Act, 1947 (VII of 1947) and the regulations made under the State Bank of Pakistan Act, 1956 (XXXIII of 1956), if any, on the subject every banking company shall make arrangements to provide to the Board in the prescribed form and manner,—
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(a) a list of persons containing particulars of cash withdrawals exceeding fifty thousand Rupees in a day and tax deductions thereon, aggregating to Rupees one million or more during each preceding calendar month;
(b) a list containing particulars of deposits aggregating rupees ten million or more made during the preceding calendar month;
(c) a list of payments made by any person against bills raised in respect of a credit card issued to that person, aggregating to rupees two hundred thousand or more during the preceding calendar month;
(d) a list of persons receiving profit on debt and tax deductions thereon during preceding financial year.
(e) omitted
(2) Each banking company shall also make arrangements to nominate a senior officer at the head office to coordinate with the Board for provision of any information and documents in addition to those listed in sub-section (1), as may be required by the Board.
(3) The banking companies and their officers shall not be liable to any civil, criminal or disciplinary proceedings against them for furnishing information required under this Ordinance.
READ MORE: Supplementary bill aimed at documenting economy: Tarin
(4) Subject to section 216, all information received under this section shall be used only for tax purposes and kept confidential.
Tax experts at PwC A. F. Ferguson & Co. said that the change is in-line with the requirement for declaration of the business bank account under the provisions of section 114A introduced through the Finance Act, 2021 and is a step towards documentation of the economy.
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Debt, credit card machines must for POS retailers: FBR
ISLAMABAD: The Federal Board of Revenue (FBR) on Wednesday said retailers, who integrated Point of Sale (POS), must have facility of debt and credit card machines to facilitate their customers in making payments.
The FBR issued Circular No. 05 of 2022 regarding implementation of Rule 150ZEB(II) of the Sales Tax Rules, 2006.
READ MORE: Who are Tier-1 retailers under Sales Tax Act?
The revenue body said that all Tier-1 retailers are expected to maintain the highest standards of documentation, reporting and transparency.
In their endeavors to achieve such high standards, they are integrated with FBR’s IT system for real-time reporting of their economic transactions.
READ MORE: FBR issues list of 608 Tier-1 non-compliant retailers
It has transpired that many integrated Tier-1 retailers are indulged in making cash transactions, which is not only against the overall scheme of things, but also the intended objectives.
In this connection, it is pertinent to note that Rule 150ZEB(II) of the Sales Tax Rules, 2006, mandates that each Tier-1 Retailer “must have the facility of debit and credit card machines installed at each notified outlet and the sales through debit or credit cards shall not be ordinarily refused.”
READ MORE: Tier-1 retailers given deadline for integration
“Accordingly, all integratable Tier-1 Retailers are liable to have debt/credit card machine installed at their outlets and IRS field formations to ensure implementation the rules in this respect,” the FBR added.
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FBR asked to facilitate startups, e-commerce
ISLAMABAD: Federal Board of Revenue (FBR) has been asked to facilitate startups and e-commerce across border exporters in the country.
Special Assistant to the Prime Minister (SAPM) on E-Commerce, Senator Aon Abbas Buppi on Tuesday issued the directives at a meeting with FBR Chairman Dr. Muhammad Ashfaq.
The SAPM also stated that startups is a growing economy and this segment needs all the facilitation by the government to promote digital economy and promoting e- Commerce, said a press release issued here.
READ MORE: FBR slashes sales tax rates on petrol, HSD
Aon Abbas Buppi specifically asked to abolish minimum turnover taxes for new startups to provide a conducive business environment for them.
SAPM discussed with the FBR chairman to offer facilitation for startups and e-Commerce cross border exporters, Chairman FBR agreed to work on proposals from SAPM and assured that FBR will work along with the Ministry of commerce to create a conducive environment for the e-commerce ecosystem.
Meanwhile Special Assistant to the Prime Minister (SAPM) on E-Commerce said the government has built the first e-commerce university in the country and is pursuing a revolutionary program to provide skilled labor in the sector.
READ MORE: FBR to re-notify property values on February 01
The e-commerce university will start its work by March 2022, which will provide affordable and quality education to the students. The country needs standard e-commerce university time.
He said that the government of Pakistan Tehreek-e-Insaf (PTI) has introduced the first e-commerce policy in October 2019, which would create new avenues of employment opportunities for the youth of the country.
Aon Abbas said that E-Commerce policy provides communities with a guideline on how they can take advantage of this innovative opportunity.
He said the country currently has more than 50 percent youth population for whom there would be huge job opportunities in the e-commerce sector.
READ MORE: FBR extends date for filing sales tax return
SAPM said that Prime Minister Imran Khan has given us a target to open 10 million new jobs through the e-commerce sector.
He said that 10,000 new companies have to be opened and 10,000 new people have to be trained to create more manpower in this sector.
He said that at present the global market for e-commerce is $30 trillion, of which Pakistan’s share is very small.
It has $4 trillion in Business to Business and $4 trillion in Business to Companies trade.
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FBR slashes sales tax rates on petrol, HSD
ISLAMABAD: Federal Board of Revenue (FBR) on Tuesday slashed sales tax rates on petrol and high speed diesel (HSD) in order to reduce the impact of high oil prices at consumer end.
The FBR issued SRO 88(I)/2022 dated January 18, 2022 to notify changes the sales tax rates on supply of petroleum products.
The sales tax on supply of petrol has been reduced to 2.5 per cent ad valorem from 4.77 per cent. Similarly, the rate of sales tax on supply of high speed diesel has been reduced to 5.44 per cent from 9.08 per cent.
The FBR kept unchanged the sales tax rates on kerosene and light diesel oil at 8.30 per cent and 2.70 per cent, respectively.
The revenue body previously issued SRO 01(I)/2022 dated January 3, 2022 to change the rate of sales tax on petroleum products.
Earlier on January 15, 2022, the government announced to increase prices of all petroleum products for next fortnight.
READ MORE: Pakistan’s petrol price rises to record high at Rs147.83
According to the notification, the price of petrol has been increased by Rs3.01 to Rs147.83 per liter from Rs144.82.
The price of high speed diesel (HSD) has been increased by Rs3 to rs144.62 per liter from Rs141.62.
The rate of kerosene has been enhanced by Rs3 to Rs116.48 per liter from Rs113.48.
The price of light diesel oil has been increased by Rs 3.33 toRs114.54 per liter from Rs111.21.
According to a notification issued by the Finance Division on January 15, 2022, the decision to enhance domestic prices of petroleum products because the international oil price had registered 6.2 per cent during the last week. Presently, at the highest level since last year.
READ MORE: Prices of all POL products increased to wish New Year
The existing sales tax rate and petroleum levy on various petroleum products are much below the budgeted targets.
The finance ministry said that against the recommendations of Oil and Gas Regulatory Authority (OGRA) for increase of Rs5.52 per liter in petrol and Rs6.19/liter in high speed diesel prices, the Prime Minister had directed to absorb at the international prices through further cut in sales tax from last fortnight.
“The finance ministry will take Rs2.6 billion revenue hit due to reduced sales tax rates,” it added.
Therefore, the government has decided to make partial increase in the prices of the petroleum products in order to provide relief to the end consumers.
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FBR to re-notify property values on February 01
ISLAMABAD: The Federal Board of Revenue (FBR) on Tuesday said it will re-notify the valuation of immovable properties on February 01, 2022. The FBR further said that the valuation issued on December 01, 2021 will remain in abeyance till January 31, 2022.
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