In an effort to provide clarity and streamline the taxation of digital payments, recent amendments have been made to the Income Tax Ordinance, 2001, through the Finance (Supplementary) Act, 2022.
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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 anomalies in single sales tax return
KARACHI: Karachi Tax Bar Association (KTBA) has highlighted anomalies in single sales tax return form, which was to be filed for the month of December 2021 in January 2022.
“The sales tax return form has been uploaded on the IRIS portal pre-maturely without removing bugs and without proper testing,” the KTBA said in a letter sent to the chairman of Federal Board of Revenue (FBR) on Monday.
READ MORE: FBR extends date for filing sales tax return
Such exercises do not only agitate the taxpayers but they also damage the image of the FBR, it added.
KTBA president Zeeshan Merchant in the letter to the FBR chairman, hoped that the tax authorities would resolve the issues at the earliest and in the meantime would allow reasonable time to the taxpayers to file sales tax return harmoniously.
He suggested the FBR to allow filing of sales tax return on e-FBR until the issues are resolved, synchronized and anomalies are effectively removed.
READ MORE: FBR launches sales tax return filing through single portal
As part of automation in tax services vis-à-vis to ensure facilitation /ease of doing business to the taxpayers, the FBR launched single sales tax return for goods and services on IRIS Portal through Office Memo dated December 24, 2021 and has made it operational from the Tax Period December 2021 and onwards.
The tax bar while appreciating the efforts of the FBR stated that it is equally important to follow the legal norms and comprehend and resolve the practical intricacies in the episode passionately.
READ MORE: KTBA passes resolution against FTO Asif Jah
About the legality of the filing sales tax return, Merchant noted that the procedure to prescribe and file monthly Sales Tax Return under the Sales Tax Act, 1990 (Act), are sourced via Rule 14 and SRO 555(I)/2006 dated June 05, 2006 which has been amended from time to time; where a monthly Sales Tax Return (for goods) under Form STR-7 is prescribed and is intact as of today. Seemingly, the Single Sales Tax Return (for goods and services) as launched on the strength of Office Memo dated December 24, 2021 without amending SRO dated June 05, 2006, “we believe, is in direct conflict with Rule 14 and we, therefore, expect that the FBR will cater to this aspect religiously at the earliest.”
Besides legal issues, the KTBA highlighted a number of anomalies/glitches the in Single Sales Tax Return uploaded on IRIS Portal, which the tax bar said are acute and otherwise are seen as impediments in filing the correct return.
READ MORE: KTBA submits recommendations for e-filing of appeals
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FBR extends date for filing sales tax return
ISLAMABAD: Federal Board of Revenue (FBR) on Monday extended date for filing sales tax return for the month of December 2021 up to January 24, 2022.
The last date for filing the sales tax return for the month of December 2021 is January 18, 2021.
The taxpayers are required to file their sales tax returns for the month of December 2021 through the Single Sales Tax Portal.
READ MORE: FBR launches sales tax return filing through single portal
The FBR on December 27, 2021 issued a notification under which it directed the taxpayers to file their sales tax returns for month of December 2021 through Single Sales Tax Portal.
The FBR issued a notification to extend the dates for submitting stock details and payment of sales tax and federal excise as well.
READ MORE: Power of the Board and Commissioner to call for records
The FBR said that the date of submission of Annexure – C of Sales Tax and Federal Excise Duty, which was due on January 10, 2022 has been extended up to January 19, 2022.
Similarly, the payment of sales tax and federal excise duty, which was due on January 15, 2022 has been extended up to January 21, 2022.
The single portal for sales tax returns has been launched to facilitate taxpayers, promote ease of doing business and reduce compliance cost.
READ MORE: Inland Revenue officers promoted to BS-20
The FBR said that through this portal, sales tax registered persons shall be able to file a single sales tax return instead of having to file separate returns to the FBR and each of the different provincial sales tax authorities.
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Dr. Alvi orders action over misconduct with 82-year taxpayer
ISLAMABAD: The President of Pakistan, Dr. Arif Alvi, expressed dismay over misconduct of tax authorities with an 82 year old taxpayers in a refund case.
Dr. Alvi directed the chairman of the Federal Board of Revenue (FBR) to look into the entire system of irresponsibility and corruption and take punitive action against the entire chain of decision makers involved in the case, a statement said on Sunday.
He took exception to the decision of FBR against a senior citizen that refused him to refund a paltry sum of Rs 2,333 on frivolous grounds and dragged him into unnecessary litigation spanning over a year.
READ MORE: Dr. Alvi rejects banker’s plea in woman harassment case
Apologizing to the senior citizen Abdul Hamid Khan, the President said that our heads should hang in shame for the inconvenience caused by FBR to the senior citizen.
Abdul Hamid Khan (the complainant), a senior citizen of 82 years of age, had claimed a refund of Rs 2,333 on his income tax return for the year 2020 and submitted requisite documents of advance tax deduction of the PTCL and cell phone company bills on October 19, 2020.
The complainant e-filed refund application on October 19, 2020 followed by representation to FBR Chairman on December 24,2020.
The Unit officer of FBR rejected his refund claim, on January 29, 2021, on the grounds that the applicant had failed to furnish the original certificates required for authentication.
READ MORE: Alvi praises FTO role in resolving taxpayers’ complaints
The complainant then took up the matter with the Federal Tax Ombudsman (FTO) to seek redressal of his complaint. The FTO investigated the matter and ordered FBR on June 02, 2021 to revisit the impugned order ,dated January 19, 2021, and pass a fresh order, under section 170(4) of the ordinance, after providing the complainant the opportunity for hearing as per law.
It further ordered to identify and initiate disciplinary proceedings against the official who passed the impugned order in derogation of the law and procedures and dragged the ageing taxpayer into unnecessary litigation as well as report compliance within 45 days.
Consequently, FBR filed a representation with the President against the original order of FTO on 24.06.2021. President Dr Arif Alvi rejected the representation of FBR.
The President said that the complainant had admittedly furnished copies of advance tax as per certificates collected by telephone authorities. In case the Unit Officer was not satisfied with the copies of certificates, he could have not only got the same verified from the PTCL and Cell Phone Company but verification was also possible through online system.
He observed that it was the responsibility of the duty officer to get the deduction of tax verified from the deducting authorities irrespective of certificates being original or copies/system generated, if the same were not reflecting in the system for one or the other reason.
READ MORE: PTCL registers 7.3% revenue growth for nine months
The President termed the failure of the officer to verify the bills from PTCL and the cell phone company through the online system as shirking from responsibility and an act of maladministration.
He upheld that the act of the officer was a mockery and travesty of law, procedure and instructions of FBR.
It appeared that unlawful treatment was meted out in the instant case with a view to irritate and humiliate the ageing pensioner.
While rejecting the representation of FBR, the President said that this must be the most pitiful and shameful use of bureaucratic authority and regretted that the FBR official had wasted the time of his department, the Tax Ombudsman and the President of Pakistan over a paltry sum of Rs 2,333 and the matter had lingered for over a year.
READ MORE: FBR announces winners of first POS prize draw
He also deplored that no one in the long chain of bureaucrats in FBR deliberated over the issue to take note of the unfairness, pettiness and superfluousness of the matter.
“Punitive action must be taken along the entire line of decision-makers in this case and Chairman FBR should ensure that those responsible, in particular, and others, in general, go through courses to teach them priorities and courtesies,” he directed.
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Cash transactions above Rs50,000 not admissible
The Federal Board of Revenue (FBR) may disallow taxpayers’ transactions under sales tax laws if those are made through cash above Rs50,000.
The Federal Board of Revenue (FBR) issued the Sales Tax Act, 1990 updated up to June 30, 2021. The Act incorporated amendments brought through Finance Act, 2021.
Following is the text of section 73 of the Sales Tax Act, 1990:
73. Certain transactions not admissible.– (1) Notwithstanding anything contained in this Act or any other law for the time being in force, payment of the amount for a transaction exceeding value of fifty thousand rupees, excluding payment against a utility bill, shall be made by a crossed cheque drawn on a bank or by crossed bank draft or crossed pay order or any other crossed banking instrument showing transfer of the amount of the sales tax invoice in favour of the supplier from the business bank account of the buyer:
Provided that online transfer of payment from the business account of buyer to the business account of supplier as well as payments through credit card shall be treated as transactions through the banking channel, subject to the condition that such transactions are verifiable from the bank statements of the respective buyer and the supplier.
Provided further that adjustments made by a registered person in respect of amounts payable and receivable to and from the same party shall be treated as payments satisfying the provisions of this sub-section subject to following conditions, namely:–
(a) sales tax has been charged and paid by both parties under the relevant provisions of this Act and rules prescribed thereunder, wherever applicable; and
(b) the registered person has sought prior approval of the Commissioner before making such adjustments.
(2) The buyer shall not be entitled to claim input tax credit, adjustment or deduction, or refund, repayment or draw-back or zero-rating of tax under this Act if payment for the amount is made otherwise than in the manner prescribed in sub-section (1), provided that payment in case of a transaction on credit is so transferred within one hundred and eighty days of issuance of the tax invoice.
(3) The amount transferred in terms of this section shall be deposited in the business bank account of the supplier, otherwise the supplier shall not be entitled to claim input tax credit, adjustment or deduction, or refund, repayment or draw-back or zero-rating of tax under this Act.
Explanation— For the purpose of this section, the term “business bank account” shall mean a bank account utilized by the registered person for business transactions, declared to the Commissioner in whose jurisdiction he is registered through Form STR-1 or change of particulars in registration database.
“(4) A registered person shall not be entitled to deduct input tax (credit adjustment or deduction of input tax) which is attributable to such taxable supplies exceeding, in aggregate, one hundred million rupees in financial year or ten million rupees in a tax period as are made to certain person who is not a registered person under this Act:
Provided that the aforesaid shall not apply to supplies made to.-
(a) Federal / provincial / local Government departments, authorities, etc. not engaged in making of taxable supplies;
(b) Foreign Missions, diplomats and privileged persons;
(c) all other persons not engaged in supply of taxable goods; and
(d) persons or classes of person, specified by the Board through notification in the official Gazette subject to such conditions and restrictions as may be specified therein.
(Disclaimer: The text of above section is only for information. Team PkRevenue.com makes all efforts to provide the correct version of the text. However, the team PkRevenue.com is not responsible for any error or omission.)
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Reward to IR officials, whistleblowers on tax detection
The Federal Board of Revenue (FBR) has prescribed procedure for grant of reward to Inland Revenue officials and whistleblowers for detection of tax evasion.
The Federal Board of Revenue (FBR) issued the Sales Tax Act, 1990 updated up to June 30, 2021. The Act incorporated amendments brought through Finance Act, 2021.
Following is the text of section 72C and 72D of the Sales Tax Act, 1990:
72C. Reward to Inland Revenue Officers and Officials.– (1) In cases involving concealment or evasion of sales tax and other taxes, cash reward shall be sanctioned to the officers and officials of Inland Revenue for their meritorious conduct in such cases and to the informer providing credible information leading to such detection, as may be prescribed by the Board, only after realization of part or whole of a taxes involve in such cases.
(2) The Board may, by notification in the official Gazette, prescribed the procedure in this behalf and specify the apportionment of reward sanctioned under this section for individual performance or to collective welfare of the officers and officials of Inland Revenue.
72D. Reward to whistleblowers.– (1) The Board may sanction reward to whistleblowers in cases of concealment or evasion of tax, tax fraud, corruption or misconduct providing credible information leading to such detection of evasion of tax fraud.
(2) The Board may, by notification in the official Gazette, prescribe the procedure in this behalf and also specify the apportionment of reward sanctioned under this section for whistleblowers.
(3) The claim for reward by the whistleblower shall be rejected, if-
(a) the information provided is of no value;
(b) the Board already had the information;
(c) the information was available in public records; or
(d) no collection of taxes is made from the information provided from which the Board can pay the reward.
(4) For the purpose of this section, “whistleblower” means a person who reports concealment or evasion of sales tax and tax fraud leading to detection or collection of taxes, fraud, corruption or misconduct, to the competent authority having power to take action against the person or a sales tax authority committing fraud, corruption, misconduct, or involved in concealment or evasion of taxes.
(Disclaimer: The text of above section is only for information. Team PkRevenue.com makes all efforts to provide the correct version of the text. However, the team PkRevenue.com is not responsible for any error or omission.)
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FBR announces winners of first POS prize draw
ISLAMABAD: The Federal Board of Revenue (FBR) on Saturday announced the winners of the first draw of prize scheme on invoices obtained from Point of Sales (POS).
According to the FBR, the bumper prize of Rs one million has been won by Tanveer Ahmed.
The second prize of two each Rs0.5 million has been won by Aftab Ahmed and Farhan Akram.
For further details please download the draw
The FBR said that thousands of prizes worth a hundred thousand rupees had been distributed through the draw.
Those buying from POS integrated retailers in the month of December 2021 were included in the balloting.
The revenue body encouraged people to actively participate in the balloting to win prizes after buying from POS integrated retailers.
READ MORE: Prize scheme on invoices issued by retailers
The FBR previously issued a procedure for participating in the prize scheme.
The revenue body said that the customers of the integrated tier-1 retailers, whose names and CNICs are notified through random computerized draw shall be entitled to prizes in respect of their purchases from the integrated tier-1 retailers.
The customers shall verify the electronically generated invoice of integrated retailers either through the “tax asaan” application or by sending SMS to number 9966.
The application shall notify the customer regarding the status of the invoice either as “verified” or “unverified”.
In case of a verified invoice, the customer shall furnish one time, the following detail to the online system, namely:- Name; CNIC; and Mobile number.
READ MORE: FBR launches prize scheme for POS customers
Names and CNICs of the customers shall be included in the random computerized draw upon fulfillment of the requirement.
In case of an unverified invoice, the customer shall report the same through the system. The Board shall conduct inquiry and take appropriate action under the relevant provisions of law.
The computerized draw for the prizes shall be held in the first week of every month at the FBR Headquarters and the invoices of the immediately preceding month shall be entered in the draw.
Draw winners shall be required to perform biometric verification, at the nearest e-sahulat facility of NADRA and submit a scanned copy on the “tax assan” application. After successful biometric verification, winners shall be required to provide their IBAN through a “tax asaan” application.
The total prize money and the denomination of the prizes shall be decided on month to month basis by the Board.
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FBR’s computerized selection for audit
The Federal Board of Revenue has been empowered to select taxpayers for audit through computerized balloting under Section 72B of Sales Tax Act.
The Federal Board of Revenue (FBR) issued the Sales Tax Act, 1990 updated up to June 30, 2021. The Act incorporated amendments brought through Finance Act, 2021.
Following is the text of section 72B of the Sales Tax Act, 1990:
72B. Selection of audit by the Board.– (1) The Board may select persons or classes of persons for audit of tax affairs through computer ballot which may be random or parametric as the Board may deem fit.
(1A) Notwithstanding anything contained in this Act or any other law, for the time being in force, the Board shall keep the selection parameters confidential.
(2) Audit of tax affairs of persons selected under sub-section (1) shall be conducted as per procedure given in section 25 and all the provisions of this Act shall apply accordingly.
(3) For the removal of doubt, it is hereby declared that the Board shall be deemed always to have had, the power to select any persons or classes of persons for audit of tax affairs under this section.
(Disclaimer: The text of above section is only for information. Team PkRevenue.com makes all efforts to provide the correct version of the text. However, the team PkRevenue.com is not responsible for any error or omission.)
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Rules amended for sales tax de-registration
ISLAMABAD: The Federal Board of Revenue (FBR) has amended rules related to sales tax de-registration of a person or a company.
The FBR issued SRO 51(I)/2022 dated January 13, 2022 to amend Sales Tax Rules, 2006. Rule 11 of the Sales Tax Rules, 2006 deals with de-registration.
Under this rule, sub-rule (1) every registered person who ceases to carry on his business or whose supplies become exempt from tax, or who ceases to remain registered shall apply to the Commissioner Inland Revenue having jurisdiction for cancellation of his registration, and the Commissioner, on such application or on its own initiative, may issue order of de-registration or cancellation of the registration of such person from such date as may be specified, but not later than ninety days from the date of such applicant or the date all the dues outstanding against such person are deposited by him, whichever is later and such person shall caused to be de-registered through computerized system accordingly.
READ MORE: Sales Tax Act, 1990 updated till June 30, 2021
The FBR made amendment in sub-rule 2 of Rule 11. The sub-rule 2 explains that The Commissioner, upon completion of any audit proceedings or inquiry which may have been initiated consequent upon the application of the registered person for de-registration, shall complete the proceedings or inquiry within ninety days from the date of application and direct the applicant to discharge any outstanding liability which may have been raised therein by filing a final return under section 28 of the Sales Tax Act, 1990:
Provided that the person applying for de-registration shall not be de-registered unless he provides record for the purpose of audit or inquiry.
READ MORE: Apex court suspends order in tax notices to overseas assets
Through the SRO the FBR inserted sub-rule 2A and 2B to the sub-rule 2.
According to sub-rule 2A: “After receipt of the application for de-registration by the Commissioner Inland Revenue having jurisdiction, the obligation of the registered person to file monthly sales tax return under Section 26 of the Sales Tax Act, 1990 shall remain suspended, until he is de-registered or his application is rejected, as the case may be.”
The sub-rule 2B explains: “Where the Commissioner Inland Revenue desires to conduct audit or inquiry of the applicant to determine his liability, he shall require the applicant, in writing, to provide the requisite records. On receipts of the complete requisite records, entry to this effect shall be made in the computerized system, which shall automatically de-register the applicant on expiry of ninety days thereof, subject to provision of sub-rule (4).”
READ MORE: Retail price of sugar may be abolished for sales tax
The sub-rule (4) explains that the obligations and liabilities of the person whose registration is cancelled under sub-rule (1) relating to the period when he conducted business as a registered person shall not be affected by the fact that his registration has been cancelled or that he has ceased to be a registered person.
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FBR terminates job of IRS officer on misconduct
ISLAMABAD: The Federal Board of Revenue (FBR) has terminated the job of BS-17 official of Inland Revenue Service (IRS) on the charges of misconduct.
The FBR issued an office order on Friday to notify the major penalty of ‘dismissal from service’ upon the officer.
READ MORE: Senior FBR auditor awarded ‘dismissal from service’ for corruption
The FBR said that disciplinary proceedings were initiated against Masud Humayun (IRS/BS-17/Prob), posted as Assistant Director, Additional Directorate of Internal Audit (IR) Gujranwala on account of multiple offences including exchange of Answer Book, cheating, lying, deceitful conduct and manhandling of the examination supervisor, a BS-19 officer while taking paper of FPO Exam i.e. Principle of Accountancy and unauthorized absence w.e.f. 17.08.2020; constituting “inefficiency” and “misconduct” in terms the Civil Servants (Efficiency and Discipline) Rules, 2020.
READ MORE: Customs official awarded ‘dismissal from service’ for misconduct
The Revenue Secretary/Chairman, FBR, while dispensing with holding of formal inquiry under Civil Servants (E&D) Rules, 2020, issued an Order under Rule7 along with Show Cause Notice dated October 12, 2021. However, no reply, to the said show cause notice (within the stipulated time) was received.
The FBR chairman Chairman after examining the facts and legal position of the case, found the accused officer guilty of the charges of “inefficiency” and “misconduct” levelled against him.
READ MORE: Three FBR officials awarded ‘dismissal from service’ for misconduct
The FBR chairman after having considered all aspects of the case, has decided to impose major penalty of “dismissal from service” upon Masud Humayun (IRS-BS-17/Prob) under the Civil Servants (E&D) Rules, 2020.
The period of his unauthorized absence from duty w.e.f. August 17, 2020 shall be treated as extraordinary leave without pay.
Masud Humayun / the accused officer, shall have the right to file departmental appeal within a period of thirty (30) days from the date of issuance of this notification.
READ MORE: FBR auditor awarded dismissal from service for availing NAB plea bargain