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According to explanation of amendments made through Finance Act, 2022, issued by PwC A. F. Ferguson, defacing the prescribed invoice number or the barcode or QR code has been introduced as an offence subject to levy of penalty of higher of Rs 500,000 or 200 per cent of the amount of tax involved.
Upon conviction by a Special Judge, a simple imprisonment for a term which may extend to two years, or with additional fine which may extend to two million rupees, or with both may also be imposed.
Any person who abets commissioning of such offence has also been made liable, upon conviction by a Special Judge, to simple imprisonment for a term which may extend to one year, or with additional fine which may extend to two hundred thousand rupees, or with both.
Certain penalties were introduced through Tax Laws (Third Amendment) Ordinance, 2021 on failure of Tier-1 retailers to register and integrate business which have now been ratified in the Act.
The Finance Act, 2022 also amended laws related to powers of the FBR regarding initiating criminal proceedings.
The powers of the FBR to prescribe rules for initiating criminal proceedings against any specified authority for willful or deliberate acts/omissions resulting in personal benefits and undue advantage to authority, person or taxpayer have been withdrawn. Earlier, the FBR was empowered to this effect through Finance Act, 2019.
According to tax experts at PwC A. F. Ferguson & Co. said that the scope of definition of the term ‘Tier-1 retailer’ has been enhanced to include a person engaged in supply of articles of jewelry or parts thereof, of precious metal excluding a person whose shop area measures 300 square feet in area or less.
Consequently, such persons are now required to integrate their retail outlets with FBR’s computerized system for real-time reporting of sales to avoid disallowance of input tax by 60 per cent.
Further, supply of locally manufactured articles of jewelry, or parts thereof, of precious metal or of metal clad with precious metal by such person will be chargeable at 3 per cent subject to the condition that no input tax adjustment shall be allowed.
Consequently, failure to integrate with Board’s computerized system for real-time reporting of sales will not result in disallowance of input tax since the input tax adjustment is otherwise barred.
However, a penalty up to Rs 1 million will be imposed if business is not integrated and if the non-integration continues after a period of two months, business premises may be sealed till such integration.
Tax experts at PwC A. F. Ferguson & Co. explained that for other than Tier – 1 retailers and specified service providers, a ‘final tax’ has been levied on the basis of gross amount billed for commercial electricity connections at the following rates:
Where the amount does not exceed Rs. 30,000: the tax shall be Rs3,000
The aforesaid tax shall be collected by the electricity companies through monthly bills in addition to withholding tax under section 235 of the Income Tax Ordinance, 2001.
However, in case sales tax is collected from such retailers through electricity bills under section 3(9) of Sales Tax Act, 1990, the sales tax will constitute discharge of tax liability under this section and thus no tax will be charged/ collected along with electricity bills.
The Federal Government is empowered to issue income tax general order for implementing this scheme and to specify service providers eligible for this regime.
3. Allowance for Pakistani nationals not availing transfer or residence: The following shall be various allowances for the Pakistani nationals not availing transfer of residence, namely:
A. Items of personal use allowed duty-free on any visit:
(i) personal wearing apparel and clothing accessories;
(iii) any other item except mobile phone, following allowances shall be admissible:
S. No.
Stay Abroad
Value of Duty Free allowance
(1)
(2)
(3)
(i)
Upto thirty days
Upto four hundred US Dollars (USD 400)
(ii)
Between thirty to sixty days
Upto eight hundred US Dollars (USD 800)
(iii)
More than sixty days
Upto twelve hundred US Dollars (USD 1200)
B. Purchases from a Duty Free Shop:
Duty free allowance of the aggregate value upto one hundred US dollars in case the goods are purchased from one of the duty free shops in Pakistan within sixty days of the arrival, and provided that the stay abroad of the passenger is more than sixty days.
The draft also recommended to substitute Rule 4 of the Baggage Rules, 2006, which is:
4. Allowance for Pakistani nationals availing transfer of residence:
A. Duty Free Allowance:
(i) personal household goods generally used by a family.
(ii) second hand or used professional equipment in use of a registered Pakistani practitioner during stay abroad, having proof of registration in the country abroad and duly recognized by the concerned regulatory authority or association:
Provided that an inspection certificate from an internationally recognized inspection agency in the exporting countries to the effect that such equipment is free from bacteria and other material injurious to human health, is furnished at the time of import of the equipment.
(iii) any other item (excluding mobile phones) of the value not exceeding fifteen hundred US dollars; and
(iv) weapon of non-prohibited bore for the personnel of armed forces, customs, police or any other law enforcement agency.
B. Purchases from a duty free shop:
Duty free allowances of the aggregate value upto fifteen hundred US dollars in case the goods are purchased from one of the duty free shops in Pakistan within sixty days of the arrival.
The draft rules amended table in Rule 5 of the Baggage Rules, 2006.
5. Special allowances for Foreign Exchange Remittance Card holders.— In addition to the allowances hereinbefore provided, the duty credit as specified in the Table below shall be admissible to a Pakistani national holding Foreign Exchange Remittance Card (FERC) once in a calendar year. The duty credit can also be utilized for the unaccompanied baggage or any purchase from one of the duty free shops. The duty credit under this scheme shall not be utilizable on import of vehicles.
The proposed amended table is as follow:
(1)
(2)
(3)
(4)
S.NO.
TYPE OF FERC
AMOUNT REMITTED THROUGH NORMAL BANKING CHANNEL (in US $ or equivalent foreign currency)
DUTY CREDIT IN PAKISTANI RUPEES
1.
Silver
2500 or more
20,000
2.
Silver Plus
5000 or more
40,000
3.
Golden
10,000 or more
60,000
4.
Golden Plus
25,000 or more
100,000
5.
Platinum
50,000 or more
200,000
The draft also recommended to substitute Rule 6 of the Baggage Rules, 2006, which is:
6. Allowance for foreign nationals and tourists: The following allowance shall be admissible to foreign national and tourist, namely:
(i) personal wearing apparel and clothing accessories; and
(ii) any other item (excluding mobile phones) of the value not exceeding eight hundred US dollars.
ISLAMABAD: The Federal Board of Revenue (FBR) has issued a list of 101 retailers and directed them to integrate by July 10, 2022 otherwise action will be taken as per law.
The FBR issued Sales Tax General Order (STGO) No. 1 of 2023 related to Tier-1 retailers for integration with FBR’s Point of Sale (POS) system.
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.
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.
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.
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.
The Federal Board of Revenue (FBR) in Pakistan has officially released the income tax return forms for companies for the tax year 2022, signaling the commencement of the annual tax filing season.
The Federal Board of Revenue (FBR) has taken a significant step towards initiating the annual tax filing process by issuing income tax return forms for business individuals for the tax year 2022.
The Federal Board of Revenue (FBR) has taken a significant step towards enhancing tax transparency by releasing income tax return forms for Association of Persons (AOPs) for the tax year 2022.
The Federal Board of Revenue (FBR) has taken a significant step in facilitating tax compliance by issuing income tax return forms specifically tailored for salaried individuals for the tax year 2022.
