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.
ISLAMABAD: The federal government has announced a reduction of 73 per cent in sales tax rate on supply of petrol in order lower the impact of high global oil prices.
According to the notification the rate of sales tax has been reduced to 1.43 per cent from the rate of 6.84 per cent. The FBR issued previous notification SRO 1327(I)/2021 on October 7, 2021.
The revenue body also reduced the rate of sales tax on High Speed Diesel (HSD) to 6.75 per cent from 10.32 per cent.
However, the sales tax rates on kerosene and Light Diesel Oil (LDO) have been kept unchanged at 6.70 per cent and 0.20 per cent, respectively.
It is worth mentioning here that the normal rate of sales tax is 17 per cent. The present government has already reduced the rate of sales tax on petroleum products to the lowest level to minimize the impact of sharp rise in global oil prices.
The government on November 04, 2021 notified increased in petroleum prices, which are now all time high.
The petrol was fixed at Rs145.82 per litre instead of Rs137.79, showing an increase of Rs8.03. The price has been increased from previous high of Rs137.79.
Similarly, the price of high speed diesel has been increased by Rs8.14 to Rs142.62 from Rs134.48.
The rate of kerosene oil has been increased by 6.27 per liter to Rs116.53 from Rs110.26. Likewise, the price of light diesel oil has been increased by Rs5.72 per liter to Rs114.07 from Rs108.35.
A notification issued by the Finance Division stated that on November 01, 2021, the prime minister had not agreed with the proposals worked out by the Oil and Gas Regulatory Authority (OGRA) and the finance division directed to maintain the prices as notified on October 16, 2021.
It is pertinent to mention that maintaining the October 16, 2021 petroleum prices had some underlying concerns for cash flow issues due to short recovery of the cost, according to the statement.
It is important to note that in the previous petroleum prices, already a significant relief was provided to the consumers. The government is cognizant of its responsibility to provide maximum relief to the consumers.
“This has dented the petroleum levy budget of Rs152.5 billion during July – September, 2021 as compared to Rs20 billion realized only,” it said.
Foregoing in view, prices of petroleum products have been increased partially as compared to the prices being worked out by the OGRA. If the government had accepted OGRA’s recommendations, the new prices would have been much higher.
Infact, the government has absorbed the bulk of the pressure after making adjustment after making adjustment in the sales tax and petroleum levy. The collection of petroleum levy is far short of its fixed target for the first quarter of the fiscal year 2021/2022, it added.
Shahid Iqbal Baloch, Chief Commissioner Inland Revenue, Large Taxpayers Office (LTO) Karachi headed the team of tax officials. Kazi Hifzur Rehman, Commissioner Inland Revenue, Audit Zone-ll, LTO, Karachi also part of the team.
CEO PBC Ehsan Malik, Director Research PBC Samir S Amir and other member taxpayers of PBC attended the meeting.
The chief commissioner highlighted the role of LTO, Karachi in collection of all domestic taxes particularly with reference to members of the PBC, who are the highest taxpayers of the country.
The members of the Pakistan Business Council shared their views and issues of taxation with the Chief Commissioner-IR, LTO, Karachi who also ensured their timely completion and highlighted that the team of officers posted at LTO, Karachi are thorough professionals and it was reiterated that all their pending issues related to taxes shall be completed as per law accordingly.
Aman Ghanchi, Company Secretary, Unilever Pakistan Limited proposed that to better understand various business cycles and processes, workshops may be arranged so that the department would better understand the trade of the taxpayers for effective implementation of the policies of the Board. That would also help improve the taxation within the country.
Ehsan Malik, CEO, Pakistan Business Council also highlighted the exchange of industry notes by virtue of which old settled issues would not be repeated and resultantly there would be less pressure on the appellate side and precious time of the tax machinery as well as the businessmen would be saved.
The members of the PBC appreciated the efforts of FBR in effective implementation of the policies of Government of Pakistan in a very effective and efficient manner.
1. Subject to the provisions of Chapter VII and VIII, income, profits and gains of a banking company shall be taken to be the balance of the income from all sources before tax, disclosed in the annual accounts required to be furnished to the State Bank of Pakistan subject to the following provisions, namely:—
(a) Deduction shall be allowed in respect of depreciation, initial allowance and amortization under sections 22, 23 and 24 provided that accounting depreciation, initial allowance or amortization deduction shall be added to the income. No allowance or deduction under this rule shall be admissible on assets given on finance lease.
(b) Section 21, sub-section (8) of section 22 and Part III of Chapter IV shall, mutatis mutandis, for computation of a banking company apply.
(c) Provisions for advances and off balance sheet items shall be allowed upto a maximum of 1% of total advances; and provisions for advances and off-balance sheet items shall be allowed at 5% of total advances for consumers and small and medium enterprises (SMEs) (as defined under the State Bank Prudential Regulations) provided a certificate from the external auditor is furnished by the banking company to the effect that such provisions are based upon and are in line with the Prudential Regulations. Provisioning in excess of 1% of total advances for a banking company and 5% of total advances for consumers and small and medium enterprises (SMEs) would be allowed to be carried over to succeeding years:
Provided that if provisioning is less than 1% of advances, for a banking company then actual provisioning for the year shall be allowed:
Provided further that if provisioning is less than 5% of advances for consumers and small and medium enterprises (SMEs) then actual provisioning for the year shall be allowed and this provisioning shall be allowable from the first day of July, 2010.
Explanation.- For removal of doubt, it is clarified that-
(i) provision for advance and off balance sheet items allowed under this clause, at the rate of 1 percent or 5 percent, as the case may be, shall be exclusive of reversals of such provisions;
(ii) reversal of “bad debts” classified as “doubtful” or “loss” are taxable as the respective provisions have been allowed under this clause; and
(iii) with effect from tax year 2020 and onward; reversal of “bad debts” classified as “loss” are taxable as the respective provisions have been allowed under this clause.
(d) The amount of “bad debts” classified as “sub-standard” “or doubtful” under the Prudential Regulations issued by the State Bank of Pakistan shall not be allowed as expense.
(e) Where any addition made under sub-rule (d) is reclassified by the taxpayer under the Prudential Regulations issued by the SBP, ‘loss’, provision of sub-rule (c) shall mutatis mutandis apply in computing the provision for that tax year.
(f) Where any addition made under sub-rule (d) is reclassified by the taxpayer in a subsequent year as ‘recoverable’, a deduction shall be allowed in computing the income for that tax year.
(g) Adjustment made in the annual accounts, on account of application of international accounting standards 39 and 40 shall be excluded in arriving at taxable income.
Explanation.─ For removal of doubt, it is clarified that nothing in this clause shall be so construed as to allow a notional loss, or charge to tax any notional gain on any investment under any regulation or instruction unless all the events that determine such gain or loss have occurred and the gain or loss can be determined with reasonable accuracy.
(h) An adjustment shall be made for exclusions from income on account of paragraph (g) for determining the cost of related item in the financial statement in the year of disposal of such item or asset or the discharge of the liability, as the case may be.
Explanation.- For removal of doubt, it is clarified that nothing contained in this Schedule shall be so construed as to restrict power of Commissioner, while conducting audit of the income tax affairs under section 177, to call for record or such other information and documents as he may deem appropriate in order to examine accounts and records to conduct enquiry into expenditure, income, assets and liabilities of a banking company and all provisions of this Ordinance shall be applicable accordingly.
2. (i)Where a deduction is allowed for any expenditure (other than on account of charge for irrecoverable debt) in the manner referred to in rule 1 and the liability or a part of the liability to which the deduction relates is not paid within three years of the end of the tax year in which the deduction was allowed, the unpaid amount of the liability shall be chargeable to tax under the head “Income from Business” in the first tax year following the end of three years.
(ii) Where an unpaid liability is chargeable to tax as a result of the application of sub-rule (i) and such liability or a part thereof is subsequently paid, a deduction shall be allowed for the amount paid in the tax year in which the payment is made.
(iii) Loss on sale of shares of listed companies, disposed of within one year of the date of acquisition, shall be adjustable against business income of the tax year. Where such loss is not fully set off against business income during the tax year, it shall be carried forward to the following tax year and set off against capital gain only. No loss shall be carried forward for more than six years immediately succeeding the tax year for which the loss was first computed.
3. Treatment for shariah compliant banking.—
(1) Any special treatment for ‘Shariah Compliant Banking’ approved by the State Bank of Pakistan shall not be provided for any reduction or addition to income and tax liability for the said ‘Shariah Compliant Banking’ as computed in the manner laid down in this schedule.
(2) A statement, certified by the auditors of the bank, shall be attached to the return of income to disclose the comparative position of transaction as per Islamic mode of financing and as per normal accounting principles. Adjustment to the income of the company on this account shall be made according to the accounting income for purpose of this schedule.
4. Head office expenditure.—
(1) In case of foreign banks head office expenditure shall be allowed as deduction as per the following formula, namely:—
Head office expenditure = (A/B) XC
Where—
A. is the gross receipts of permanent establishment in Pakistan;
B. is the world gross receipts; and
C. is the total Head Office expenditure.
(2) The head office expenditure shall have the meaning as given in sub-sections (3) and (4) of section 105.
(3) The head office expenditure shall only be allowed if it is charged in the books of accounts of the permanent establishment and a certificate from external auditors is provided to the effect that the claim of such expenditure:
(i) has been made in accordance with the provision of this rule; and
(ii) is reasonable in relation to operation of the permanent establishment in Pakistan.
5. Advance tax.—
(1) The banking company shall be required to pay advance tax for the year under section 147 in twelve installments payable by 15th of every month. Other provisions of section 147 shall apply as such.
(1A) A banking company required to make payment of advance tax in accordance with sub-rule (1), shall estimate the tax payable by it for the relevant Tax Year, at any time before the installment payable on 15th June, of the relevant year is due. In case the tax payable is likely to be more than the amount it is required to pay under sub-rule (1), the banking company shall furnish to the Commissioner an estimate of the amount of tax payable by it and thereafter pay in the installment due on 15th June the difference, if any, of fifty per cent of such estimate and advance tax already paid upto 15th June, of the relevant tax year. The remaining fifty per cent of the estimate shall be paid after 15th June in six equal installments payable by 15th of each succeeding month of the relevant tax year.
(2) Provisions of withholding tax under this Ordinance shall not apply to a banking company as a recipient of the amount on which tax is deductible.
6. Tax on income computed—Income computed under this Schedule shall be chargeable to tax under the head “Income from Business” and tax payable thereon shall be computed at the rate applicable in Division II of Part I of the First Schedule.
6C. Enhanced rate of tax on taxable income from Federal Government securities.- (1) The taxable income arising from additional income earned from additional investment in Federal Government securities for the tax years 2020 and 2021, shall be taxed at the rate of 37.5% instead of the rate provided in Division II of Part I of the First Schedule.
(2) A banking company shall furnish a certificate from external auditor along with accounts while e-filing return of Income certifying the amount of the money invested in Federal Government securities in preceding tax year, additional investments made for the tax year and mark-up income earned from the additional investments for the tax year.
(3) Notwithstanding anything contained in this Ordinance, the Commissioner may require the banking company to furnish details of the investments in Federal Government securities to determine the applicability of the enhanced rate of tax.
(4) “Additional income earned” means mark-up income earned from additional investment in Federal Government securities by the bank for the tax year.
(5) “Additional investments” means average investment made in Federal Government securities by the bank during the tax year, in addition to the average investments held during the tax year 2019.
(6) The taxable income arising from additional investment under sub-rule (1) shall be determined according to the following formula, namely:-
Table income subject to enhanced rate of tax = A x B/C
Where –
A. is taxable income of the banking company;
B. is mark up income earned from the additional investment for the tax year; and
C. is the total of the mark-up income and non-make-up income of the banking company as per accounts.
(6A) For tax year 2022 onwards, the taxable income attributable to investment in the Federal Government securities shall be taxed at the rate of—
(i) 40% instead of rate provided in Division II of Part I of the First schedule if the assets to deposit ratio as on last day of the tax year is upto 40%;
(ii) 37.5% instead of rate provided in Division II of Part I of the First schedule if the assets to deposit ratio as on last day of the tax year exceeds 40% but does not exceed 50%; and
(iii) at the rates provided in Division II of Part I of the First schedule if assets to deposit ratio as on last day of the tax year exceeds 50%.
7A. The provisions of section 113 shall apply to banking companies as they apply to any other resident company.
(7B) From tax year 2015 and onwards, income from Dividend and income from Capital Gains shall be taxed at the rate specified in Division II of Part I of First Schedule.
(7C) For tax year years 2015 and onwards the provisions of section 4B shall apply to banking companies and shall be taxed at the rate specified in Division IIA of Part I of First Schedule:
Provided that brought forward losses, if any, shall be excluded from income computed under this Schedule for the purpose of section 4B of this Ordinance.
7D. Reduced rate of tax on additional advances for micro, small and medium enterprises.– (1) The taxable income arising from additional advances to micro, small and medium enterprises, for the tax years 2020 to 2023, shall be taxed at the rate of 20% instead of the rate provided in Division II of Part I of the First Schedule-
(2) A banking company shall furnish a certificate from external auditor along with accounts while e-filing return of Income certifying the amount of such advances made in preceding lax year, additional advance made for the tax year and net mark-up earned from such additional advances for the tax year.
(3) Notwithstanding anything contained in this Ordinance, the Commissioner may require the banking company to furnish details of the advances to micro, small and medium enterprises to determine the applicability of the reduced rate of tax.
(4) For the purposes of this rule, the term ”micro, small and medium enterprises” shall have the same meaning as provided in Prudential Regulations issued by the State Bank of Pakistan.
(5) “Additional advances” means any average advances disbursed in addition to average amount of such advances made in such sector by the bank for the tax year.
(6) The taxable income arising from additional advances under sub-rule (1) shall be determined according to the following formula, namely:-
Taxable income subject to reduced rate of tax = A x B/C
Where-
A. is taxable income of the banking company;
B is not mark up income earned from such additional advances for the tax year as declared in the annual accounts; and
C is total of the net mark-up and non mark-up income of the banking company as per accounts.
7E. Reduced rate of tax on additional advances for low cost housing.- (l) The taxable income arising from additional advances for low cost housing, for the tax years 2020 to 2023, shall be taxed at the rate of 20% instead of the rate provided in Division II of Part I of the First Schedule:
Provided that the taxable income arising from additional advances to Naya Pakistan Housing and Development Authority for low cost housing schemes shall be taxed at the rate of 10%.
(2) A banking company shall furnish a certificate from external auditor along with accounts while e-filing return of income certifying the amount of such advances made in preceding tax year, additional advance made for the tax year and net mark-up earned from such additional advances for the tax year.
(3) Notwithstanding anything contained in this Ordinance, the Commissioner may require the banking company to furnish details of the advances made for low cost housing to determine the applicability of the reduced rate of tax.
(4) For the purposes of this rule, the term “low cost housing” shall have the same meaning as provided in Prudential Regulations issued by the Stare Bark of Pakistan.
(5) “Additional advances” means any average advances disbursed in addition to average amount of such advances made in such sector by the bank for the tax year 2019.
(6) The taxable income arising from additional advances under sub rule.(1) shall be determined according to the following formula. namely:-
Taxable income subject to reduced rate of tax = A x B/C
Where-
A. is taxable income of the banking company;
B. is net mark-up income earned from such additional advances for the tax year as declared in the annual accounts; and
C. is total of the net mark-up and non mark-up income of the banking company as per accounts.
7F. Reduced rate of tax on additional advances as Farm Credit.– (1) The taxable income arising from additional advances for Farm Credit in Pakistan for the tax years 2020 to 2023, shall be taxed at the rate of 20% instead of the rate provided in Division ll of Part 1 of the First Schedule.
(2) A banking company shall furnish a certificate from external auditor along with accounts while e-filing return of income certifying the amount of such advances made in preceding tax year, additional advance made for the tax year and net mark-up earned from such additional advances for the tax year.
(3) Notwithstanding anything contained in this Ordinance, the Commissioner may require the banking company to furnish details of the advances made for Farm Credit to determine the applicability of the reduced rate of tax.
(4) For the purposes of this rule, the term ”Farm Credit” shall have the same meaning as provided in Prudential Regulations issued by the State Bank of Pakistan for agriculture financing excluding such advances made to a company as defined in section 80.
(5) “Additional advances” means any average advances disbursed in addition to average amount of such advances made in such sector by the bank for the tax year 2019.
(6) The taxable income arising from additional advances under sub-rule (1) shall be determined according to the following formula namely:-
Taxable income subject to reduced rate of tax = A x B/C
Where-
A. is taxable income of the banking company;
B. is net mark-up income earned from such additional advances for the .tax year as declared in the annual accounts: and
C. is total of the net mark-up and non mark-up income of the banking company as per accounts.
8. Exemptions—(1) Exemptions and tax concessions under the Second Schedule to this Ordinance shall not apply to income of a banking company computed under this Schedule.
(1A) The accumulated loss under the head “Income from Business” (not being speculation business losses) of an amalgamating banking company or banking companies shall be set off or carried forward against the business profits and gains of the amalgamated company and vice versa, up to a period of six tax years immediately succeeding the tax year in which the loss was first computed in the case of amalgamated banking company or amalgamating banking company or companies.
(2) The provisions relating to group relief as contained in section 59B shall be available to the banking companies provided the holding and subsidiary companies are banking companies. The accounts of the group companies shall be audited by the chartered accountants firm on the panel of auditors of the State Bank of Pakistan. The surrender and claim of loss would be subject to the approval of the State Bank of Pakistan.
(3) The holding and subsidiary companies of 100% owned group of banking companies may opt to be taxed as one fiscal unit as per the provisions of section 59AA relating to group taxation subject to the approval of the State Bank of Pakistan.
8A. Transitional provisions.— (1) Amounts provided for in the tax year 2008 and prior to the said tax year for or against irrecoverable or doubtful advances, which were neither claimed nor allowed as a tax deductible in any tax year, shall be allowed in the tax year in which such advances are actually written off against such provisions, in accordance with the provision of section 29 and 29A.
(2) Amounts provided for in the tax year 2008 and prior to the said tax year for or against irrecoverable or doubtful advances, which were neither claimed nor allowed as a tax deductible in any tax year, which are written back in the tax year 2009 and thereafter in any tax year and credited to the profit and loss account, shall be excluded in computing the total income of that tax year under rule 1 of this Schedule.
(3) The provisions of this Schedule shall not apply to any asset given or acquired on finance lease by a banking company up to the tax year 2008, and recognition of income and deductions in respect of such asset shall be dealt in accordance with the provisions of the Ordinance as if this Schedule has not come into force:
Provided that un-absorbed depreciation in respect of such assets shall be allowed to be set-off against the said lease rental income only.
9. Provision of Ordinance to apply— The provisions of the Ordinance not specifically dealt with in the aforesaid rules shall apply, mutatis mutandis, to the banking company.
10. The Federal Government may, from time to time, by notification in the official Gazette, amend the schedule so as to add any entry therein or modify or omit any entry 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.)
ISLAMABAD: The Federal Board of Revenue (FBR) has decided to deploy officials at sugar mills for monitoring of production and supply of sugar, sources said on Tuesday.
The sources said that the tax offices having jurisdiction over sugar mills would post their officials for the crushing season 2021-2022.
In this regard the FBR would invoke Section 40B of Sales Tax Act, 1990 for physical monitoring of manufacturing and supply of the commodity.
In this regard, tax offices in Lahore have initiated the process for deploying the officials at the sugar mills. The Regional Tax Office (RTO) Lahore has placed its officials at the disposal of chief commissioner Inland Revenue, Large Taxpayers Office (LTO) Lahore.
The sources said that the monitoring would help bringing down retail price of the commodity in the local market.
It is worth mentioning that the sugar prices have gone up to Rs160 per kilogram in some parts of the country. However, as the crushing is coming near the prices have come down.
This year the FBR has planned to document all the supply chain from manufacturing to the retail sale of the sugar.
Through Finance Act, 2021 the treatment of sales tax on supply of sugar was changed and it was brought taxation at the retail price. The FBR through Circular No. 02 of 2021 stated: “Currently, the price of white crystalline sugar is fixed at Rs60 per kg in terms of SRO 812(I)/2016 dated September 02, 2016, which is considerably below the actual market price of the commodity.
“In order to address this anomaly, sugar is proposed to be included in Third Schedule of the Sales Tax Act, 1990, so that sales tax is charged and collected on actual retail price of the product at the manufacturing stage.
“This measure would not only ensure due payment of tax but also help in putting a more effective price control mechanism in place for sugar.”
The rate of sales tax at 17 per cent on retail price was to be applicable on sugar supply from July 01, 2021. However, the implementation was deferred till November 30, 2021. Therefore, the normal sales tax rate on sugar supply will be applicable from December 01, 2021.
Meantime, the FBR has increased the minimum sales tax rate on domestically produced sugar to Rs72.22 per kg from Rs60 per kg.
The tax bar sent a set of recommendations to the FBR on Tuesday for e-filing of appeals in sales tax and federal excise regimes.
The KTBA said that a distinct numerical number should be allotted to each appeal and similarly acknowledgment for each appeal should be served to the appellant from the concerned Commissioner Appeals.
A digital or web based form has been proposed to be prescribed that essentially contains basic information about the case, including appellant’s name and its number, tax periods, order jurisdiction/section, order date and tax demanded etc. This feature though omitted from income tax regime with introduction of e-filing of appeals, has been suggested to be reintroduced in like manner.
The KTBA said that currently late e-filing of appeals under the income tax regime is conditional to acceptance of application for condonation of time by the concerned commissioner appeals. The tax bar suggested that no such condition should be adopted in the sales tax e-appeals and the same should also be done away with from e-appeals under the income tax regime.
The rules for fixation and disposal of stay application should have definite deadlines for the concerned commissioner appeals to follow mandatorily with consequences. “Needless to add that the timelines prescribed under Rule 76G of the Income Tax Rules 2002 are not practiced in letter and spirit.”
The tax bar said that all notices and orders in appeals proceedings shall effectively be served via primary modes as provided under Section 56(1)(a), 56(1)(b) of the Sales Tax Act, 1990 and in case this being not possible only then option of service of notices and orders via secondary modes as provided under Section 56(1)(c) and (d) of the Act shall be exploited. “The date of service of notice or order shall essentially be reckoned in like manner.”
The KTBA said that all notices and orders including stay orders issued by the concerned commissioner appeals should seamlessly be served to the concerned field formations so that the IRIS portal is updated bilaterally in real-time.
The tax bar further proposed that the portal should have dedicated link to upload: written arguments; and miscellaneous applications for multiple reasons etc.
The FBR has been suggested that the draft e-appeal procedure should be shared with the KTBA prior to launching in order to undertake enhanced due diligence.
Further, before adoption of the new system, the manual filing of appeal as in vogue currently should be run concurrently for some time.
ISLAMABAD: Federal Board of Revenue (FBR) has announced an incentive scheme for its officials in completion and timely submission of inquiry reports, official sources said on Tuesday.
Under the incentive scheme up to two basic salaries have been announced for the authorized officer for submitting inquiry report up to 60 days from receipt of letter nominating inquiry officer/authorized officer.
The FBR has decided the incentive while observing that most inquiry officers were delaying the finalization of inquiries which lead to delay in conclusion of disciplinary proceedings against the officer/officials of FBR.
“This not only reflect poorly on the part of inquiry officer, authorized officer, authorized concerned but also puts the career of the accused officers in the state of limbo for longer periods,” the FBR said.
Therefore, with a view to encourage expeditious finalization of inquiries and with a view to prevent delays in finalization of inquires, the FBR chairman approved the incentive and punitive regime.
For inquiry officers/inquiry committees/fact finding inquiry officers/fact finding inquiry committees; for submitting quality reports to the satisfaction of the authorized officers/authorized concerned:
i. Two basic salaries to be given as incentive on submission of inquiry report up to 60 days from receipt of letter nominating inquiry officer / authorized officer.
ii. One basic salary to be given as incentive on submission of inquiry report up to 75 days from receipts of letter nominating inquiry officer/authorized officer.
iii. Half basic salary to be given as incentive on submission of inquiry report up to 90 days from receipt of letter nominating inquiry officer/authorized officer.
For authorized officer the incentive shall be one basic salary on disposal of inquiry report within 30 days from date of receipt of inquiry report.
For authority the incentive shall be one basic salary for passing order within 30 days from date of receipt of reply to show cause notice/recommendations of inquiry officer / authorized officer.
The FBR also introduced punitive regime for delaying inquiry report.
The FBR said that Internal Job Posting (IJP) allowance of inquiry officers/inquiry committee members/fact finding inquiry officer/ fact finding inquiry committee members shall be discontinued who will take more than 100 days to complete the inquiry till completion of such inquires.
Similar shall apply to authorized officers who take more than 40 days to decide the inquiry; and in case of proceedings against officers’ upto to BS-16; the authority who takes more than 40 days for doing the needful.
The FBR said any excuse including requests for adjournment, non-availability of record etc., shall not be taken as valid excuse for lack of adherence to the time set for doing the needful. Time will not run only in the case of valid stay order from a court of competent jurisdiction.
“These instructions will have prospective effect, but these instructions shall be applicable to all pending inquiries from the date of issuance of these instructions by the board. Accordingly, time will from the date of issuance of these instructions.”
The instruction have been implemented with effect from November 08, 2021.
Part III, Sixth Schedule of Income Tax Ordinance, 2001 has explained the procedure for the grant of approval to gratuity funds for treatment of income tax. by Commissioner Inland Revenue (IR).
1. Approval of Gratuity Funds. — (1) The Commissioner may accord approval to any gratuity fund which, in his opinion, complies with the requirements of rule 2 and may, at any time, withdraw such approval if, in his opinion, the circumstances of the fund cease to warrant the continuance of the approval.
(2) An order according approval or withdrawing approval shall take effect from such date as the Commissioner may fix.
(3) The Commissioner shall neither refuse nor withdraw approval to any gratuity fund unless he has given the trustees of that fund a reasonable opportunity of being heard.
2. Conditions for approval. — In order that a gratuity fund may receive and retain approval, it shall satisfy the conditions hereinafter specified and any other conditions which the Board may, by rules, prescribe –
(a) the fund shall be a fund established under an irrevocable trust in connection with trade or undertaking carried on in Pakistan, and not less than ninety per cent of the employees shall be employed in Pakistan;
(b) the fund shall have for its sole purpose the provision of a gratuity to employees in the trade or undertaking on their retirement at or after a specified age or on their becoming incapacitated prior to such retirement, or on termination of their employment after a minimum period of service specified in the regulations of the fund or to the widows, children or dependents of such employees on their death;
(c) the employer in the trade or undertaking shall be a contributor to the fund; and
(d) all benefits granted by the fund shall be payable only in Pakistan.
3. Application for approval. — (1) An application for approval of a gratuity fund shall be made in writing by the trustees of the fund to the Commissioner by whom the employer is assessable and shall be accompanied by copy of the instrument under which the fund is established and by two copies of the rules and, where the fund has been in existence during any year or years prior to the financial year in which the application for approval is made, also two copies of the accounts of the fund relating to such prior year or years (not being more than three years immediately preceding year in which the said application is made) for which such accounts have been made up, but the Commissioner may require such further information to be supplied as he thinks proper.
(2) If any alteration in the rules, constitution, objects or conditions of the fund is made at any time after the date of the application for approval, the trustees of the fund shall forthwith communicate such alteration to the Commissioner mentioned in sub-rule (1), and in default of such communication, any approval given shall, unless the Commissioner otherwise orders, be deemed to have been withdrawn from the date on which the alteration took effect.
4. Gratuity deemed to be salary. —Where any gratuity is paid to an employee during his life-time, the gratuity shall be treated as salary paid to the employee for the purposes of this Ordinance.
5. Liability of trustees on cessation of approval. —If a gratuity fund for any reason ceases to be an approved gratuity fund, the trustees of the fund shall nevertheless remain liable to tax on any gratuity paid to any employee.
6. Contributions by employer, when deemed to be his income. — Where any contributions by an employer (including the interest thereon, if any,) are repaid to the employer, the amount so repaid shall be deemed for the purposes of tax to be the income of the employer of the income year in which they are so repaid.
7. Particulars to be furnished in respect of gratuity funds. — The trustees of an approved gratuity fund and any employer who contributes to an approved gratuity fund shall, when required by notice from the Commissioner, furnish, within such period not being less than twenty-one days from the date of service of the notice as may be specified in the notice, such return, statement, particulars or information, as the Commissioner may require.
8. Provisions of the Part to prevail against regulations of the fund. —Where there is a repugnance between any rule of an approved gratuity fund and any provision of this Part or of the rules made thereunder the said rule shall, to the extent of repugnance, be of no effect and the Commissioner may, at any time, require that such repugnance shall be removed from the rules of the fund.
9. Appeals. — (1) An employer objecting to an order of the Commissioner refusing to accord approval to a gratuity fund or an order withdrawing such approval may appeal, within sixty days of the receipt of such order, to the Board.
(2) The Board may admit an appeal after the expiration of the period specified in sub-rule (1), if it is satisfied that the appellant was prevented by sufficient cause from presenting it within that period.
(3) The appeal shall be in such form and shall be verified in such manner and shall be accompanied by such fee as may be prescribed.
10. Provisions relating to rules. —(1) In addition to any power conferred in this Part, the Board may make rules –
(a) prescribing the statements and other information to be submitted along with an application for approval;
(b) limiting the ordinary annual and other contributions of an employer to the fund;
(c) regulating the investment or deposit of the moneys of an approved gratuity fund;
(d) providing for the assessment by way of penalty of any consideration received by an employee for an assignment of, or the creation of a charge upon, his beneficial interest in an approved gratuity fund;
(e) providing for withdrawal of the approval in the case of a fund which ceases to satisfy the requirements of this Part or the rules made thereunder; and
(f) generally, to carry out the purposes of this Part and to secure such further control over the approval of gratuity funds and the administration of gratuity funds as it may deem requisite.
11. Definitions.—In this Part, unless the context otherwise requires, “contribution”, “employee”, “employer”, “regulations of a fund” and “salary” have in relation to gratuity funds, the meaning assigned to those expressions in rule 14 of Part I in relation to provident funds.
(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.)
1. Approval of superannuation funds.— (1) The Commissioner may accord approval to any superannuation fund or any part of a superannuation fund which, in his opinion, complies with the requirements of rule 2, and may, at any time withdraw such approval if, in his opinion, the circumstances of the fund or the part, as the case may be, cease to warrant the continuance of the approval.
(2) An order according approval or withdrawing approval shall take effect from such date as the Commissioner may fix.
(3) The Commissioner shall neither refuse nor withdraw approval to any superannuation fund or any part of a superannuation fund unless he has given the trustees of that fund a reasonable opportunity of being heard.
2. Conditions for approval. — In order that a superannuation fund may receive and retain approval, it shall satisfy the conditions hereinafter specified and any other conditions which the 2[Board] may, by rules prescribe –
(a) the fund shall be a fund established under an irrevocable trust, in connection with a trade or undertaking carried on in Pakistan, and not less than ninety per cent of the employees shall be employed in Pakistan;
(b) the fund shall have for its sole purpose the provision of annuities for employees in the trade or undertaking on their retirement at or after a specified age or on their becoming incapacitated prior to such retirement, or for widows, children or dependants of persons who are or have been such employees on the death of these persons;
(c) the employer in the trade or undertaking shall be a contributor to the fund; and
(d) all annuities, pensions and other benefits granted from the fund shall be payable only in Pakistan.
3. Application for approval.— (1) An application for approval of a superannuation fund, or part of a superannuation fund, shall be made in writing by the trustees of the fund to the Commissioner by whom the employer is assessable, and shall be accompanied by a copy of the instrument under which the fund is established and by two copies of the regulations and, where the fund has been in existence during any year or years prior to the financial year in which the application for approval is made, also two copies of the accounts of the funds relating to such prior year or years (not being more than three years immediately preceding the year in which the said application is made) for which such accounts have been made up, but the Commissioner may require such further information to be supplied as he thinks proper.
(2) If any alternation in the regulations, constitutions, objects or conditions of the fund is made at any time after the date of the application for approval, the trustees of the fund shall forthwith communicate such alteration to the Commissioner mentioned in sub-rule (1), and, in default of such communication, any approval given shall, unless the Commissioner otherwise directs, be deemed to have been withdrawn from the date on which the alteration took effect.
4. Contributions by employer, when deemed to be his income. — Where any contributions by an employer (including the interest thereon, if any), are repaid to the employer, the amount so repaid shall be deemed for the purpose of tax to be the income of the employer of the income year in which it is so repaid.
5. Deduction of tax on contributions paid to an employee. — Where any contributions made by an employer (including interest on contributions, if any), are repaid to an employee during his life-time in circumstances other than those referred to in clause (25) of Part I of the Second Schedule, tax on the amount so repaid shall be deducted by the trustees 1[at the rate applicable to the year of withdrawal] and shall be paid by the trustees to the credit of the Federal Government within such time and in such manner as may be prescribed.
6. Deduction from pay of and contributions on behalf of employees to be included in a statement under section 165. — Where an employer deducts from the emoluments paid to an employee or pays on his behalf any contributions of that employee to an approved superannuation fund, he shall include all such deductions or payments in a statement which he is required to furnish under section 165.
7. Liability of trustees on cessation of approval. — If a fund, or a part of a fund, for any reason ceases to be an approved superannuation fund, the trustees of the fund shall nevertheless remain liable to tax on any sum paid on account of returned contributions (including interest on contributions, if any), in so far as the sum so paid is in respect of contributions made before the fund or part of the fund, as the case may be, ceased to be an approved superannuation fund under the provisions of this Part.
8. Particulars to be furnished in respect of superannuation fund. — The trustees of an approved superannuation fund and any employer who contributes to an approved superannuation fund shall, when required by notice from the Commissioner, within such period (not being less than twenty-one days from the date 1[of service] of the notice), as may be specified in the notice, furnish such return, statement, particulars or information, as the Commissioner may require.
9. Provisions of the Part to prevail against regulations of the fund. — Where there is a repugnance between any regulation of an approved superannuation fund and any provision of this Part or of the rules made thereunder the regulation shall, to the extent of the repugnance, be of no effect ; and the Commissioner may, at any time, require that such repugnance shall be removed from the regulations of the fund.
10. Appeals. —(1) An employer objecting to an order of the Commissioner refusing to accord approval to a superannuation fund or an order withdrawing such approval may appeal, within sixty days of the 2[service] of such order, to the 3[Board].
(2) The 4[Board] may admit an appeal after the expiration of the period specified in sub-rule (1), if it is satisfied that the appellant was prevented by sufficient cause from presenting it within that period.
(3) The appeal shall be in such form and shall be verified in such manner and shall be accompanied by such fee as may be prescribed.
11. Provisions relating to rules. —(1) In addition to any power conferred by this Part, the 5[Board] may make rules –
(a) prescribing the statements and other information to be submitted along with an application for approval;
(b) prescribing the returns, statements, particulars, or information which the Commissioner may require from the trustees of an approved superannuation fund or from the employer;
(c) limiting the ordinary annual contribution and any other contributions to an approved superannuation fund by an employer;
(d) regulating the investment or deposit of the moneys of any approved superannuation fund;
(e) providing for the assessment by way of penalty of any consideration received by an employee for an assignment of, or creation of a charge upon, his beneficial interest in an approved superannuation fund;
(f) providing for the withdrawal of approval in the case of a fund which ceases to satisfy the requirements of this Part or of the rules made thereunder; and
(g) generally, to carry out the purposes of this Part and to secure such further control over the approval of superannuation funds and the administration of approved superannuation funds as it may deem requisite.
12. Definitions.— In this Part, unless the context otherwise requires “contributions”, “employee’, “employer”, “regulations of a fund” and “salary” have, in relation to superannuation funds, the meanings assigned to those expressions in rule 14 of Part I in relation to provident funds.
(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.)
