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Tag: FBR

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.

  • Input tax adjustment restricted for oil, ghee, steel makers

    Input tax adjustment restricted for oil, ghee, steel makers

    ISLAMABAD: The Federal Board of Revenue (FBR) has restricted input adjustment for manufacturers of steel and oil and ghee.

    The FBR issued Sales Tax General Order (STGO) No. 12 of 2022 dated April 07, 2022, regarding input tax adjustment to manufacturers of oil and ghee and steel melters and re-rollers.

    Under the STGO, the sectors of oil & ghee and steel would only avail input adjustment against invoices issued for the same products falling under these sectors.

    READ MORE: FBR detects fraudulent declaration of goods in ST returns

    The FBR said the Sales Tax Act, 1990 mandates a taxpayer registered with FBR to claim input tax credit on import/purchases from registered suppliers only.

    Section 8(1)(a) of the Act restricts the adjustment of input on goods or services used or to be used for any purpose other than for taxable supplies made or to be made.

    Similarly, Section 8(1)(f) and (i) of the Act provide that tax credit shall not be admissible on the goods or services not related to the taxable supplies made by the taxpayer.

    This essentially being a self-assessment based system warrants high standards of responsibility and integrity on part of the UST filers.

    READ MORE: Adjustment restrictions hamper return filing by retailers

    “However, the analysis of the data available in the system has led to conclude that the facilities/benefits provided through automated sales tax return are being misused by the manufacturers of oil & ghee and steel melters and re-rolling mills who are claiming inputs other than their relevant business activities in violation of provisions of law.”

    In order to ensure certainty, transparency across-the-board, it has been decided that input tax adjustment shall not be allowed to the manufacturers of Oil & Ghee and Steel Melters and Re-Rollers on the goods which are not related to their business activity.

    The list of such goods attached as Annexure-I for manufacturers of Oil & Ghee and as Annexure-11 for Steel Melters and Re-Rollers on the basis of PCT heading on which input tax credit shall not be admissible under the law.

    Although, all these PCT headings have been identified after due diligence, yet any hardship caused may be brought to the notice of the Commissioner concerned. This STGO become applicable with effect from April 1, 2022.

  • FBR detects fraudulent declaration of goods in ST returns

    FBR detects fraudulent declaration of goods in ST returns

    ISLAMABAD: The Federal Board of Revenue (FBR) has detected that traders in supply chain fraudulently declaring goods in sales tax returns.

    The FBR issued Sales Tax General Order (STGO) No. 13 of 2022 dated April 07, 2022 regarding purchases and supplies made by importers, wholesalers, dealers and distributors in sales tax return.

    The Sales Tax Act, 1990 mandates a taxpayer registered with the FBR to correctly declaration of purchases and supplies in the monthly sales tax return as filed under section 26 of the Sales Tax Act, 1990.

    READ MORE: Adjustment restrictions hamper return filing by retailers

    This essentially being a self-assessment based system warrants high standards of responsibility and integrity on part of the GST filers.

    “However, the analysis of the data available in the system has led to conclude that the facilities/benefits provided through automated sales tax return are being misused by the importers, wholesalers, distributors who are engaged in business of buying and selling of same state of goods but are fraudulently declaring sales of goods irrespective of their business purchases in violation of provisions of law,” the FBR said.

    READ MORE: FBR announces winners of third POS invoice draw

    In order to ensure certainty, transparency across-the-board, it has been decided that sales of goods by importers wholesalers, Dealers and Distributors under HS Code as declared in Annex-C of the sales tax return shall be allowed on the basis of goods under the said HS Code as declared in Annex-A and Annex-B of sales tax return by these taxpayers.

  • Advance tax on individuals must be for Rs10mn turnover

    Advance tax on individuals must be for Rs10mn turnover

    KARACHI: The Federal Board of Revenue (FBR) has been proposed to increase the turnover from one million rupees to 10 million rupees for individuals to made advance payment.

    Karachi Tax Bar Association (KTBA) in its proposals for budget 2022/2023, stated that Section 147 of the Income Tax Ordinance, 2001 relates to quarterly payment of advance tax.

    READ MORE: Eliminating commissioner audit selection power sought

    The subsection 6 entitles a taxpayer to file a lower estimate. Vide Finance Act 2018 condition has been added that the lower estimate be accompanied with prescribed details.

    Subsection 4A as substituted vide Finance Act 2015 states that the taxpayer shall estimate the tax payable for the tax year, by the second installment due date and if the tax payable is likely to be more than the amount payable under sub-section (4), the taxpayer shall furnish an estimate of the amount of tax payable and discharge fifty per cent by the second quarter installment. The remaining fifty per cent to be discharged by the due date of the third and fourth quarter of the tax year.

    READ MORE: Threshold be doubled for domestic electric consumers

    The requirement of quarterly payment of advance tax is comfortable for the companies and AOPs as they are regularly operated entities. While the condition of income more than one million for the individual cause workload for the registered individuals to face notices and quarterly compliance of advance tax. Unease of doing business and rigorous compliance requirement.

    The requirements to file prescribed details along with the lower estimate is against the scheme of deemed assessment and concurrent legislation as well since the section 205 mandates the taxpayer to discharge ninety percent of the tax liability by way of advance tax.

    READ MORE: Genuine NPOs unable to get benefit of 100% tax credit

    “The amendment shall be made in the threshold of one million rupees. It should be increased to ten million,” it is recommended.

     Sub-section147(4A) may be restored to the position prior to amendment vide Finance Act 2015 requiring taxpayers to file an estimate of higher side. While the ultimate objective of section 147 is to discharge tax liability of 90 percent this is well achieved vide pre-amended position with check as per section 205 of the Ordinance.

    READ MORE: Changes sought in withholding on non-resident payment

    The requirements under subsection 6 as inserted vide Finance Act 2018 tantamount to disturbing the concept of deemed assessment and should be deleted.

    Giving rationale, the KTBA said this will save individuals from cost burdens of quarterly compliance And decrease the workload of individual tax-payers.

  • FBR exempts customs duty on import of oxygen gas

    FBR exempts customs duty on import of oxygen gas

    The Federal Board of Revenue (FBR) has issued an exemption on customs duty for the import of oxygen gas and oxygen cylinders.

    (more…)
  • FBR raises steel valuation amid high commodity prices

    FBR raises steel valuation amid high commodity prices

    ISLAMABAD: The Federal Board of Revenue (FBR) on Tuesday increased the valuation of steel products considering rising commodity prices in the international markets.

    The FBR has fixed the valuation of steel products for the collection of sales tax, instead of the prevailing rates in the open market.

    The fixed valuation is the minimum price on which sales tax is to be collected on the supply of steel products.

    The FBR issued SRO 489(I)/2022 on April 05, 2022.

    Previously, the FBR issued SRO 1465(I)/2021 dated November 15, 2021 in this regard. The FBR issued SRO 985(I)/2021 dated August 04, 2021, to introduce the valuation for collection of sales tax at 17 per cent on supply of steel products.

    The FBR enhanced the valuation to Rs164,037 per metric ton from Rs153,000 per metric ton on the supply of steel bars and other long profiles.

    READ MORE: FBR increases valuation of steel products

    The value has been increased to Rs133,813 metric tons from Rs131,000 per metric ton on supply of steel billets.

    However, the value of steel ingots has been kept unchanged at Rs126,000 per metric ton for the collection of sales tax.

    The value of ship plates has been increased to Rs129,584 per metric tons from Rs126,000 per metric ton for collection of sales tax.

    The value of other re-rollable iron and steel scrap has been increased to Rs125,688 per ton from Rs119,000 per metric ton for the purpose of sales tax.

    The FBR further said that in case notified value of supply of the goods is higher than the value fixed, the value of goods shall be the value at which the supply is made.

  • FBR issues list of 185 retailers for mandatory integration

    FBR issues list of 185 retailers for mandatory integration

    ISLAMABAD: The Federal Board of Revenue (FBR) on Tuesday issued a list of 185 retailers for mandatory integration with online tax system.

    The FBR directed the retailers to integrate with the online tax system by April 10, 2022 in order to avoid harsh action.

    The revenue body issued Sales Tax General Order No. 11 of 2022 asking Tier-1 retailers for integration with FBR’s Point of Sale (POS) system.

    READ MORE: FBR issues list of 1,358 retailers for mandatory POS

    The FBR said that the Finance Act, 2019 added sub-section 6 to section 8B of the Sales Tax Act, 1990 whereby a Tier-1 retailer, 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 through Finance Act, 2021.

    The FBR further said that in order to operationalize the 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 return 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.

    READ MORE: Prize scheme on invoices issued by retailers

    As per latest the STGO a list of 185 identified Tier-1 retailers has been issued allowing them to integrate with FBR’s system by April 10, 2022 and the procedure of exclusion from the list of 185 identified retailers shall apply as laid down in Para 2 of STGO 1 of 2022 dated August 03, 2021.

    The FBR said upon filing of sales tax return for the month of February 2022 for all notified Tier-1 retailers 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.

    READ MORE: FBR decides penal action against defaulting retailers

  • Eliminating commissioner audit selection power sought

    Eliminating commissioner audit selection power sought

    KARACHI: The Karachi Tax Bar Association (KTBA) has proposed the discretionary power of commissioner Inland Revenue to select audit cases should be eliminated.

    (more…)
  • Threshold be doubled for domestic electric consumers

    Threshold be doubled for domestic electric consumers

    KARACHI: Federal Board of Revenue (FBR) has been suggested to double threshold for collection of withholding tax on consumption of electricity by domestic users.

    (more…)
  • Genuine NPOs unable to get benefit of 100% tax credit

    Genuine NPOs unable to get benefit of 100% tax credit

    KARACHI: Karachi Tax Bar Association (KTBA) has highlighted that genuine Non-Profit Organizations (NPOs) are unable to gent benefit of 100 per cent ax credit.

    In its proposals for budget 2022/2023, the tax bar informed the Federal Board of Revenue (FBR) that through Finance Act 2017 an additional condition was inserted to avail the benefit of 100 per cent tax credit.

    READ MORE: Changes sought in withholding on non-resident payment

    Also, provision for taxation of surplus funds has also been introduced. The condition debarred the NPO could be from having admin and management expenses of more than 15 per cent of its total receipts.

    The legitimately collected funds properly invested in specified securities are subjected to tax.

    “These harsh provisions was introduced in the wake of the trust gap between the FBR and the NPO’s whereby certain cases found susceptible of the genuineness or negligent toward compliances,” the tax bar said, adding that the condition was imposed across the board on all NPOs regardless of the fact that nature of some of the NPOs activities is such that it is impossible for them to restrict these expenses under the threshold of 15 per cent.

    READ MORE: FBR urged to allow all tax adjustment in salary income

    This has resulted in many genuine NPOs being unable to claim the benefit of 100 per cent tax credit.

    It is recommended that NPO’s should be categorized according to their nature objectives and purposes and not one single standardized rule should be made applicable. The said condition be deleted or a clarification should be issued whereby certain nature of NPO’s are excluded from this condition.

    Alternatively, the provision for taxation of surplus funds should not be applicable in case those funds are invested in Federal Government securities.

    This will ensure that genuine NPOs are not punished for the compliances under which they have no control.

    READ MORE: PYMA seeks duty, taxes cut on yarn in budget 2022/2023

    The tax bar further informed the FBR that the Rule 214 of the Income Tax Rules, 2002 spells that approval of the Commissioner shall be valid for three years unless withdrawn.

    Despite this position as per the Rules, the Commissioner in general issue certificates valid for only one year or even half year.

    A clarification is proposed U/s. 2(36) of the Ordinance that approval of Commissioner shall be deemed in conformity with the Rule 214 of the Rules. To bring consistency between the law and the procedures in place.

    Entitles not registered as Trust, Society or company. A condition has been imposed a requirement for NPOs to be formed and registered by or under any law as a non-profit organization.

    READ MORE: CGT exemption on private company shares suggested

    This has caused hardship to the entities that are not registered as Trust, Society or Section 42 company who yet completely fall within the four corners of Non- Profit

    The law should be appropriately amended to exclude this requirement. Following amended words are suggested: “formed or registered by or under any law for the time being enforce”

    It is a cardinal principal that income tax law is self-regulated law. Its applicability should not be linked with any other statutory status.

  • Erstwhile FATA/PATA units to get exemption on quota

    Erstwhile FATA/PATA units to get exemption on quota

    ISLAMABAD: The Federal Board of Revenue (FBR) has decided to allow tax exemption to industries located in erstwhile FATA/PATA on the basis quota determined against installed capacity.

    An important meeting held in FBR Headquarter on April 01, 2022, (Friday). Chairman FBR Dr. Muhammad Ashfaq Ahmed reviewed progress regarding determination of quota for import of raw material on the basis of installed capacity for the industrial units located in erstwhile FATA/PATA.

    READ MORE: March collection up over 20% amid political unrest: FBR

    The participants of meeting were informed that out of total 140 units of steel , oil and ghee, plastics and textile etc. in erstwhile FATA/ PATA identified for joint survey for determination of manufacturing capacity, reports about 58 units have been sent to the FBR, while reports of 20 more units were in the pipeline.

    The Director General IOCO stated that the survey and reports on the remaining units will be completed in couple of weeks. Chairman FBR directed that exercise/survey to determine the installed capacity needed to be completed by April 15, 2022 positively.

    READ MORE: Pakistan needs to introduce laws to tax crypto income

    It was also decided that exemptions under Sixth Schedule of Sales Tax Act, 1990 and Income Tax Ordinance, 2001 will not be available to industrial units beyond their quota determined on the basis of their installed capacity after April 15, 2022.

    It was reported that some of industrial units were delaying the exercise on frivolous grounds. However, such units will not be allotted any quota to import raw materials after completion of the exercise.

    Chairman FBR reiterated that the business community should play its positive role to complete this survey so that misuse of exemption of taxes in these areas could be discouraged and thus a level playing field may be ensured to industries located in all parts of the country.

    READ MORE: Tax slabs reduction may be considered: FBR chairman

    It is pertinent to mention that at the time of merger of erstwhile Federally Administered Tribal Areas/Provincially Administered Tribal Areas in Khyber Pakhtunkhwa in 2018, tax exemptions had been granted to these areas for 5 years up to June 30, 2023.

    Currently several industrial units located in these areas are manufacturing different goods including Iron & Steel, Plastic, Ghee, Textile, Plastic etc.

    These units import raw material through sea port at Karachi without payment of Sales Tax and Income Tax. However, these units are required to sell the finished goods only in the newly merged Districts of erstwhile FATA/PATA and not in the tariff areas/other Districts of the Province or in other Provinces.

    READ MORE: Withholding tax should be on income: FBR Chairman

    To frustrate and prevent the misuse of facility of exemption of taxes on the import of raw materials by these units, different measures are being taken by FBR including escort of containers from Azakhail Dryport to the location of the concerned unit.

    The meeting was attended by Member IR Operations, Member IR Policy, Member Customs Policy, Director General Input Output Coefficient Organization (IOCO), Chief Commissioner Peshawar, Chief Collector Khyber Pakhtunkhwa, concerned Collector Customs, Commissioner IR, Director IOCO and other senior officers of FBR.