In a historic achievement, Pakistan’s Federal Board of Revenue (FBR) has surpassed the psychological target of Rs. 4 trillion in revenue collection for the fiscal year 2021.
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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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Issuance of exemption, reduced tax rate certificate
Section 159 of Income Tax Ordinance, 2001 explains the issuance of exemption and reduced income tax rate certificate.
The Federal Board of Revenue (FBR) issued the Income Tax Ordinance, 2001 updated up to June 30, 2021. The Ordinance incorporated amendments brought through Finance Act, 2021.
Following is the text of Section 159 of Income Tax Ordinance, 2001:
159. Exemption or lower rate certificate.— (1) Where the Commissioner is satisfied that an amount to which Division II or III of this Part or Chapter XII applies is –
(a) exempt from tax under this Ordinance; or
(b) subject to tax at a rate lower than that specified in the First Schedule; or
(c) is subject to hundred percent tax credit under this Ordinance,
the Commissioner shall, upon application in writing by the person, in the prescribed form issue the person with an exemption or lower rate certificate:
Provided that in case of a company, the Commissioner shall issue exemption or lower rate certificate under this section within fifteen days of filing of application by the company:
Provided further that the Commissioner shall be deemed to have issued the exemption certificate upon the expiry of fifteen days from filing of application by the aforesaid company and the certificate shall be automatically processed and issued by Iris:
Provided also that the Commissioner may modify or cancel the certificate issued automatically by Iris on the basis of reasons to be recorded in writing after providing an opportunity of being heard.
(1A) The Commissioner shall, upon application from a person, in the prescribed form whose income is not likely to be chargeable to tax under this Ordinance, issue exemption certificate for the profit on debt referred to in clause (c) of sub-section (1) of section 151.
(2) A person required to collect advance tax under Division II of this Part or deduct tax from a payment under Division III of this Part or deduct or collect tax under Chapter XII shall collect or deduct the full amount of tax specified in Division II or III or Chapter XII, as the case may be, unless there is in force a certificate issued under sub-section (1) relating to the collection or deduction of such tax, in which case the person shall comply with the certificate.
(6) Notwithstanding omission of sub-sections (3), (4) and (5), any notification issued under the said sub-sections and for the time being in force, shall continue to remain in force, unless rescinded by the Board through notification in the official Gazette.
(Disclaimer: The text of the 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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No extension in return filing date for Tax Year 2021
The last date for filing an income tax return for the tax year 2021 is September 30, 2021. Taxpayers including salaried persons, business individuals, Association of Persons (AOPs), companies with special tax year etc. are required to file their returns by September 30.
As per commitment the Federal Board of Revenue (FBR) launched the income tax return forms on July 01, 2021, and given a statutory time period of three months to the taxpayers for filing the returns for tax year 2021.
Last year the FBR, while extending the last date for the return of the tax year 2020, made it clear the tradition of date extension will not be continued from next year.
The FBR extended the date for filing tax returns up to December 08, 2021, after the tax bars objected that the taxpayers should be given a statutory time of three months from the issuance of return forms. Last year the FBR issued the finalized return form on September 08, 2020.
(a) every company;
(ab) every person (other than a company) whose taxable income for the year exceeds the maximum amount that is not chargeable to tax under this Ordinance for the year; or
(ac) any non-profit organization as defined in clause (36) of section 2;
(ad) any welfare institution approved under clause (58) of Part I of the Second Schedule;
(ae) every person whose income for the year is subject to final taxation under any provision of this Ordinance;
(b) any person not covered by clause (a), (ab), (ac) or (ad) who,—
(i) has been charged to tax in respect of any of the two preceding tax years;
(ii) claims a loss carried forward under this Ordinance for a tax year;
(iii) owns immovable property with a land area of five hundred square yards or more or owns any flat located in areas falling within the municipal limits existing immediately before the commencement of Local Government laws in the provinces; or areas in a Cantonment; or the Islamabad Capital Territory;
(iv) owns immoveable property with a land area of five hundred square yards or more located in a rating area;
(v) owns a flat having covered area of two thousand square feet or more located in a rating area;
(vi) owns a motor vehicle having engine capacity above 1000 CC;
(vii) has obtained National Tax Number; or
(viii) is the holder of commercial or industrial connection of electricity where the amount of annual bill exceeds rupees five hundred thousand;
(ix) is a resident person registered with any chamber of commerce and industry or any trade or business
association or any market committee or any professional body including Pakistan Engineering Council, Pakistan Medical and Dental Council, Pakistan Bar Council or any Provincial Bar Council, Institute of Chartered Accountants of Pakistan
or Institute of Cost and Management Accountants of Pakistan; or
(x) is a resident person being an individual required to file a foreign income and assets statement under section 116A.
(1A) Every individual whose income under the head ‘Income from the business’ exceeds rupees three hundred thousand but does not exceed rupees four hundred thousand in a tax year is also required to furnish return of income from the tax year.
In a statement, the FBR said that improvement of tax compliance culture is the prime objective of the government and the Federal Board of Revenue (FBR) is actively trying to achieve it with the cooperation of taxpayers. The decision of non-extension in due date for filing of return last year saw an overwhelming response from taxpayers.
In view of this the Iris portal for filing of return this year was operationalized w.e.f 1st of July, 2021 in order to facilitate the compliant taxpayers.
FBR has advised all taxpayers required to file tax returns by 30th September 2021 to fulfill their legal obligation without waiting for the last date to avoid system delays which occur when a large number of taxpayers log in for submission of returns near the deadline. FBR has reiterated that there will be no extension in due date for filing of Income-tax return.
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Time of payment made under tax law
Section 158 of Income Tax Ordinance, 2001 sheds light on the critical aspect of the time of tax deduction, providing time of payment of tax liability.
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OMCs collect income tax from petrol pumps
Section 156A of the Income Tax Ordinance, 2001 delineates the mechanism for the deduction of income tax from petrol pump operators by Oil Marketing Companies (OMCs).
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Income tax on prize bonds, lottery winning
Section 156 of Income Tax Ordinance, 2001 describes the income tax on prize bonds and lottery winnings.
The Federal Board of Revenue (FBR) issued the Income Tax Ordinance, 2001 updated up to June 30, 2021. The Ordinance incorporated amendments brought through Finance Act, 2021.
Following is the text of Section 156 of Income Tax Ordinance, 2001:
156. Prizes and winnings.—(1) Every person paying prize on a prize bond, or winnings from a raffle, lottery, prize on winning a quiz, prize offered by companies for promotion of sale, or cross-word puzzle shall deduct tax from the gross amount paid at the rate specified in Division VI of Part III of the First Schedule.
(2) Where a prize, referred to in sub-section (1), is not in cash, the person while giving the prize shall collect tax on the fair market value of the prize.
(3) The tax deductible under sub-section (1) or collected under sub-section (2) shall be final tax on the income from prizes or winnings referred to in the said sub-sections.
(Disclaimer: The text of the 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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Income tax on rental immoveable property
Section 155 of Income Tax Ordinance, 2001 explains income tax on rental immoveable property. The Federal Board of Revenue (FBR) issued the Income Tax Ordinance, 2001 updated up to June 30, 2021.
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Track, trace system to roll out from November 01: FBR
ISLAMABAD: Dr. Muhammad Ashfaq Ahmed, Chairman, Federal Board of Revenue (FBR) on Thursday said that track and trace system will be rolled out from November 01, 2021.
According to a statement, FBR Chairman Dr. Muhammad Ashfaq Ahmed appreciated the performance of Inland Revenue Enforcement Network (IREN) staff.
The chairman said that from November 1, 2021, Track and Trace System would be rolled out to cover tobacco manufacturing across the country, and that the AJK Government had approached the Federal Board of Revenue to extend the scope of Track & Track System to cigarette manufacturing units located inside AJK territory.
It is expected that over the next few months’ implementation of Track & Trace System and its extension into AJK, coupled with IREN’s valiant drive would help overcome the menace of counterfeit, illicit and non-tax paid cigarettes in the market.
IREN Squads of FBR, in a counter-evasion operation, has seized non duty / tax paid cigarettes (approximately 14,798,000 sticks) worth Rs. 30,741,100, resulting in detection of evasion of taxes and duties of Rs. 26,184,100 in the month of August, 2021.
Likewise, during the period from July to August, 2021, IREN had seized 26,030,500 illegal cigarettes worth Rs. 48,537,140. As such evasion of taxes and duties worth of Rs. 44,786,258 was detected. This action is in pursuance to directions of the honorable Prime Minister of Pakistan against illicit sale of non-duty/tax-paid and counterfeit cigarettes.
IREN was established in September 2019 with a Chief Coordinator, Central Field Coordinator, and seven regional enforcement hubs all across Pakistan, tasked to conduct raids and seizures on the counterfeit and non-duty paid cigarettes.
As a part of ongoing crackdown against illicit cigarette trade country-wide, all IREN hubs intensified their operation against businesses dealing in non-duty paid and counterfeit cigarettes to save the national exchequer from revenue loss.
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Tax payment on export of IT services
Section 154A of Income Tax Ordinance, 2001 tells about the tax payment on exports of IT services. The Federal Board of Revenue (FBR) issued the Income Tax Ordinance, 2001 updated up to June 30, 2021.
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Tax to be deducted on realization of export proceeds
Section 154 of Income Tax Ordinance, 2001 explains the tax to be deducted on realization export proceeds.
The Federal Board of Revenue (FBR) issued the Income Tax Ordinance, 2001 updated up to June 30, 2021. The Ordinance incorporated amendments brought through Finance Act, 2021.
Following is the text of Section 154 of Income Tax Ordinance, 2001:
154. Exports. — (1) Every authorised dealer in foreign exchange shall, at the time of realisation of foreign exchange proceeds on account of the export of goods by an exporter, deduct tax from the proceeds at the rate specified in Division IV of Part III of the First Schedule.
(2) Every authorised dealer in foreign exchange shall, at the time of realisation of foreign exchange proceeds on account of the commission due to an indenting commission agent, deduct tax from the proceeds at the rate specified in Division IV of Part III of the First Schedule.
(3) Every banking company shall, at the time of realisation of the proceeds on account of a sale of goods to an exporter under an inland back-to-back letter of credit or any other arrangement as prescribed by the Board, deduct tax from the amount of the proceeds at the rate specified in Division IV of Part III of the First Schedule.
(3A) The Export Processing Zone Authority established under the Export Processing Zone Authority Ordinance, 1980 (VI of 1980), shall at the time of export of goods by an industrial undertaking located in the areas declared by the Federal Government to be a Zone within the meaning of the aforesaid Ordinance, collect tax at the rate specified in Division IV of Part III of the First Schedule.
(3B) Every direct exporter and an export house registered under the Duty and Tax Remission for Exports Rules, 2001 provided in Sub-Chapter 7 of Chapter XII of the Customs Rules, 2001 shall, at the time of making payment for a firm contract to an indirect exporter defined under the said rules, deduct tax at the rates specified in Division IV of Part III of the First Schedule.
(3C) The Collector of Customs at the time of clearing of goods exported shall collect tax from the gross value of such goods at the rate specified in Division IV of Part III of the First Schedule.
(4) The tax deductible under this section shall be a final tax on the income arising from the transactions referred to in this section.
“(5) The provisions of sub-section (4) shall not apply to a person who opts not to be subject to final taxation:
Provided that this sub-section shall be applicable from tax year 2015 and the option shall be exercised every year at the time of filing of return under section 114:
Provided further that the tax deducted under this sub-section shall be minimum tax.”
(Disclaimer: The text of the 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.)