In the intricate landscape of taxation, ensuring fairness and preventing duplicity is paramount. Section 73 of the Income Tax Ordinance, 2001, as updated up to June 30, 2021, serves this purpose by delineating rules to prevent double derivation and double deductions.
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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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Withholding income tax rates on prize bonds
Federal Board of Revenue (FBR) has issued updated rates of withholding income tax on winning of prize bonds during fiscal year 2021-2022.
The withholding tax rates have been updated after incorporating changes made through Finance Act, 2021.
WITHHOLDING TAX CARD 2021-2022
The FBR collects withholding tax under Section 156 of the Income Tax Ordinance, 2001.
The withholding tax shall be collected from every person making payment on account of winning of prize on prize bond, cross word, raffle, lottery and quiz from recipient of prize or winning at the time of the prize or winnings are actually paid.
A tax rate of 15 per cent of the gross amount shall be collected on payments made for prize on prize bond and cross word. The rate shall be increased by 100 per cent if the person is not appearing on the Active Taxpayers List (ATL).
A tax rate at 20 per cent of the gross amount shall be collected on payments on winning from a raffle, lottery, prize on winning a quiz, prize, offered by companies for promotion of sale crosswords puzzles.
However, the tax rate shall be increased by 100 per cent i.e. 40 per cent if person is not appearing on the ATL.
The tax rate shall be final against tax liability of the person.
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Customs clears first mango consignment under TIR
Pakistan Customs has successfully cleared the first consignment of mangoes bound for Moscow, Russia, under the International Transportation of Goods – TIR Convention.
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Tax on income from ceased business
Section 72 of the Income Tax Ordinance, 2001 has outlined tax on income from ceases business. The Federal Board of Revenue (FBR) has incorporated these regulations into the Ordinance, ensuring that taxpayers understand the implications of income derived from a business, activity, investment, or other sources that have ceased.
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Every amount to be taken in PKR for income tax purpose
Section 71 of the Income Tax Ordinance, 2001 sets forth the requirement that every amount considered for taxation purposes must be in Pakistani Rupees (PKR).
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Retailers to collect invoice fee from customers
KARACHI: The Tier-1 retailers will collect one rupee from customers against issuance of invoice from their point of sale (POS) machine.
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Income tax on compensation against loss
In a bid to provide clarity on the income tax treatment for expenditures or losses that are initially deducted but later compensated, Section 70 of the Income Tax Ordinance, 2001 outlines specific provisions.
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Paper income tax return draft forms issued
ISLAMABAD: The Federal Board of Revenue (FBR) on Monday issued draft paper income tax return form for tax year 2021.
The FBR issued SRO 1022(I)/2021 to notify the draft income tax return forms.
The revenue body invited objection or suggestions within seven days from date of issuance of the SRO. “Objections or suggestions, which may be received from any person in respect of the said draft, before the expiry of the aforesaid period, shall be considered by the Federal Board of Revenue.”
The FBR issued the draft income tax returns for individuals driving income other than salary.
The draft paper income tax return form has been issued as one and half months left for the last date i.e. September 30, 2021.
Tax experts said that the FBR has already notified electronic income tax return form for taxpayers including salaried persons, business individuals, association of persons and companies. The return forms were issued through SRO 853(I)/2021 dated July 01, 2021.
The experts said that the FBR had given statutory time of three months for the return filing on the forms issued on July 01, 2021. However, the latest draft return forms would be finalized after considerable time and then the statutory last date for filing the paper return forms would be start on issuance of the forms.
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Treatment of time for receiving amount under tax law
Section 69 of Income Tax Ordinance, 2001 provides treatment of time for receiving amount under tax law.
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Amendment of assessment must be completed in 120 days
ISLAMABAD: The Federal Board of Revenue (FBR) on Monday said that a limitation of 120 days has been imposed with regard to the period of time during which amendment of assessment under section 122 of the Ordinance must be completed.
The FBR in a circular No. 4 Income Tax (Operations) stated that owing to availability of extended period of time, the completion of proceedings under section 122 of the Income Tax Ordinance, 2001 within desired time has remained a challenge and diverse treatment was meted out viz-a-viz time taken for completion of proceedings across the formations.
This varied treatment has commutatively resulted in below par revenue outcomes for the exchequer and increased compliance costs for the taxpayers due to protracted delays in legal actions.
The Finance Act, 2021 has brought about a significant amendment in section 122 of the Ordinance whereby a limitation of 120 days has been imposed with regard to the period of time during which amendment of assessment under section 122 of the Ordinance must be completed subsequent to issuance of a show cause notice.
The said amendment harmonizes the procedure of amendment of assessment under the Income Tax Ordinance, 2001 with the procedure of assessment under section 11 the Sales Tax Act, 1990 and section 14 of the Federal Excise Act, 2005.
The aforementioned amendment is also an effort to restore the true spirit of the Income Tax Ordinance, 2001 where amendment proceedings are entered into after carrying out inquiry or audit, if necessary, and do not remain pending for an indefinite period of time.
In case the proceedings cannot be completed within the prescribed time period of 120 days, the Commissioner may extend the time limit for up to another ninety days for recorded reasons. The new provision would apply to the show cause notices issued after July 1, 2021.
Accordingly, formations are expected to be cognizant of this important amendment. The Commissioners are required to ensure that necessary guidance is provided to assessing officers in this regard.