Section 35 of Income Tax Ordinance, 2001 has explained tax treatment on disposal of stock in trade. The Federal Board of Revenue (FBR) issued the Income Tax Ordinance, 2001 updated up to June 30, 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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Method of accounting under income tax ordinance
KARACHI: The intricacies of accounting methods for income tax purposes are elucidated in Sections 32, 33, and 34 of the Income Tax Ordinance, 2001, as outlined by the Federal Board of Revenue (FBR).
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Tax expenditures against transfer of participatory reserve
Section 31 of Income Tax Ordinance, 2001 has allowed transfer of participatory reserve on certain circumstances.
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.
31. Transfer to participatory reserve.—(1) Subject to this section, a company shall be allowed a deduction for a tax year for any amount transferred by the company in the year to a participatory reserve created under section 66 of the Companies Act, 2017 (XIX of 2017) in accordance with an agreement relating to participatory redeemable capital entered into between the company and a banking company as defined in the Financial Institutions(Recovery of Finances) Ordinance,2001 (XLVI of 2001).
(2) The deduction allowed under subsection (1) for a tax year shall be limited to five per cent of the value of the company’s participatory redeemable capital.
(3) No deduction shall be allowed under subsection (1) if the amount of the tax exempted accumulation in the participatory reserve exceeds ten per cent of the amount of the participatory redeemable capital.
(4) Where any amount accumulated in the participatory reserve of a company has been allowed as a deduction under this section is applied by the company towards any purpose other than payment of share of profit on the participatory redeemable capital or towards any purpose not allowable for deduction or exemption under this Ordinance the amount so applied shall be included in the income from business of the company in the tax year in which it is so applied.
(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.)
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Expenditures on non-performing debts under tax law
In a significant development for banking companies, development finance institutions, and Non-Banking Finance Companies (NBFCs), Section 30 of the Income Tax Ordinance, 2001 now allows for the deduction of profits accrued on non-performing debts under certain conditions.
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Expenditures against bad debt allowed
The Federal Board of Revenue (FBR) has allowed expenditures against bad debt with certain conditions under Section 29 of Income Tax Ordinance, 2001.
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Expenditure against profit on debt allowed
Section 28 of Income Tax Ordinance, 2001 has allowed expenses to taxpayers against profit on debt to the extent used in business purpose.
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FBR collects Rs410 billion; highest ever in July
ISLAMABAD: Federal Board of Revenue (FBR) has posted a robust growth of 48 per cent in the first month of the fiscal year 2021/2022. The collection in July 2021 is the highest collection in the same month of any past year.
The tax collection target for the fiscal year has been set at Rs5,829 billion.
The FBR has provisionally collected Rs410 billion in July 2021 as compared with Rs277.3 billion in the same month of the last year.
The FBR also surpassed the revenue collection target of Rs342 billion set for the month of July 2021.
Prime Minister Imran Khan commended the performance of the FBR in a tweet message. “I commend the efforts of FBR in achieving record revenue collection in July. As of now collection is Rs410 billion which is highest ever in the month of July and around 22 per cent above required target for the month,” the prime minister said.
The prime minister said the revenue collection performance is a reflection of the government’s policies for sustained economic growth and revival.
The provisional collection showed all the heads have recorded significant growth. The FBR collected Rs190 billion as sales tax, Rs135 billion as income tax, Rs22 billion as federal excise and Rs63 billion as customs duty during July 2021.
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Expenses on employee training allowed tax adjustment
In a move to incentivize investment in employee development and welfare, Section 27 of the Income Tax Ordinance, 2001 allows for the adjustment of expenses incurred on employee training and facilities.
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FBR not to extend last date for filing tax return
Federal Board of Revenue (FBR) will not extend the last date for filing income tax returns, this was stated by Sardar Ali Khawaja, Chief Commissioner Inland Revenue at the Regional Tax Office (RTO) in Peshawar.
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Tax rates on usage of telephone and internet
The Federal Board of Revenue (FBR) collects withholding income tax on telephone and internet usage under Section 236 of Income Tax Ordinance, 2001.
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