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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.

  • New rates of regulatory duty on imported smart phones

    New rates of regulatory duty on imported smart phones

    ISLAMABAD: Federal Board of Revenue (FBR) has notified new rates of regulatory duty to be imposed on imported mobile phones during.

    The FBR issued SRO 840(I)/2021 dated June 30, 2021 to notify regulatory duty on 599 tariff lines.

    Following are the rates of regulatory duty on mobile phone with effect from July 01, 2021:

    HS CodeDescriptionRegulatory Duty
    8517.1219Other having C&F Value up to US$ 30 per set excluding Smart PhonesRs.300/set
    8517.1219Other (having C&F Value above US$ 30 per set but not exceeding US$ 100 per set, including Smart Phones having C&F value up to US$ 30 per set)Rs.3,000/set
    8517.1219Other (having C&F Value above US$ 100 per set but not exceeding US$ 200 per set)Rs.7,500/set
    8517.1219Other (having C&F Value above US$ 200 per set but not exceeding US$ 350 per set)Rs.11,000/set
    8517.1219Other (having C&F Value above US$ 350 per set but not exceeding US$ 500 per set)Rs.15,000/set
    8517.1219Other (having C&F Value above US$ 500 per set)Rs.22,000/set
  • Tax officials’ power to amend assessment without audit selection withdrawn

    Tax officials’ power to amend assessment without audit selection withdrawn

    KARACHI: Federal Board of Revenue (FBR) has said that the powers of Inland Revenue officers to conduct an inquiry for amendment of assessment without selection of audit have been withdrawn.

    The FBR while explaining major amendments made in Income Tax Ordinance, 2001, through of Finance Act, 2021 stated that tax authorities were authorized to conduct inquiry under section 122(5A) of the Income Tax Ordinance in certain matters regarding amendment of assessment without selection of case for audit under section 177 of the Ordinance.

    “This power to conduct an inquiry has been withdrawn,” the FBR said.

    The law prescribes a time limit of five years for amendment of assessment. Such proceedings were usually dragged for long periods after issuance of show cause notices. Now the time limit of 120 days has been prescribed to conclude these proceedings after issuance of show cause notice. Necessary changes have been made in section 122(9) of the Ordinance.

    The power of the commissioner to reject advance tax estimates has also been withdrawn. Necessary changes have been made in section 147 of the Ordinance.

    Law has not provided any time limitation to complete proceedings in pursuant to the orders of the commissioner under section 122A. Now proceedings shall be concluded within the time limit of 120 days.

  • Capital gain tax rates enhanced on disposal of immovable properties

    Capital gain tax rates enhanced on disposal of immovable properties

    ISLAMABAD: The Federal Board of Revenue (FBR) has said that the rates of capital gain tax (CGT) on disposal of immovable properties have been slightly enhanced through Finance Act, 2021.

    The FBR in its explanation to changes made through Finance Act, 2021 in Income Tax Ordinance, 2001, said that a separate block of taxation of capital gain on the sale of immoveable property is available under the Ordinance.

    The gain arising on the disposal of immovable property for more than 4 years, is not taxable.

    The capital gain arising on the disposal of immovable properties is taxable to extent of 100 per cent, 75 per cent, 50 per cent and 25 per cent, if property is sold within 1, 2, 3 and 4 years respectively.

    The gain so calculated on the basis of holding period was taxable at the rates ranging from 2.5 per cent to 10 per cent. Now these rates have been slightly enhanced through changes in Division VIII of Part I of First schedule of the Ordinance, however, the holding period concession remains intact.

    ―Division VIII

    Tax on capital gains on disposal of Immoveable Property

    The rate of tax to be paid under sub-section (1A) of section 37 shall be as follows:-

    TABLE S.NoAmount of GainRate of Tax
    (1)(2)(3)
    1.Where the gain does not exceed Rs. 5 million3.5 per cent
    2.Where the gain exceeds Rs. 5 million but does not exceed Rs. 10 million7.5 per cent
    3.Where the gain exceeds Rs. 10 million but does not exceed Rs. 15 million10 per cent
    4.Where the gain exceeds Rs. 15 million15 per cent
  • Law amended to prevent tax avoidance on gifts

    Law amended to prevent tax avoidance on gifts

    KARACHI: The Finance Act, 2021 has amended Income Tax Ordinance, 2001 to prevent tax avoidance on giving away gifts, official sources said on Friday.

    The Federal Board of Revenue (FBR) while explaining the Finance Act, 2021 stated that tax law had provided a special mechanism for treatment of transfer of assets under certain transactions.

    The non-recognition rules provide that no gain or loss shall arise on disposal of assets under certain special arrangements enumerated in sub-section (1) of section 79 of Income Tax Ordinance, 2001.

    However, these rules did not apply if the recipient was a non-resident person. This was giving rise to anomalous situations in certain circumstances therefore, non-recognition rules have been extended in cases of disposal of assets between spouses under an agreement to live apart, inheritance and gift from a relative in case of non-residents.

    Sub-section (4A) of section 37 provides valuation of assets received under certain transactions. However, this was manipulated to avoid tax therefore a proviso has been inserted whereby the commissioner has been empowered to undo such a tax avoidance scheme.

    Gifts received from certain persons were made taxable in the hands of recipients. The provision has been broadened to exclude gifts received from relatives from this taxation in line with other provisions. Necessary changes have been made in clause (la) of sub-section (1) of section 39 of the Ordinance.

  • FBR explains changes to tax on property income through Finance Act 2021

    FBR explains changes to tax on property income through Finance Act 2021

    ISLAMABAD: The Federal Board of Revenue (FBR) has explained changes brought in tax on property income through Finance Act, 2021.

    The FBR said that the block taxation for property income available to non-corporate entities has been done away with.

    Following changes governing taxation of income chargeable to tax under the head income from property have been introduced;

    a. Property income of companies was taxable as normally computable income. However, in case of individuals and AOPs there was an option for property income to be taxed on gross rental bases. This distinction has been withdrawn and now property income shall be chargeable to tax under the head income from property under normal tax regime after admissible deductions. Necessary changes have been introduced in sections 15 and 15A of the Income Tax Ordinance, 2001. Subsequently, Division VIA of Part I of First Schedule has been omitted.

    b. Current year’s loss under any head of income has been allowed to be set off against the person’s income chargeable to tax under the head “income from property” by amending section 56 of the Ordinance.

    c. Withholding tax regime dealing with rental income from immoveable properties has been rationalized. The ambiguity regarding withholding of tax on rental income of immoveable property of sub-lessee has been removed. It has been explained that all persons making payment on account of immoveable property are required to withhold tax at the prescribed rates which have also been rationalized in Division V of Part III of First schedule.

  • Profit from government securities to be taxed at 15%

    Profit from government securities to be taxed at 15%

    ISLAMABAD: The Federal Board of Revenue (FBR) has said that interest income earned from investment in federal government securities will be taxed at the rate of 15 per cent under Final Tax Regime (FTR) with effect from July 01, 2021.

    In an explanation to Finance Act, 2021, the FBR said that interest income earned by all taxpayers except banking and insurance companies from investment in federal government securities shall be taxed at the rate of 15 per cent under final tax regime. This has been provided in clause (20) of Part III of the second schedule on the Income Tax Ordinance, 2001.

    The FBR said that the scope of separate block taxation on interest income has been reduced. Previously, interest income up to Rs 36 million in case of individuals and Association of Persons (AOPs) was chargeable to tax at the rates ranging from 15 per cent to 20 per cent under final tax regime.

    By virtue of new amendments; the interest income up to Rs5 million shall be taxed at the rate of 15 per cent under final tax regime. If the interest income is more than Rs5 million, it shall be taxed under normal tax regime.

    Uniform rate of withholding tax under section 151 of the Ordinance on interest income has been introduced at 15 per cent.

  • Finance Act, 2021: Withholding tax on phone, internet usage reduced

    Finance Act, 2021: Withholding tax on phone, internet usage reduced

    ISLAMABAD: The Federal Board of Revenue (FBR) on Thursday said that the withholding tax rates on usage of phone and internet have been reduced to 10 per cent from 12.5 per cent with effect from July 01, 2021.

    For tax year 2022 the rate has been reduced to 10 per cent and it will be further reduced to 8 per cent beyond the tax year 2022.

    The FBR said that the withholding tax is applicable under Section 236 of the Income Tax Ordinance, 2001. Through the Finance Act, 2021 the withholding tax rates on the usage of phone and internet have been reduced from 12.5 per cent to 10 per cent for tax year 2022 and 8 per cent onwards.

    The FBR said that the Finance Act, 2021 inclusion of telecommunication sector in the definition of industrial undertaking under clause (29C) of section 2 of the Ordinance. This will enable them to adjust tax

    deducted under section 148 on import of capital equipment and plant & machinery for their own use. Reduction of withholding tax rate under section 153(1) of the Ordinance on telecommunication services from 8 per cent to 3 per cent under minimum tax regime.

  • FBR registers 71 cases of money laundering in FY21

    FBR registers 71 cases of money laundering in FY21

    ISLAMABAD: The Federal Board of Revenue (FBR) on Thursday said that around 71 cases of money laundering have been registered during FY21 (2020/2021) in which an amount of Rs62 billion is involved.

    The FBR said that its wing i.e. Directorate General of Intelligence & Investigation-IR showed commendable performance during July 2020 to June 2021.

    During this period, Directorate General forwarded 1,608 Investigation Reports and Red Alerts to the field formations involving revenue amounting to Rs244 billion.

    The Directorate General filed 71 complaints under Anti-Money Laundering Act, 2010 where more than Rs. 62 billion were involved.

    The Directorate General seized 8,754 cartons containing 87,540,000 cigarette sticks during the period of July 2020 to June 2021.

  • FBR receives 3.01 million income tax returns

    FBR receives 3.01 million income tax returns

    ISLAMABAD: Federal Board of Revenue (FBR) on Thursday said it has received 3.01 million income tax returns for tax year 2020 till June 30, 2021.

    “FBR’s efforts to broaden the tax base are expanding apace. Early signs suggest such efforts are bearing fruits,” it said in a statement.

    As on June 30, 2021, income tax returns for Tax Year 2020 have reached 3.01 million as compared to 2.67 million in Tax Year 2019, showing an increase of 12.5 per cent.

    The tax deposited with returns was Rs.52 billion compared to only Rs.34.3 billion last year, showing an increase of 52.1 per cent.

    The FBR said that 11,100 point of sale terminals have been integrated with the real time reporting system of the revenue body.

  • Annual tax collection grows by 18% to Rs4.732 trillion: FBR

    Annual tax collection grows by 18% to Rs4.732 trillion: FBR

    ISLAMABAD: Federal Board of Revenue (FBR) has collected Rs4.732 trillion during fiscal year 2020/2021 surpassing the annual target of Rs4.69 trillion by Rs41 billion.

    This represents a growth of about 18 per cent over the collection of Rs. 3,997 billion during the same period last year.

    The net collection for the month of June was Rs. 568 billion representing an increase of 26 per cent over Rs. 451 billion collected in June 2020.

     The year-on-year growth of 18 per cent is unprecedented particularly as it is realized on the heel of 26 per cent growth in June.

    These figures would further improve before the close of the day and after book adjustments have been taken into account.

    On the other hand, the gross collections increased from Rs. 4,132 billion during this period last year to Rs. 4,983 billion, showing an increase of 21 per cent.

    The amount of refunds disbursed was Rs. 251 billion compared to Rs. 135 billion paid last year, showing an increase of 86 per cent. This is reflective of FBR’s resolve to fast-track refunds to prevent liquidity shortages in the industry.

    The improved revenue performance is even more significant due to adoption of ‘no-undue’ advances policy as well as effective enforcement by field formations. It is also a reflection of growing economic activities in the country despite facing the challenge of third wave of COVID-19.