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.

To whom filing income tax return for tax year 2021 mandatory

KARACHI: The Federal Board of Revenue (FBR) on Thursday launched its IRIS portal for filing income tax returns for tax year 2021.

Filing of a return of income is mandatory under Section 114 of the Income Tax Ordinance, 2001.

Section 114: Return of income. — (1) Subject to this Ordinance, the following persons are required to furnish a return of income for a tax year, namely:–

(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 foreign income and assets statement under section 116A.

(1A) Every individual whose income under the head ‘Income from 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.

A return of income under section 114 of a company shall be furnished —

(a) in the case of a company with a tax year ending any time between the first day of January and the thirtieth day of June, on or before the thirty-first day of December next following the end of the tax year to which the return relates; or

(b) in any other case, on or before the thirtieth day of September next following the end of the tax year to which the return relates.

July 1, 2021
Return filing for tax year 2021 commences

ISLAMABAD: Unlike past practice of delayed opening of income return filing, the Federal Board of Revenue (FBR) has opened the IRIS portal for filing annual return of income for tax year 2021 from July 01, 2021.

The taxpayers can login with their ID and password to the IRIS portal of the FBR and file their income tax return.

The FBR on Thursday also launched the income tax return forms for salaried persons, association of persons and companies having special tax years.

In the past the FBR was under criticism for delayed issuance of income tax return form which resulted in multiple extensions in date for filing the returns.

As the FBR opened the portal for return filing of tax year 2021 therefore the last date is September 30, 2021 in case of salaried persons, AOPs and companies.

July 1, 2021
Finance Act, 2021: FBR to boost revenue collection through various revenue measures

ISLAMABAD: The Federal Board of Revenue (FBR) shall boost tax collection through various measures adopted through Finance Act, 2021.

The changes have been implemented from Thursday July 01, 2021 for the fiscal year 2021/2022.

The sources in the FBR said that the revenue measures are included a special regime for export of services at par with export of goods to be taxed at the rate of one per cent under final tax regime.

Through Finance Act, 2021, block taxation of property income has been eliminated and the same is shifted to normal tax regime.

The rate of capital gain tax has been enhanced on disposal of immovable properties.

Reduction in block taxation on interest income has been allowed, if it exceeds Rs5 million.

The interest income from federal government securities would be taxed under final tax regime at the rate of 15 per cent.

Tax on “on” money on vehicles has been continued for the fiscal year 2021/2022, if vehicle is disposed without registration.

The withholding tax scope has been expanded on supply chain below manufacturers and importers of specified sectors.

The reduced threshold monthly electricity bill for withholding tax on electricity consumption has been reduced from 75,000 to 25,000 from domestic users not appearing on Active Taxpayers’ list (ATL).

The tax authorities would not require issuing separate notice in concealment cases.

Scope of withholding agents has been broadened for the purpose of collection of withholding tax on commission income under section 233 of Income Tax Ordinance, 2001.

Withholding tax has been streamlined on sale and purchase of immoveable property under section 236C and 236K of the Ordinance.

July 1, 2021
FBR to arrest persons on concealment above Rs25 million

ISLAMABAD: The Federal Board of Revenue (FBR) has been empowered to arrest a person for concealing above Rs25 million under code of criminal procedure.

Through Finance Act, 2021 a new section 203B has been inserted to Income Tax Ordinance, 2001, which stated as follow:

203B. Power to arrest and prosecute:

(1) Where on the basis of material evidence brought on record, as a result of audit conducted by the auditors in terms of sub-section (8) of section 177 read with section 214C of this Ordinance, an assessment is made or amended under section 121 or 122 of this Ordinance, as the case may be, and the assessing officer records a finding that the taxpayer has committed the offence of concealment of income which has resulted in non-payment of tax of Rupees one hundred million and above in case of a filer and rupees twenty five million or above in case of non-filer, the taxpayer may be arrested after obtaining written approval of the committee specified under sub-section (2).

(2) The committee under sub-section (1) shall comprise the Minister for Finance and Revenue, the Chairman of the Board and the senior most member of the Board.

(3) All arrests made under this Ordinance shall be carried out in accordance with the relevant provisions of the Code of Criminal Procedure, 1898 (Act V of 1898).

(4) Notwithstanding anything contained in sub-sections (1) and (2) or any other provision of this Ordinance, where any person has committed offence of concealment of income or any offence warranting prosecution under this Ordinance, the Chief Commissioner with the prior approval of the Board may, either before or after the institution of any proceedings for recovery of tax, compound the offence if such person pays the amount of tax due along with such default surcharge and penalty as is determined under the provisions of this Ordinance.

(5) Where the person suspected of offence of concealment of income or any offence warranting prosecution under this Ordinance is a company, every director or officer of that company whom the authorised officer has reason to believe is personally responsible for actions of the company contributing to offence of concealment of income or any offence warranting prosecution under this Ordinance shall be liable to arrest:

Provided that any arrest under this sub-section shall not absolve the company from the liabilities of payment of tax, default surcharge and penalty imposed under this Ordinance.

Through the Finance Act, 2021 another Section 203C has been inserted to the Income Tax Ordinance, 2001 under which procedure has been laid down to follow on arrest of a person.

Following is the text of Section 203C:

203C. Procedure to be followed on arrest of a person.– (1) When an officer of Inland Revenue authorized under sub-section (1) of section 203B in this behalf arrests a person under section 203B, he shall immediately intimate the fact of the arrest of that person to the Special Judge who may direct such officer to produce that person at such time and place and on such date as the Special Judge considers expedient and such Officer shall act accordingly.

(2) Notwithstanding anything contained in the sub-section (1), any person arrested under this Ordinance shall be produced before the Special Judge or, if there is no Special Judge within a reasonable distance, to the nearest Judicial Magistrate, within twenty-four hours of such arrest, excluding the time necessary for the journey from the place of arrest to the Court of the Special Judge or, as the case may be, of such Magistrate.

(3) When any person is produced under sub-section (2) before the Special Judge, he may, on the request of such person, after perusing the record, if any and after giving the prosecution an opportunity of being heard, admit him to bail on his executing a bond, with or without sureties, or refuse to admit him to bail and direct his detention at such place as he deems fit:

Provided that nothing herein contained shall preclude the Special Judge from cancelling the bail of any such person at a subsequent stage if, for any reason, he considers such cancellation necessary, but before passing such order he shall afford such person an opportunity of being heard, unless for reasons to be recorded he considers that the affording of such opportunity shall defeat the purposes of this Ordinance.

(4) When such person is produced under sub-section (2) before a Judicial Magistrate, such Magistrate may, after authorising his detention in such custody at such place and for such period as he considers necessary or proper for facilitating his earliest production before the Special Judge, direct his production before the Special Judge on a date and time to be fixed by him or direct such person to be forthwith taken to, and produced before, the Special Judge and he shall be so taken.

(5) Nothing in sub-section (3) or sub-section (4) shall preclude the Special Judge or the Judicial Magistrate from remanding any such person to the custody of an officer of Inland Revenue holding inquiry against that person if such officer makes a request in writing to that effect, and the Special Judge or the Judicial Magistrate, after perusing the record, if any, and hearing such person, is of the opinion that for the completion of inquiry or investigation it is necessary to make such order:

Provided that the period of such custody shall not exceed more than fourteen days.

(6) When any person is arrested under this Ordinance, an officer of Inland Revenue shall record the fact of arrest and other relevant particulars in the register specified in sub-section (10) and shall immediately proceed to inquire into the charge against such person and if he completes the inquiry within twenty four hours of his arrest, excluding the time necessary for journey as aforesaid, he may, after producing such person before the Special Judge or the nearest Judicial Magistrate, make a request for his further detention in his custody.

(7) While holding an inquiry under sub-section (6), an officer of Inland Revenue shall exercise the same powers as are exercisable by an officer in charge of a police station under the Code of Criminal Procedure, 1898 (Act V of 1898), but such officer shall exercise such powers subject to the foregoing provisions of this section while holding an inquiry under this Ordinance.

(8) If an officer of Inland Revenue, after holding an inquiry as aforesaid, is of the opinion that there is no sufficient evidence or reasonable ground for suspicion against such person, he shall release him on his executing a bond, with or without sureties, and shall direct such person to appear, as and when required, before the Special Judge, and make a report to the Special Judge for the discharge of such person and shall make a full report of the case to his immediate superior.

(9) The Special Judge to whom a report has been made under sub-section, (8) may, after the perusal of record of the inquiry, and hearing the prosecution, agree with such report and discharge the accused or, if he is of the opinion that there is sufficient ground for proceedings against such person, proceed with his trial and direct the prosecution to produce evidence.

(10) An officer of Inland Revenue empowered to hold inquiry under this section shall maintain a register to be called “Register of Arrests and Detentions” in the prescribed form in which he shall enter the name and other particulars of every person arrested under this Ordinance, together with the time and date of arrest, the details of the information received, the details of things, goods or documents, recovered from his custody, the name of the witnesses and the explanation, if any, given by him and the manner in which the inquiry has been conducted from day to day and, such register or authenticated copies of its aforesaid entries shall be produced before the Special Judge, whenever such Officer is so directed by him.

(11) After completing the inquiry, an officer of Inland Revenue shall, as early as possible, submit to Special Judge a complaint in the same form and manner in which the officer in-charge of a police station submits a report, before a court.

(12) Magistrate of the first class may record any statement or confession during inquiry under this Ordinance, in accordance with the provisions of section 164 of the Code of Criminal Procedure, 1898 (Act V of 1898).

(13) Without prejudice to the foregoing provisions of this section, Board, with the approval of the Federal Minister-in-charge, may, by notification in the official Gazette, authorize any other officer working under the Board to exercise the powers and perform the functions of an officer of Inland Revenue under this section, subject to such conditions, if any, that it may deem fit to impose.

July 1, 2021
FBR surpasses revenue collection target for FY21

The Federal Board of Revenue (FBR), Pakistan’s premier tax collection agency, has surpassed its revenue collection target for the fiscal year 2020/2021.
(more…)

June 30, 2021
Finance Act, 2021: Taxpayers given three months to update business bank accounts

ISLAMABAD: Declaring business bank accounts has become mandatory from July 01, 2021 otherwise a monetary penalty would be imposed. However, taxpayers have been given to update their registration profile along with business bank accounts up to September 30, 2021.

According to the Finance Act, 2021 a new definition has been included in the Income Tax Ordinance, 2001 in which business bank account means a bank account utilized by the taxpayer for business transaction declared to the Commissioner through original or modified registration form prescribed under section 181.

A Section 114A has been inserted through the Finance Act, 2021 under which every taxpayer will require to declare to the Commissioner the bank account utilized by the taxpayer for business transactions.

Business bank account shall be declared through original or modified registration form prescribed under section 181.

The Finance Act 2021 further imposed monetary penalty for not declaring the business bank account. Where any person fails to declare business bank account(s), in his registration application or fails to amend his registration profile to declare existing business bank account(s) willfully: Such person shall pay a penalty of Rs. 10,000 for each day of default since the date of submission of application for registration or date of opening of undeclared business bank account whichever is later:

Provided that if penalty worked out as aforesaid is less than Rs.100,000 for each undeclared bank account, such person shall pay a penalty of Rs.100,000 for each undeclared business bank account:

Provided further that this provision shall be applicable from the first day of October, 2021 during which period the taxpayer may update their registration forms.

June 30, 2021
Phone calls above 5 minutes to be chargeable additional 75 paisa

ISLAMABAD: The government has imposed additional 75 paisas as federal excise duty (FED) on a mobile phone call if its duration exceeds five minutes.

The national assembly approved the changes in the law after the Federal Board of Revenue (FBR) will collect additional 75 paisa FED on a call above five minutes.

According to the law, mobile phone call, if call duration exceeds five minutes; seventy five paisa per call in addition to the applicable rate of duty.

The additional federal excise duty on mobile phone calls above five minutes shall be applicable from July 01, 2021.

June 30, 2021
Procedure issued for income tax e-audit

ISLAMABAD: Federal Board of Revenue (FBR) on Tuesday issued procedure for selection and conducting electronic audit of income tax cases.

In this regard, the FBR issued SRO 835(I)/2021 dated June 29, 2021 to make amendments in the Income Tax Rules, 2002.

A new rule 231FA has been inserted into the Income Tax Rules, 2002 to make the e-audit part of the tax laws.

Following is the text of newly inserted rule:

“ 231FA. Procedure for E-Audit. – (1) The provisions of this rule shall apply for the conduct of audit proceedings electronically under sub-section (2A) of section 177 of Income tax Ordinance, 2001 (XLIX of 2001).

(2) Definitions.- in this rule, unless there is anything repugnant in subject or context,

(a) “Adjudication Officer” means an officer of Inland Revenue to whom a case is assigned for assessment on the basis of audit report under these rules;

(b) :Audit Officer” means an officer of Inland Revenue to whom a case is assigned for conducting e-audit under these rules;

(c) “Automated Case Selection System” means an algorithm for randomized allocation of cases by using suitable technological modes;

(d) “Competent Authority” means the Board in case of selection of audit under section 214C and Commissioner Inland Revenue having jurisdictions in case of selection under section 177 of the Ordinance;

(e) “e-audit” means the audit proceedings of registered person conducted through electronic means including video links, or any other facility as may be specified by the Board from time to time; and

(f) “Iris” means a web based computer programme for operation and management of Inland Revenue taxes and laws administered by the Board.

(3) Where a case has been selected under section 177 or section 214C of the Ordinance, as the case may be, and the competent authority may issue direction to conduct e-audit, the following procedure shall be adopted, namely:

(a) the cases selected for e-audit under sub-rule (1) shall be processed through Automated Case Selection System which will create an assignment for issuing notice through Iris to the taxpayer against selection of cases for audit;

(b) for issuance of notices, Automated Case Selection System will configure the:-

List of officers of Inland Revenue to whom the case can be assigned; and

List of the cases to be marked across the jurisdiction; and thereafter, intimate to the concerned Commissioner IR where the case has been assigned by the Automated Case Selection System;

(c) The concerned Commissioner Inland Revenue to whom the case has been assigned by the Automated Case Selection System shall serve a notice under sub-section (1) of section 177 of Income Tax Ordinance 2001,

(d) a taxpayer shall produce the record or documents including books of accounts maintained under Income Tax Ordinance, 2001 through Iris or electronic data carrier notified by the Board;

(e) a taxpayer shall not be required to appear either personally or through authorized representative in connection with any proceedings under e-audit before the officer of Inland Revenue. In case of any explanation required by the taxpayer or officer of Inland revenue, request for personal hearing, shall be made through iris and may be allowed to do so in assigned Jurisdiction and such hearings shall be conducted exclusively through video links from personal computer system or any of the nearest Tax Facilitation Centre situated at the premises of the different Tax Offices , as the case may be;

(f) an Audit Officer to whom the case is assigned, after considering all the information, documents or evidence, if finds no discrepancy and have no conclusive proof against taxpayer may close the audit and send it to the Automated Case Selection System:

(g) after examination of record and after obtaining taxpayers’ explanation on all the issues raised, if the Audit Officer to whom the case is assigned, does not agree with the declared version and proposes order for assessment of tax, shall prepare an audit report, containing audit observations/ findings and forward the report to taxpayer through Iris and Automated Case Selection System simultaneously;

(h) the Automated Case Selection System will once again configure and assign the case to any Adjudication Officer across the jurisdiction to make an order for assessment of tax under section 122, including imposition of penalty and default surcharge in accordance with sections 182 and 205 of the Ordinance, if required, as pointed out in the audit report;

(i) notwithstanding anything contained in the Income Tax rules, 2002, the Jurisdiction assigned under sub-clause

(ii) of clause (b) of sub-rule (3) above , by the Automated Case Selection System shall be deemed to have been made under the powers conferred by section 209 of the Income Tax Ordinance, 2001 till such time proceedings under clause (k) are finalized for the purpose of section 122 and section 177 of Income Tax Ordinance ,

(j) the adjudication officer to whom the case is assigned under clause (h) of sub-rule (3) above, shall after a notice under section 122(9) of the ordinance through Iris to show cause to such person, make an order for assessment of tax as pointed out in the audit report and issue Assessment Order accordingly under section 122 of the Inc ome Tax Ordinace, 2001 and send it to the Automated Case Selection System:

Provided that in case the taxpayer applies electronically for agreed assessment under section 122D in the prescribed form to the committee constituuted under section 122D (5), and the committee may,-

Accept or modify the offer, and the taxpayer agrees to that offer, the Adjudication Officer shall pass the amended assessment order accordingly; or

Rejects or unable to reach on consensus, the case will be referred back to Adjudication Officer for passing amended order under section 122 on the basis of available record and reply of the taxpayer; and

(k) the Automated Case Selection System, shall forward the assessment order passed under section 122 of the Ordinance for initiating recovery proceedings, if any under section 137 of the Income Tax Ordinance, 2001 to the jurisdiction where such person is originally registered.”

June 29, 2021
Online market places to withhold sales tax from July 01

ISLAMABAD: Online market places will collect sales tax on supply of goods and services through digital platforms on behalf of the Federal Board of Revenue (FBR) from July 01, 2021, sources said on Monday.

The sources said that through Finance Bill, 2021 the term online marketplace was introduced.

According to KPMG Taseer Hadi & Co. Chartered Accountants said that COVID-19 had catapulted the universe into adopting truly digital lifestyle and Pakistan has also seen drastic growth in e-Commerce.

As a way forward to clearer taxation policy in this sector, there have been many changes in Pakistani Taxation laws.

The Finance Bill proposes to insert new clause 18A to Sales Tax Act, 1990 defining the term “Online marketplace” to include an electronic interface such as a market place, e-commerce platform, portal or similar means which facilitate sale of goods, including third party sale, in any of the following manner, namely:

(a) by controlling the terms and conditions of the sale;

(b) authorizing the charge to the customers in respect of the payment for the supply; or

(c)ordering or delivering the goods.

Furthermore, Bill proposes to insert clause 3(1)(c) requiring the person running online market place to charge sales tax on the value of supply of goods through that online market place, whether the goods are owned by him or not.

June 28, 2021
Tax officials given arrest powers on concealment above Rs200 million; changes made to Finance Bill 2021

ISLAMABAD: The government has reviewed the proposal related to power of tax officials to arrest persons under criminal proceedings for concealment of income.

The power to make arrest may be restricted to concealment of Rs200 million and above, sources in Federal Board of Revenue (FBR) said.

Through Finance Bill 2021, it is proposed to substitute the Section 203 which at present deals with procedure of appeal against the order of a Special Judge.

The Bill proposed to substitute section 203A which provides that an authorized officer may arrest a person as per the provisions of the Code of Criminal Procedure, 1898 on the basis of material evidence and he has a reason to believe that person has committed an offence of concealment of income or an offence warranting prosecution.

Further, where a person commits an offence, the Chief Commissioner with the prior approval of the Board either before or after the institution of any proceedings for recovery of tax, compound the offence if such person pays the tax due along with such default surcharge and penalty.

Accordingly, existing section 202 is proposed to be deleted from the statute.

If the person suspected of committing an offence or concealment is a company, every director or officer of that company whom the authorized officer has reason to believe that he is personally responsible for actions of the company contributing to offence or concealment of income or any offence, shall be liable to arrest.

Provided that any arrest shall not absolve the company from the liabilities of payment of tax, default surcharge and penalty.

The sources said that the after this proposal the business community strongly reacted and termed it immense discretionary powers to the tax authorities.

The government realizing the sensitivity of the situation made changes it its actual proposal and now the power of tax officials has be restricted in those cases where concealment is abve Rs200 million.

The government will present the Finance Bill 2021 after making certain changes before the Parliament for approval.

June 27, 2021