In a move aimed at streamlining taxation in the digital era, proposed amendments to the Sales Tax Act, 1990 are set to require individuals operating online marketplaces to collect sales tax on goods sold through their platforms, regardless of ownership.
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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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Tax Rates for Individuals and Association of Persons
ISLAMABAD: The government has decided to retain the tax rates for individuals and Association of Persons (AOPs) for the year 2021-2022, sources in Federal Board of Revenue (FBR) said.
Since there is no change proposed through the Finance Bill, 2021 the rates applicable in Tax Year 2021 shall remain applicable in Tax Year 2022.
Rates of Tax for Individuals and Association of Persons
(1) Subject to clause (2), the rates of tax imposed on income of every individual and association of persons except a salaried individual shall be as set out in the following Table, namely:—
TABLE
S. No. Taxable income Rate of tax (1) (2) (3) 1. Where taxable income does not exceed Rs. 400,000 0% 2. Where the taxable income exceeds Rs. 400,000 but does not exceed Rs. 600,000 5% of the amount exceeding Rs. 400,000 3. Where taxable income exceeds Rs. 600,000 but does not exceed Rs. 1,200,000 Rs. 10,000 plus 10% of the amount exceeding Rs. 600,000 4. Where taxable income exceeds Rs.1,200,000 but does not exceed Rs. 2,400,000 Rs. 70,000 plus 15% of the amount exceeding Rs. 1,200,000 5. Where taxable income exceeds Rs. 2,400,000 but does not exceed Rs. 3,000,000 Rs. 250,000 plus 20% of the amount exceeding Rs. 2,400,000 6. Where taxable income exceeds Rs. 3,000,000 but does not exceed Rs. 4,000,000 Rs. 370,000 plus 25% of the amount exceeding Rs. 3,000,000 7. Where taxable income exceeds Rs. 4,000,000 but does not exceed Rs. 6,000,000 Rs. 620,000 plus 30% of the amount exceeding Rs. 4,000,000 8. Where taxable income exceeds Rs. 6,000,000 Rs. 1,220,000 plus 35% of the amount exceeding Rs. 6,000,000 -
Super tax permanently imposed on banking companies
ISLAMABAD: The levy of super tax has been permanently imposed on banking companies as it was expiring in the tax year 2021.
Sources in the Federal Board of Revenue (FBR) said that the super tax was only imposed on banking companies while the other taxpayers were exempted from tax year 2020.
The sources said that the Finance Bill 2021 had proposed to continue the levy of super tax at 4 percent on banking companies beyond Tax Year 2021 and onwards.
The government imposed the super tax through Finance Act, 2015 for one year, which was later extended for subsequent years, by inserting Section 4B to the Income Tax Ordinance, 2001.
According to Section 4B:
Super tax for rehabilitation of temporarily displaced persons.― (1) A super tax shall be imposed for rehabilitation of temporarily displaced persons, for tax years 2015 and onwards, at the rates specified in Division IIA of Part I of the First Schedule, on income of every person specified in the said Division.
(2) For the purposes of this section, “income” shall be the sum of the following:—
(i) profit on debt, dividend, capital gains, brokerage and commission;
(ii) taxable income (other than brought forward depreciation and brought forward business losses) under section (9) of this Ordinance, if not included in clause (i);
(iii) imputable income as defined in clause (28A) of section 2 excluding amounts specified in clause (i); and
(iv) income computed, other than brought forward depreciation, brought forward amortization and brought forward business lossess under Fourth, Fifth, Seventh and Eighth Schedules.
(3) The super tax payable under sub-section (1) shall be paid, collected and deposited on the date and in the manner as specified in sub-section (1) of section 137 and all provisions of Chapter X of the Ordinance shall apply.
(4) Where the super tax is not paid by a person liable to pay it, the Commissioner shall by an order in writing, determine the super tax payable, and shall serve upon the person, a notice of demand specifying the super tax payable and within the time specified under section 137 of the Ordinance.
(5) Where the super tax is not paid by a person liable to pay it, the Commissioner shall recover the super tax payable under subsection (1) and the provisions of Part IV,X, XI and XII of Chapter X and Part I of Chapter XI of the Ordinance shall, so far as may be, apply to the collection of super tax as these apply to the collection of tax under the Ordinance.
(6) The Board may, by notification in the official Gazette, make rules for carrying out the purposes of this section.
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Salary Tax Rates for year 2021-2022
ISLAMABAD: The Finance Bill 2021 has not proposed changes to tax rates and slabs for salaried persons for tax year 2022, sources in the Federal Board of Revenue (FBR) said.
Therefore tax rate and slabs will remain unchanged for tax year starting from July 01, 2021.
Following is the table for tax rates on taxable income of salaried persons prevailed during tax year 2021:
Where the income of an individual chargeable under the head “salary” exceeds seventy-five per cent of his taxable income, the rates of tax to be applied shall be as set out in the following table, namely:—
01. Where taxable income does not exceed Rs. 600,000: the tax is zero per cent
02. Where taxable income exceeds Rs. 600,000 but does not exceed Rs. 1,200,000: the tax rate is 5% of the amount exceeding Rs. 600,000
03. Where taxable income exceeds Rs. 1,200,000 but does not exceed Rs. 1,800,000: the tax rate is Rs. 30,000 plus 10% of the amount exceeding Rs. 1,200,000
04. Where taxable income exceeds Rs. 1,800,000 but does not exceed Rs. 2,500,000: the tax rate is Rs. 90,000 plus 15% of the amount exceeding Rs. 1,800,000
05. Where taxable income exceeds Rs.2,500,000 but does not exceed Rs. 3,500,000: the tax rate is Rs. 195,000 plus 17.5% of the amount exceeding Rs. 2,500,000
06. Where taxable income exceeds Rs. 3,500,000 but does not exceed Rs. 5,000,000: the tax rate is Rs. 370,000 plus 20% of the amount exceeding Rs. 3,500,000
07. Where taxable income exceeds Rs. 5,000,000 but does not exceeds Rs. 8,000,000: the tax rate is Rs. 670,000 plus 22.5% of the amount exceeding Rs. 5,000,000
08. Where taxable income exceeds Rs. 8,000,000 but does not exceeds Rs. 12,000,000: the tax rate is Rs. 1,345,000 plus 25% of the amount exceeding Rs. 8,000,000
09. Where taxable income exceeds Rs. 12,000,000 but does not exceeds Rs. 30,000,000: the tax rate is Rs. 2,345,000 plus 27.5% of the amount exceeding Rs. 12,000,000
10. Where taxable income exceeds Rs. 30,000,000 but does not exceeds Rs. 50,000,000: the tax rate is Rs. 7,295,000 plus 30% of the amount exceeding Rs. 30,000,000
11. Where taxable income exceeds Rs. 50,000,000 but does not exceeds Rs. 75,000,000: the tax rate is Rs. 13,295,000 plus 32.5% of the amount exceeding Rs. 50,000,000
12. Where taxable income exceeds Rs. 75,000,000: the tax rate is Rs. 21,420,000 plus 35% of the amount exceeding Rs. 75,000,000
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FBR to confiscate goods without brand licensing
In a bid to enhance regulatory oversight and combat counterfeiting, the proposal to make brand licensing mandatory for manufacturers of specified goods has been put forward. In the event of non-compliance, the Federal Board of Revenue (FBR) is poised to be empowered with the authority to confiscate such items.
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FBR forms committees to remove anomalies in Finance Bill
ISLAMABAD: The Federal Board of Revenue (FBR) on Friday formed committees to identify and remove technical and legal anomalies in the Finance Bill, 2021.
The FBR formed following committees:
Sultan Ali Allana, Chairman, HBL has been appointed as chairman of the business anomaly committee. Ch. Muhammad Tarique, Member (IR- Policy), FBR is co-chairman of the committee. The other members of the committee are included:
01. Ehsan A Malik, CEO, Pakistan Business Council
02. M. Shariq Vohra, President, Karachi Chamber of Commerce and Industry
03. Irfan Siddiqui, President, Overseas Investors Chamber of Commerce and Industry
04. Sherbaz Ilyas Ghazanfar Bilour, President, Sarhad Chamber
05. Abdul Samad, President, Quetta Chamber
06. Mian Naseer Hayat Maggo, President, Federation of Pakistan Chambers of Commerce and Industry
07. Mian Tariq Misbah, President, Lahore Chamber of Commerce and Industry
08. Adil Bashir, Chairman, All Pakistan Textile Mills Association
09. Asif Peer, President, American Business Council
10. Asad Shah, Director (External Affairs), PTC
11. Amir Waheed, ex-President of Islamabad Chamber
Naeem Akhtar Sheikh, UHY Hassan Naeem & Co. has been appointed as chairman of the anomaly technical committee constituted by the FBR. The co-chairman of the committee are: Ch. Muhammad Tarique, Member (IR-Policy), FBR; and Syed Hamid Ali, Member (Customs –Policy), FBR,
The other members of the committee are:
01. Ashfaq Tola, FCA, FCMA
02. Abdul Qadir Memon, Patron Pakistan Tax Bar, Karachi
03. Syed Yawar Ali, Chairman, Pakistan Business Council, Karachi
04. Shahzad Hussain, Ex- Partner, A F Ferguson & Co.
05. Khurram Mukhtar, Patron-in-Chief, PTEA
06. Ms. Sadia Nazeer, FCA, Partner KPMGA
07. Hafiz Muhammad Idrees, Advocate, Supreme Court, Ex-President, Tax Bar
08. Habib Fakhruddin, CA
09. Abdul Wahab Kodvai
The committees have been given tasks to review the anomalies identified and to advise FBR on removal of anomalies.
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Penalty imposed for non-declaration of business bank account
ISLAMABAD: The Federal Board of Revenue (FBR) has been authorized to impose penalty on taxpayers who fail to declare their bank accounts.
According to budget 2021/2022 commentary issued by KPMG Taseer Hadi & Co. the Finance Bill 2021 proposed a new definition of “business bank account” to mean a bank account utilized by the taxpayer for business transaction declared to the Commissioner through original or modified registration form prescribed under section 181.
The form under section 181is available on IRIS wherein the taxpayer is required to declare bank account which would be treated as business bank account.
The Bill proposes to beef-up the documentation of taxpayer by prescribing specific penalty and prosecution provisions on non-declaration of 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), 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 subject to minimum penalty of Rs.100,000 per undeclared bank account. This provision is proposed to be effective from 1st October 2021.
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Tarin directs FBR to ensure tracking progress of installed POS machines
ISLAMABAD: Minister for Finance and Revenue Shaukat Tarin on Tuesday directed the tax authorities to ensure effective tracking progress of installed Point of Sale (POS) machines and provide post deployment support to the retailers.
He further directed to determine the total volume of sales by retailers to effectively tap the revenue generation through POS system after adjustment of input and output taxes. He directed to establish a cell at FBR HQ to fast track the progress on POS integration.
Minister for Finance & Revenue Shaukat Fayaz Ahmed Tarin visited FBR Headquarters on Tuesday and held a meeting with FBR officers.
The agenda of the meeting was to devise a strategy to increase integration of retailers with the Point of Sales System of FBR.
The meeting also discussed the way forward to bring identified potential taxpayers into tax net. Special Assistant to the Prime Minister on Finance & Revenue Dr. Waqar Masood Khan and Chairman FBR Asim Ahmad along with other members of FBR were present in the meeting.
Chairman FBR while briefing said that the licensing of IT companies for installation and configuration of POS System would be completed by the end of August.
He further briefed that monitoring cells would be formed in each RTO headed by respective Chief Commissioner to supervise the POS integration for achieving desired results. Minister for Finance and Revenue directed to ensure effective tracking progress of installed POS machines and provide post deployment support to the retailers. He further directed to determine the total volume of sales by retailers to effectively tap the revenue generation through POS system after adjustment of input and output taxes. The finance minister directed to establish a cell at FBR HQ to fast track the progress on POS integration.
The meeting under the Chair of Minister for Finance & Revenue also discussed the strategy to increase the tax net possibilities.
FBR Team briefed that sizeable number of potential taxpayers have been identified after retrieving available data of their withholding taxes through third party sharing.
Chairman FBR briefed that efforts are being made to bring all the identified potential taxpayers into tax net. Minster for Finance and Revenue directed to remove all hurdles in bringing the identified potential taxpayers into tax net. He directed to further identify the potential taxpayers on the basis of third party data being received through credible sources.
The Minister stressed on the need to finalize the modalities of third party audit which would not only increase the tax net but would also generate much needed revenue. The meeting ended after it was decided to hold regular meetings to pursue the targets on fast track basis.
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FBR explains exemption withdrawal not new tax
ISLAMABAD: The Federal Board of Revenue (FBR) on Monday explained that withdrawal of exemption and concession does not mean imposition of new taxes.
Clarifying to a news report, the FBR said that withdrawal of exemption and reduced rates should not be confused with imposition of new taxes.
It is very clearly and candidly informed that the present budget proposals do not contain any new item for taxation of pensions or major components of salary as initially discussed.
Omission of Clause (39) of Part I of Second Schedule to the Income Tax Ordinance, 2001 is only of technical nature. This clause provided exemption to re-imbursement of expenditure incurred by employee on behalf of the employer organization.
This type of transaction cannot form part of the salary in any circumstances. The omission has been made only because there were some interpretations of the courts that were not in accordance with the actual purpose of this clause.
The clause has accordingly been omitted to avoid multiple interpretations or confusions. The figures of revenue generation of Rs.1.82 billion reported by the Express Tribune in this regard are absolutely unwarranted and misleading.
The clause has accordingly been omitted to avoid multiple interpretations or confusions. The figures of revenue generation of Rs.1.82 billion reported by the Express Tribune in this regard are absolutely unwarranted and misleading.
However, profit on debt or markup component on provident fund has been proposed to be taxed @ 10% as a separate block of income only if such markup exceeds Rs.500, 000 in a tax year.
FBR firmly believes that this change will not result in any significant burden on taxpayers.
Slight changes on account of traveling allowance of newspapers employees, free supply of food or other perquisites etc. and salary of seafarers that was wholly exempt have been proposed for rationalization of salary tax regime rather than as revenue generation measure.
Tax rate on capital market transactions has been lowered from 15% to 12.5% in order to encourage ordinary people to invest their savings in the stock market tradable securities.
This change will result in enhanced savings and investment in an activity that will lead to industrial expansion and economic growth.
Needless to highlight, an enhanced confidence in stock market ultimately translates into raising funds/money by initial public offerings (IPOs) by existing companies or new companies joining the field.
The incentive has been offered for promoting sustainable and inclusive economic growth.
Ministry of Finance and FBR are always open to positive critique for making changes if any required in the proposals, however, take a strong exception to undue, unwarranted and unjustified criticism.
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Tax officers empowered to arrest persons for concealing income
ISLAMABAD: The Federal Board of Revenue (FBR) has introduced a significant amendment to the Income Tax Ordinance, 2001, through the Finance Bill, 2021, empowering tax officers to arrest individuals in cases of income concealment.
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