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of Inland Revenue officers to conduct an inquiry for amendment of assessment without selection of audit have been withdrawn.
(more…)Tag: FBR
Get the latest FBR news, tax updates, income tax, sales tax, customs, notifications, and policies from the Federal Board of Revenue.
-
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.No Amount of Gain Rate of Tax (1) (2) (3) 1. Where the gain does not exceed Rs. 5 million 3.5 per cent 2. Where the gain exceeds Rs. 5 million but does not exceed Rs. 10 million 7.5 per cent 3. Where the gain exceeds Rs. 10 million but does not exceed Rs. 15 million 10 per cent 4. Where the gain exceeds Rs. 15 million 15 per cent -
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
ISLAMABAD: The Federal Board of Revenue (FBR) has explained changes brought in tax on property income through Finance Act, 2021.
(more…) -
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
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
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
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
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.
-
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.