The Federal Board of Revenue (FBR) is facing a projected revenue collection shortfall of Rs272 billion for the current fiscal year, according to the International Monetary Fund (IMF).
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MoU signed for single sales tax return
ISLAMABAD: The revenue authorities of federal and provincial governments on Wednesday reached on an agreement to provide a single web portal to taxpayers for filing only one sales tax return for all revenue authorities.
A statement stated that Federal Board of Revenue (FBR) and all the four provincial revenue authorities Wednesday signed a Memorandum of Understanding (MOU) for a single sales tax return and single web portal.
According to the statement issued by the FBR, the signing of the MOU was one of the most significant components of harmonization of sales tax initiative currently underway between the Federation and the provinces.
On behalf of FBR, the MoU was signed by Chairman FBR, M. Javed Ghani whereas the heads of all provincial revenue authorities signed the document on behalf of their respective departments.
The representatives of Khyber Pakhtunkhwa Revenue Authority (KPRA) and Balochistan Revenue Authority (BRA) were physically present in the ceremony whereas the representatives of Sindh Revenue Board (SRB) and Punjab Revenue Authority (PRA) participated virtually through Zoom.
Speaking on the occasion, Special Assistant to Prime Minister on Revenue, Dr. Waqar Masood Khan said that signing of the document was another step towards completion of Prime Minister’s vision to make FBR fully automated.
“This step will bring facilitation for taxpayers and it will help a great deal in improving the country’s position on ‘Ease of Doing Business Index’,” he added.
He further added that now persons associated with businesses would only have to file one Sales Tax Return instead of many returns.
He further said that this step would help bring simplification in tax system and procedure and expressed commitment that other issues currently existing between FBR and provincial revenue authorities would soon be resolved which would further bring ease for business community.
Waqar Masood congratulated Chairman FBR, heads of Provincial Revenue Authorities and FBR’s Policy Wing Team on achieving this significant milestone.
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FBR urged to provide option for business principal activity in sales tax registration
The Karachi Chamber of Commerce and Industry (KCCI) has called upon the Federal Board of Revenue (FBR) to address challenges in the business registration process, emphasizing the need for streamlined options in the IRIS registration form.
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FBR collects Rs24 billion on purchases of immovable properties
ISLAMABAD: Federal Board of Revenue (FBR) has collected Rs24 billion as withholding tax on purchase of immovable properties during tax year 2020.
According to collection statistics for tax year 2020 released by the FBR on Tuesday revealed the withholding tax collection on purchase of immovable properties increased to Rs24 billion as compared with Rs13.50 billion in the preceding fiscal year, showing an increase of 78 percent.
The collection of withholding tax on purchase of immovable properties is made under Section 236K of the Income Tax Ordinance, 2001.
Prior to Finance Act, 2019, the withholding tax rate was at zero percent where value of immovable property was up to Rs4 million. While, withholding tax at two percent for income tax return filer was to be collected where the value of immovable property is more than Rs4 million. However, at this value of immovable properties the withholding tax for non-filers was prescribed at 4 percent.
However, through Finance Act, 2019 the withholding tax rate was amended to one percent on fair market value of the immovable properties purchased during tax year 2020 and onwards in case the purchase is on the Active Taxpayers List (ATL).
The rate of withholding tax in case person is not on the ATL is 2 percent.
The withholding tax was imposed on purchase of immovable properties under Section 236K was introduced through Finance Act, 2014 in order to encourage income tax return filing.
According to the Section 236K of Income Tax Ordinance, 2001, any person responsible for registering, recording or attesting transfer of any immovable property shall collect withholding tax at the time of registering, recording or attesting the transfer shall collect from the purchaser or transferee.
It further said that the person responsible for registering, recording or attesting transfer includes person responsible for registering, recording or attesting transfer for local authority, housing authority, housing society, co-operative society and registrar of properties.
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FBR removes additional customs duty on import of auto disable syringes
ISLAMABAD: Federal Board of Revenue (FBR) has removed additional customs duty on import of auto disable syringes with or without needles.
The FBR issued SRO 367(I)/2021 dated March 30, 2021 and amended the SRO 572(I)/2020 dated June 30, 2020.
According to the latest notification the additional customs duty shall not be collected on the import of auto disable syringes with or without needles under PCT codes 9018.3110, 9018.3120 up to June 30, 2021.
Similarly, the additional customs duty is also not leviable on import of tubular metal needles under PCT code 9018.3200 and rubber gaskets under PCT 4016.9310 imported by sales tax registered manufacturers of auto disable syringes up to June 30, 2021.
Prior to this through Tax Laws (Second Amendment) Ordinance, 2021, the import of auto disable syringes with or without needles were allowed sales tax exemption.
Similarly, import of raw materials for the manufacturers of auto disable syringes including tubular metal needles and rubber gaskets were allowed sales tax exemption.
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Tax collection from cash withdrawals falls by 52 percent in Tax Year 2020
ISLAMABAD: The income tax collection on cash withdrawal from banking system fell by around 52 percent during tax year 2020 following return filers allowed tax free transactions.
According to statistics released by the Federal Board of Revenue (FBR) the collection of income tax under Section 231A of Income Tax Ordinance, 2001 was at Rs15.17 billion as compared with Rs31.75 billion in the preceding tax year.
Prior to March 2019 the person filing income tax return and were on the Active Taxpayers List (ATL) were liable to pay 0.3 percent on cash withdrawal above Rs50,000 in a day from banking system. Meanwhile, the persons not on the ATL were required to pay 0.6 percent on the cash withdrawal above Rs50,000 in a day.
However, through Finance Supplementary (Second Amendment) Act, 2019 amendment was made to Section 231A Income Tax Ordinance, 2001 and persons on the ATL were exempt from paying 0.3 percent income tax on making cash withdrawal above Rs50,000.
The levy of withholding income tax on cash withdrawal was introduced through Finance Act, 2005. Initially the tax was payable on withdrawal of above Rs25,000 per day. But through Finance Act, 2012 the limit was increased to Rs50,000.
According to Section 231A of the Income Tax Ordinance, 2001 every banking company shall deduct tax, if the payment for cash withdrawal, or the sum total of the payment for cash withdrawal in a day, exceeds fifty thousand rupees.
The FBR clarified that the said fifty thousand rupees shall be aggregate withdrawals from all the bank accounts in a single day.
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FTO proposes initiating criminal prosecution against smugglers
ISLAMABAD: Federal Tax Ombudsman (FTO) has recommended that tax authorities should initiate criminal prosecutions against persons involved in smuggling or selling non-duty paid goods.
In its proposals for budget 2021/2022, the FTO recommended measures on the issues of smuggling, misdeclarations, under-invoicing and non-transparent auctions.
In order to effectively check the smuggling, it was recommended that criminal prosecution should be initiated against the persons/owners of the showrooms involved in business of Non-Duty Paid (NDP) vehicles, fuel pumps of smuggled oil and storage godowns of other smuggled items, from whom the NDP goods were recovered as provided in the Customs Act, 1969 read with the Prevention of Smuggling Act, 1977.
Installation of scanners on the ports was recommended to be given top priority. It was emphasized that if government invested herself in this project, it will raise the potential of higher revenue and more effective check on misdeclaration of description or quantity of imported goods.
So far two scanners have been added at Karachi Ports in addition to one already installed there. Two scanners have also been installed at Jamrud and Torkham, Peshawar.
It was recommended to provide a mechanism in law for cross-matching of value declared on export documents of exporting station to import documents at importing station.
Federal Board of Revenue (FBR) was asked to prescribe Model Auction Rules for auction through electronic means and prepare/operationalize an auction module in the WeBOC system to bring transparency and efficiency in the auctions.
According to FBR, under the WeBOC-Glo initiative (an enhanced version of WeBOC), an electronic auction module has been developed and deployed in the system. This module envisages online registration of bidders who can bid for all auctionable goods displayed on website by the Customs authorities. Pilot is being run at Karachi Port (South Asia Port Terminal only).
In view of constant complaints about delayed clearance at the border stations, generators should be provided on priority for speedy passengers/goods clearances and maintenance of IT and infrastructure support.
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List of exemptions from total income withdrawn through ordinance
KARACHI: officials in the Federal Board of Revenue (FBR) have said that through Tax Laws (Second Amendment) Ordinance, 2021 various clauses of Second Schedule of Income Tax Ordinance, 2001 have been deleted that have allowed tax exemptions from total income.
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Minimum penalty of Rs10,000 fixed for defaulting withholding statement
KARACHI: A minimum penalty of Rs10,000 has been fixed for defaulting withholding statement where no tax is required to be deposited.
Official at the Federal Board of Revenue (FBR) said that the amendment has been brought into Section 182 of Income Tax Ordinance, 2001 through Tax Laws (Second Amendment) Ordinance, 2021.
Chartered Accountants said that prior to the amendment following penalties are prescribed for non-filing of statements under sections 165, 165A or 165B within due date:
a) Rs. 5,000 where the person has deposited the tax withheld within due date and the statement is filed within 90 days;
b) In all other cases, Rs. 2,500 for each day of default with a minimum penalty of Rs. 10,000.
However, a new proviso has been inserted whereby minimum penalty has been prescribed at Rs. 10,000 in cases where there is no tax withholding to be deposited in a particular period.
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Penalty amount for late return filing reduced up to 75 percent
KARACHI: Penalty amount for late return filing has been reduced up to 75 percent in order to encourage people to make compliance of mandatory filing of declaration of income.
Sources in the Federal Board of Revenue (FBR) said that the reduction in penalty amount has been made part of the Income Tax Ordinance, 2001 and amendments have been introduced through Tax Laws (Second Amendment) Ordinance, 2021.
They said that the penalty amount will be reduced by 75 percent in case tax return is filed within one month after the due date for filing income tax return.
According to a commentary on Tax Laws (Second Amendment) Ordinance, 2021 released by PwC A. F. Ferguson & Co. the law prescribes penalty for non-filing of return of income within due date as under:
a) 0.1 per cent of tax payable for the tax year under consideration for each day of default, subject to minimum penalty of Rs. 40,000 and maximum penalty up to 50 per cent of the tax payable for the tax year under consideration;
b) In case, 75 per cent of the income is from salary, and the same is less than Rs. 5 million, minimum penalty is Rs. 5,000
However, two new provisos have been added whereby:
a) Minimum penalty has been prescribed at Rs. 5,000 if taxable income for the year is up to Rs. 800,000; and
b) Amount of penalty is reduced by:
75 per cent if the return of income is filed within one month of the due date;
50 per cent if the return of income is filed within two months of the due date;
25 per cent if the return of income is filed within three months of the due date.
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