KARACHI: Builders and developers are required to discharge tax liability for tax year 2020 with the tax return. Commenting on Tax Laws (Amendment) Ordinance, 2020, tax experts at PwC A Ferguson said that the annual tax liability for a project is to be computed by dividing the total liability of the project under the regime by the estimated life of the project in years (which shall not exceed 2.5 years).
(more…)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.
-
FBR issues procedure for safe transportation of ISAF cargo
ISLAMABAD: Federal Board of Revenue (FBR) has issued procedure for movement of International Security Assistant Force (ISAF) cargo under Pakistan Customs Container Security System (PCCSS).
The FBR through a notification dated April 17, 2020 said that the procedure as followed for the transshipment cargo shall be applicable for sealing and de-sealing of ISAF cargo with the following modification:
(i) The containers will be sealed with customs machine readable seal at Karachi by PCCSS after representative of ISAF has inspected, verified and confirmed that the Bill of Lading (B/L) seal/ other seal are intact. Sealing will be done in presence of authorized agent.
(ii) The routes shall be specified by the PCCSS, and any different route or time taken en route will be informed to incharge PCCSS by the ISAF representative.
(iii) The private companies authorized by the FBR to carry ISAF cargo in addition to National Logistic Cell (NLC) will have their transport units registered with PCCSS and the Directorate of Transit Trade, Karachi, or as specifically allowed by Incharge PCCSS on, a case to case basis.
(iv) The unloading from Pakistani Transport Unit and loading on Afghan Transport Unit/authorized units will be done at Peshawar/Quetta dry port. In case unloading is done at the respective terminals of the private carriers, the Incharge PCCSS FP Peshawar/Quetta will coordinate with the FP, carriers and ISAF officials and depute PCCSS staff of these terminals for checking of seals. Officials of ISAF/American Consulate will check their own seals and may affix another seal of their own for their checking at Beghrem Base.
(v) The PCCSS FP Peshawar/Quetta will check the Customs seal as well as other seals and unless a discrepancy is noted, allow the change of transport after noting the number of Second Transport of the Form A. The staff on return to PCCSS Focal Point will enter the verification of the seal in the computer.
(vi) The PCCSS seals will be removed at Focal Point Exit Torkham/Chaman, scanned by the bar code reader and stored in the disposal receptacle.
(vii) Returning containers from Afghanistan will be sealed at Torkham/Chaman only if not empty, as per procedure adopted for ISAF at Karachi for container bound for Afghanistan. Empty containers will not be sealed.
Goods not to be sealed: All containerized cargo which is transshipped, in transit or for export is to be sealed. However, in case of large machinery and awkward loads wherein the seals cannot be applied, the decision will be taken by Incharge Focal Point based on the level of risk in transshipment of such cargo. The Incharge Focal Points will also decided if photographs are to be taken and sent to Incharge PCCSS. In such case the Form A will not carry a seal number, but will mention reasons for not sealing the cargo and whether a photograph of the load/cargo has been sent by e-mail.
-
Filing return mandatory for builders, developers under incentive scheme
KARACHI: The filing of income tax return and wealth statement has been made mandatory for builders and developers under new ordinance to provide incentives to construction industry.
According to Tax Laws (Amendment) Ordinance, 2020, builders and developers under the special tax regime are also required to electronically file annual tax returns (including wealth statements, wherever applicable) to be accompanied by evidence of tax payment.
Such a tax return will be considered as an assessment order issued under section 120 of the Ordinance, according to commentary on the ordinance issued by PWC A F Ferguson.
Tax liability for tax year 2020 is required to be discharged with the tax return.
It further said that a tax return or declaration of a builder or developer is considered void if it is based on misrepresentation or on suppression of facts and all the provisions of the Ordinance will apply unless such misrepresentation is due to a bona fide mistake.
No action is to be taken without providing an opportunity of being heard and without prior approval of Federal Board of Revenue (FBR).
-
SECP highlights difficulties in present tax regime
ISLAMABAD: Securities and Exchange Commission of Pakistan (SECP) has highlighted difficulties faced by corporate sector due to prevailing tax regime.
(more…) -
FBR asks taxpayers to provide IBAN for direct refund payment transfer
ISLAMABAD: Federal Board of Revenue (FBR) on Wednesday asked taxpayers to provide IBAN of their bank accounts for receiving refund payment through online system.
FBR spokesman said that the tax body had devised a centralized system of online payment of Sales Tax, FED and Income Tax refunds directly in the bank account of the taxpayers.
For this purpose, FBR has requested the taxpayers to update their IRIS profile.
In the given bank account details area in the system, IBAN detail row is added wherein taxpayers are required to add their complete Bank’s IBAN number of same Bank Account whose details are already available in IRIS profile to receive Sales Tax, FED and Income Tax refund cheques.
FBR has advised the taxpayers to do the needful as soon as possible to avail electronic transfer facility.
Likewise, FBR has also required from the exporters to update their WEBOC profile and provide IBAN of the same Bank Account whose details are already available in WEBOC profile of the exporters to receive Custom Duty Drawback.
FBR has required the information to be provided as soon as possible to avail electronic transfer facility for Customs Duty Drawback payments.
-
New fixed tax regime for builders and developers
KARACHI: The government has launched the incentive package for construction industry and introduced a fixed tax regime for builders and developers.
The Federal Board of Revenue (FBR) issued Tax Laws (Amendment) Ordinance, 2020, which was promulgated through presidential order to amend Income Tax Ordinance, 2001 in order to provide tax incentives.
According to commentary on the new ordinance issued by PWC A F Ferguson Chartered Accountants a new provision section 100D has been introduced in the Income Tax Ordinance, 2001, prescribing a scheduler based fixed tax regime for Builders and Developers on the basis of project area in respect of their income from sale of building or sale of plots, for tax year 2020 and onwards.
Necessary rules to that effect have been enacted by way of insertion of Eleventh Schedule to the Ordinance.
Similar to other scheduler based taxation provisions, all other provisions of the Ordinance (including recovery of tax not paid and matters connected therewith) not specifically covered under section 100D and Eleventh Schedule will remain applicable on Builders and Developers.
A similar fixed tax regime for builders and developers whereby tax was payable on the basis of area was also introduced though Finance Act, 2016 by way of sections 7C and 7D of the Ordinance, which was subsequently restricted through Finance Act, 2017 to only such Projects, which were initiated and approved during tax year 2017.
As such, builders and developers not covered by sections 7C and 7D were required to pay tax on net income basis.
The provisions of section 100D read with Eleventh Schedule to the Ordinance are applicable to all Builders and Developers, who opts for such taxation and are registered with the Federal Board of Revenue (FBR) on a Project-by-Project basis (hereinafter referred to as ‘eligible project/project’ as the context so requires).
For the eligible projects, the builder or developer will pay tax on the income from the sale of buildings or sale of plots, as the case may be, in respect of:
(a) a new project to be completed by September 30, 2022; or
(b) an incomplete existing project to be completed by September 30, 2022.
However, income, profits and gains earned up to tax year 2019 from incomplete existing projects will remain subject to the provisions of the Ordinance before the commencement of the Amendment Ordinance.
Any income of the builder or developer other than income subject to special tax regime of the Eleventh Schedule shall be subject to tax as per normal provisions of the Ordinance.
Computation of income and annual tax payable thereon at the fixed rates under the regime is to be made on a Project-by-Project basis as Final Tax.
Such income, being subject to final tax regime, shall not be chargeable to tax under any head of income in computing the taxable income.
No deduction for any expenditure, deductible allowance or set-off of any loss will be allowed. Tax credits are also not allowed against tax payable except for tax collected from the builder or developer under section 236K of the Ordinance after the commencement of the Amendment Ordinance on purchase of immovable property utilized in eligible projects. No refund of any taxes suffered is allowed.
-
Illicit money given amnesty through package to construction industry
ISLAMABAD: The government has given an amnesty to illicit money in case of investment made into to construction industry as no question of money to be asked under Income Tax Ordinance, 2001.
Federal Board of Revenue (FBR) on Monday issued the Tax Laws (Amendment) Ordinance No.1 of 2020 after the approval from the president.
The ordinance says that it was being promulgated, “whereas, the COVID-19 pandemic has created a worldwide crisis due to which industries, businesses, offices, service has been shut down in Pakistan and economic activity is at a standstill.”
“And whereas, in order to protect and revive the economy of Pakistan, it is essential and critical to give incentives for revival of the construction industry with certain conditions as provided for in this ordinance.”
Amendment has been made to Income Tax Ordinance, 2001 under which Section 111 shall not apply to the first purchaser of a building or a unit and capital investment made in a new project in the form of money or land.
Section 111 of the Ordinance deals with concealed or undeclared money whereas harsh penalties under the ordinance have been outlined for undeclared money.
According to the sub-Section 3 of Tax Laws (Amendment) Ordinance No.1 of 2020, the provisions of Section 111 shall not apply to capital investment made in a new project in the form of money or land, subject to following conditions, namely:
(a) if the investment is made by a builder or developer being an individual –
(i) in the form of money, such builder or developer shall open a new bank account and deposit such amount in it on or before the 31st day of December 2020; or
(ii) in the form of land, such builder or developer shall have the ownership title of the land at the time of commencement of the Tax Laws (Amendment) Ordinance, 2020;
(b) if the investment is made by a person in a project through a company or an association of persons;
(i) such company or association of persons shall be single object (builder or developer) company or association of persons registered under the Companies Act, 2017 or the Partnership Act, 1932, as the case may be, after the date of commencement of the Tax Laws (Amendment) Ordinance, 2020 and on or before the 31st day of December, 2020; and
(ii) the person shall be a member or shareholder of such association of persons or company, as the case may be;
And if the capital investment is made,
(i) in the form of money, such amount shall be invested through a crossed banking instrument deposited in the bank account of such association of persons or company, as the case may be, on o before the 31st day of December, 2020; or
(ii) in the form of land, such land shall be transferred to such association of persons or company, as the case may be, on or before the 31st day of December 2020;
Provided that the person shall have the ownership title of the land at the time of commencement of the Tax Laws (Amendment) Ordinance, 2020;
(c) a person making an investment under the ordinance shall submit a prescribed form on IRIS web portal;
(d) a person making an investment shall be wholly utilized in project; and
(e) completion of the project shall be certified in the following manner, namely:
(i) in case of a builder, the map approving authority or NESPAK shall certify that grey structure as per the approved map has been completed by the builder on or before the 30th day of September 2022; and
(ii) in case of a developer
(A) the map approving authority or NESPAK shall certify that landscaping has been completed on or before the 30th day of September 2022;
(B) a firm of chartered accountants having an ICAP QCR rating of ‘satisfactory’, notified by the Board for this purpose, shall certify that at least 50 percent of the plots have been booked for sale and at least 40 percent of the sale proceeds have been received by the 30th day of September, 2020; and
(C) at least 50 percent of the roads have been laid up to sub-grade level as certified by the approving authority or NESPAK.
The sub-Section 4 of the latest ordinance said that the provisions of Section 111 shall also not apply to-
(a) the first purchaser of a building or a unit of the building purchased from the builder in respect of purchase price of the building or unit of the building subject to the following conditions, namely:
(i) full payment is made through a crossed banking instrument to the builder during a period starting from the date of registration of the project with the board under this section and ending on the 30th day of September 2022, in case the purchase is from a new project; and
(ii) full or balance amount of payment is made through a crossed banking instrument to the builder during a period starting from the date of registration of the project with the board under this section and ending on the 30th day of September 2022, in case the purchase is from an existing incomplete project; and
(b) the purchaser of a plot who intends to construct a building thereon, if
(i) the purchase is made on or before the 31st day of December 2020;
(ii) the full payment is made on or before the 31st day of December, 2020 through a crossed banking instrument;
(iii) construction of such plot is commenced on or before the 31st day of December 2020.
(iv) such construction is completed on or before the 30th day of September 2022; and
(v) the person registers himself with the board on the online IRIS web portal.
The sub-Section 5 of the latest ordinance said that sub-Section (3) or (4) apply, the value or price of land or building, as the case may be, shall be higher of clause (a) or (b) below:
(a) 130 percent of the fair market value as determined by the board under sub-section (4) of Section 68; or
(b) at the option of the person making investment, the lower of the values as determined by at least two independent valuers from the list of valuers approved by the State Bank of Pakistan.
Sub-Section 6 of the ordinance stated that Sub-Section (3) and (4) shall not apply to –
(a) holder of any public office as defined in the Voluntary Declaration of Domestic Assets Act, 2018 or his benamidar as defined in the Benami Transactions (Prohibition) Act, 2017 or his spouse or dependents;
(b) a public listed company, a real estate investment trust or a company whose income is exempt under any provision of the ordinance; or
(c) any proceeds derived from the commission of a criminal offence including the crimes of money laundering extortion or terror financing but excluding the offences under the ordinance.
-
FBR promotes 35 DEOs to MIS Officer BS-16
ISLAMABAD: Federal Board of Revenue (FBR) on Monday notified promotions of 35 Data Entry Operators (BS-14) to the post of MIS Officer (BS-16) on regular basis with immediate effect.
The following officers have been promoted to the post of MIS Officers:
01. Agha Zafar Ullah, Regional Tax Office, Sukkur
02. M Latif Awan, Data Processing Center (Income Tax), Karachi.
03. Tanveer Ahmed Awan, Large Taxpayers Unit, Karachi.
04. Mirza Adnan Baig, Corporate Regional Tax Office, Karachi.
05. Amanullah Khan, Directorate of Intelligence and Investigation (Inland Revenue), Lahore.
06. Muhammad Asim Bashir, Large Taxpayers Unit, Lahore.
07. Syed Hassan Riaz, Data Processing Center (Income Tax), Lahore.
08. Waseem Shafiq, Data Processing Center (Income Tax), Karachi.
09. Kamran Sabir, Regional Tax Office, Quetta.
10. Irshad Hussain, Regional Tax Office-III, Karachi.
11. Muhammad Ayub, Data Processing Center (Income Tax), Karachi.
12. Muhammad Mukarram, Data Processing Center (Income Tax), Karachi.
13. Nahid Sultana, Data Processing Center (Income Tax), Karachi.
14. Rashid Ishaq, Regional Tax Office, Faisalabad.
15. Mst. Abida Aslam Rathore, Directorate of Research and Statistics, Islamabad.
16. Muhammad Riaz, Corporate Regional Tax Office, Lahore.
17. Muhammad Nisar, Data Processing Unit (Income Tax), Gujranwala.
18. Danish Muhammad Khan, Large Taxpayers Unit-II, Karachi.
19. Tasadduq Hussain, Regional Tax Office, Islamabad.
20. Rashid Maqbool, Large Taxpayers Unit, Lahore.
21. Furqan Khan, Large Taxpayers Unit, Lahore.
22. Asif Mehmood, Data Processing Center (Income Tax), Lahore.
23. Nisar Rasheed, Data Processing Center (Income Tax), Lahore.
24. Agha Mehboob Abbas, Regional Tax Office, Rawalpindi.
25. Kh, Altaf ur Rehman, Data Processing Unit (Income Tax), Multan.
26. Yaseen Panhwar, Regional Tax Office, Hyderabad.
27. Shah Qaiser Sheikh, Regional Tax Office-II, Lahore.
28. Faiz Hussain Qureshi, Corporate Regional Tax Office, Lahore.
29. Tariq Javed Khan Niazi, Corporate Regional Tax Office, Lahore.
30. Muhammad Sohail, Large Taxpayers Unit, Lahore.
31. Javed Rashid, Corporate Regional Tax Office, Lahore.
32. Abdul Waheed, Large Taxpayers Unit, Lahore.
33. Tahir Ali Khan, Directorate of Intelligence and Investigation (Inland Revenue), Lahore.
34. Khalid Mehmood S/o Muhammad Qasim, Directorate of Intelligence and Investigation (Inland Revenue), Lahore.
35. Tajamal Abbas, Reginoal Tax Office, Faisalabad.
The FBR said that the officers would be on probation for a period of one year, extendable for a further period not exceeding one year, provided that if no order is issued by the day following the termination of probationary period, the appointment shall be deemed to be held until further orders.
The officers already drawing performance allowance equal to 100 percent of the basic pay will continue to draw the same on their promotion.
The FBR congratulates the officers on their promotion.
-
FBR collects Rs71.21 billion as regulatory duty in last fiscal year
KARACHI: The customs authorities have collected Rs71.21 billion as regulatory duty during fiscal year 2018/2019, said Federal Board of Revenue (FBR) in a report released recently.
The collection of regulatory duty increased by 12 percent to Rs71.21 billion in fiscal year 2018/2019 as compared with Rs63.58 billion in the preceding fiscal year.
The share of regulatory duty in total customs collection in fiscal year 2018/2019 was 10.36 percent. This ratio was at 10.45 percent to the total customs duty in fiscal year 2017/2018.
The total collection of customs duty was Rs685.57 billion in fiscal year 2018/2019 as compared with Rs608.37 billion in the preceding fiscal year, showing increase of 12.7 percent.
The collection of customs duty also includes warehouse surcharge, regulatory duty, export development surcharge and export duties.
The customs authorities collected Rs1.06 billion as warehouse surcharge in fiscal year 2018/2019 as compared with Rs853 million.
An amount of Rs7.69 billion as export development surcharge during fiscal year 2018/2019 as compared with Rs6.13 billion in the preceding fiscal year.
Besides, the authorities also collected Rs816 million as export duties during fiscal year 2018/2019 as compared with Rs859 million in the fiscal year 2017/2018.
-
Tax to GDP ratio to ease at 11pc as COVID19 losses estimated at Rs1,023bn
ISLAMABAD: Pakistan’s tax to GDP ratio likely fall to 11 percent as losses due to coronavirus lockdown on tax revenue has been estimated at around Rs1,023 billion in current fiscal year.
(more…)