Tax authorities are considering a significant increase in monetary penalties for violations of general provisions of income tax laws. According to sources within the Federal Board of Revenue (FBR), the Large Taxpayers Unit (LTU) Karachi has submitted proposals for the budget 2020/2021, suggesting an increase in fines and penalties from the current Rs5,000 to Rs50,000.
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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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Changes to CNIC condition likely in budget
ISLAMABAD: Federal Board of Revenue (FBR) may introduce changes to mandatory CNIC (Computerized National Identity Card) condition in the upcoming budget 2020/2021 in to facilitate registered taxpayers.
At present unregistered purchasers, excluding end-consumers, of above Rs50,000 are required to provide a copy of CNIC in order bring the sales into the documented economy.
The business community raised concern over the low purchase limit. The sources said that the FBR is considering to enhance the limit to Rs200,000.
In the last budget the government made it mandatory for registered persons to obtain CNIC of unregistered person at the time of sale above Rs50,000.
The amendment was brought to Section 8 and Section 23 of Sales Tax Act, 1990 under which in case of invoices issued without CNIC or National Tax Number (NTN) of buyer, related input tax was disallowed on prorate basis except in cases where supplies are made to end consumers not exceeding Rs. 50,000.
Condition of providing CNIC number of buyers on invoices, to claim input tax adjustment, have benefitted unorganized sector more than the already documented sector.
Due to the condition, buyers prefer to purchase from unregistered suppliers as they do not ask for CNIC numbers. On the other hand, registered persons and corporate entities, who were already facing resistance from buyers for charging sales tax and further tax, have been facing severe deterrence from buyers who are resisting provision of CNIC numbers.
Consequently, the compliant taxpayers are forced to either provide CNICs of their employees, relatives, truck drivers, etc. or to shut down their businesses as they are at a competitive disadvantage with the unorganized sector.
This condition has also encouraged cash economy as taxpayers have been withdrawing their money from banks and are dealing in cash only.
According to a report despite massive changes in sales tax laws in Finance Act 2019 to force and mandate sales tax registration and filing of sales tax returns, there is only about 7 percent annual increase in sales tax returns filed from 146,922 return filers in June 2019 to 158,206 in December 2019.
Out of 11,284 additional returns, only 2,769.are payment returns while rest is Nil and Null returns.
The condition of CNIC on unregistered sales has been introduced in the Finance Act 2019 but it was not implemented in July 2019. While, from August 2019 to January 2020, the condition was relaxed through agreement between shopkeepers and FBR.
The FBR sources said that business community had also recommended changes in provisions related to CNIC conditions.
Federation of Pakistan Chambers of Commerce and Industry (FPCCI) in its proposals for budget 2020/2021 suggested to enhance the purchase limit to Rs100,000.
It also pointed out that CNIC condition has been causing cashflow issues since its implementation which will further intensify during the current pandemic of CoVid-19, especially for registered taxpayers.
Therefore, the FPCCI sought a general amnesty through legislation in the next budget regarding CNIC condition for the whole tax year 2020 starting from August 2019 to June 2020.
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Tax credit for final, minimum regimes may be withdrawn
ISLAMABAD: The tax authorities may withdraw tax credit available to taxpayers falling in final and minimum tax regimes, sources in Federal Board of Revenue (FBR) said.
The sources said that the Large Taxpayers Unit (LTU) Karachi has submitted its proposals for budget 2020/2021 and recommended withdrawal of tax credit for final tax and minimum tax regimes.
The sources said that the elimination of tax credit likely to generate Rs5 billion during the next fiscal year.
The LTU Karachi suggested amendment in Section 65B, 65D and 65E of Income Tax Ordinance, 2001 to withdraw tax credit for taxpayers falling in minimum tax and final taxation.
The LTU Karachi said that allowing tax credits against minimum tax and final taxes payable under the Ordinance is against the principal of fairness and final tax regime.
It further said that the withdrawal of tax credit to such taxpayers would help the revenue body to get additional Rs5 billion during the next fiscal year.
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FBR extends date for POS integration up to June 30
ISLAMABAD: Federal Board of Revenue (FBR) on Thursday extended the date for integration of Point of Sale (POS) by high volume retailers up to June 30, 2020.
The last date for integrating the POS for Tier-1 retailers was April 30, 2020.
The FBR said that only those retailers can integrate their POS by June 30 who submit their intention to RTOs/LTUs by June 20, 2020.
FBR sources said that the decision had been taken due to lockdown in the many parts of the country in order to prevent spread of coronavirus the business activities had become stand still.
They said that big outlets and shopping plazas are observing closure during the lockdown and many of those big retailers would not able to make compliance.
The deadline was expired on December 15, 2019 which was given by the FBR to tier-1 retailers to integrate their POSs with the FBR online system.
All tier-1 retailers are required to integrate all their POSs with FBR’s computerized system.
Tier-1 retailer is defined in section 2(43A) of the Sales Tax Act, 1990, to be a person who falls in any of the following categories:
(a) a retailer operating as a unit of a national or international chain of stores;
(b) a retailer operating in an air-conditioned shopping mall, plaza or centre, excluding kiosks;
(c) a retailer whose cumulative electricity bill during the immediately preceding twelve consecutive months exceeds Rupees twelve hundred thousand;
(d) a wholesaler-cum-retailer, engaged in bulk import and supply of consumer goods on wholesale basis to the retailers as well as on retail basis to the general body of the consumers; and
(e) a retailer, whose shop measures one thousand square feet in area or more.
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No question on source of investment for construction section: FBR
ISLAMABAD: Federal Board of Revenue (FBR) on Thursday highlighted tax relief package and said that source of investment for construction sector will not be investigated.
The government recently tax relief package for construction sector in order to restore economic activities. The package was also aimed to benefit 40 additional construction-linked industries. Besides, it was also aimed to generate more employment.
Highlighting the salient features, the FBR said that the tax reform package also allowed 90 percent tax reduction on investment in Naya Paksitan Housing Scheme.
Further, the package allowed fixed tax scheme with facility to pay tax liability in quarterly installments. Further, the incentive package offers easy and simple tax registration.
The FBR said that the government has granted concession in income tax and capital gain tax for builders and land developers.
Further, one time exemption of capital gain tax on sale/purchase of personal accommodation (up to 500 square yards house or 4000 square yards apartment).
The FBR said that the package extended exemption from requirement of withholding tax on building material and services (except steel and cement).
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FBR advised to allow examination before filing GDs
KARACHI: Federal Board of Revenue (FBR) has been advised to allow examination/ weighment should be allowed before filing goods declaration (GDs) in order to verify contents of containers.
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Probe launched into amnesty scheme cases
ISLAMABAD: The Federal Tax Ombudsman (FTO) has launched investigation of over 12,000 pending cases of aggrieved taxpayers who could not avail amnesty scheme or Assets Declaration Scheme 2019 despite payment of due taxes before the deadline.
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FPCCI demands elimination of discretionary powers of tax officials
KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has demanded withdrawal of discretionary powers of tax officials including multiple selection of audit and entering business premises.
Mian Anjum Nisar, President and Zakaria Usman, Convener, Budget Advisory Council of the FPCCI urged the FBR to withdraw the discretionary powers vested with the tax officials to avoid their misuse, provide relief to the taxpayers, simplify taxation law and restore the diminishing confidence of the assessees in the taxation laws – a pre-requisite for success of any scheme.
The proposal is made as a part of the FPCCI presentation being made to the concerned quarters including Dr. Hafeez Shaikh, Advisor to the PM on Finance and Revenue, Razak Dawood, Adviser to PM for Commerce, Textile and Investment and Nausheen Javaid Amjad, Chairperson, FBR for incorporation in the forthcoming Federal Budget 2020-2021.
He added that the FPCCI after identifying a series of such provisions vesting discretionary powers had given concrete proposals to safeguard the interest of the taxpayers against the misuse of discretionary powers.
Regarding discretionary powers of conducting Multiple Audits / Amendment of Assessment under Sections 177, 214C and 122of Income Tax Ordinance, they elaborated, “Although a return filed, U/S 114 of ITO 2001, within time limit does qualify for Universal Self-Assessment Scheme (USAS) and considered to be Assessment Order deemed to have been passed U/S 120(1) of the Ordinance on the date of filing the return, but even then it may be amended as many times as may be necessary by the Inland Revenue officials within 5 years from the end of the financial year in which the return is filed which results in multiple tax assessments”.
They therefore, proposed that the power to select the return of income may rest only with the FBR who is already having the powers to select the audit cases randomly through Computer U/S 214C of the Ordinance.
However, they added, “In case where definite evidence is available with the department then the audit be initiated upto the transaction in question only”.
These discretionary powers provide sufficient incentives to the Inland Revenue Officials to serve Audit Notices to the commercial importers and other such assessees who have already discharged their tax liability as full and final at the time of clearance of goods at customs stage and as such promote direct contact between a taxpayer and tax officials which is against the government policy as it encourage tax evasion and corruption.
The FPCCI Chief Mian Anjum Nisar also lamented posting of Inland Revenue Officer at Business Premises under Section 40B of Sales Tax Act, 1990 to monitor production, sales of goods, stock position etc as it is out dated and unnecessary in the modern era of computerization and available methods of monitoring the entire production and supply chain.
He argued, “It gives a perception of anti-business and anti-investment government policies, creates harassment and tantamount to revival of supervise clearance scheme of Central Excise in Sales Tax Act, 1990”.
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FBR takes notice of closure of field offices
ISLAMABAD: Federal Board of Revenue (FBR) has taken serious notice of without approval closure of field offices for prevention against COVID-19 (coronavirus).
In an official notice issued on Tuesday, the FBR said that it had been observed with grave concern that field offices, unilaterally decided for closure of offices without approval of the Board while dealing with cases of COVID-19.
“This action not only causes embarrassment to the board but also leads to interruption in service delivery of the organization,” the FBR said.
The FBR said that although the tax body places a premium on the safety of its human resource, however, it is important that while taking precautionary steps, simultaneous measures are also taken to ensure uninterrupted provision of services to the taxpayers.
The FBR directed all the field formations to ensure close liaison with Admin Wing, FBR and in future, while dealing with matters related to COVID-19 pandemic or any decision regarding closure or other admin related matters, the same shall only be taken with prior approval of Member (Admin).
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FBR extends date for sales tax payment, return filing
ISLAMABAD: Federal Board of Revenue (FBR) on Tuesday extended the last date for federal excise / sales tax payment and filing monthly return for the month of April 2020.
A notification issued by the FBR stated that the date for federal excise duty / sales tax payment has been extended up to May 29, 2020, which was due on May 15, 2020.
Whereas the date for filing sales tax return for the month of April has been extended to May 30, 2020, which was due on May 18, 2020.