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.

Advance tax on purchase of immovable property to be paid on fair market value

KARACHI: Federal Board of Revenue (FBR) will collect advance income tax on sale of immovable properties on the basis of fair market value.

Sources in FBR said that the purchaser of immovable property shall make payment of advance tax income tax on the amount determined at fair market value not on the DC value or valuation tables notified by the FBR.

Under Section 236K of Income Tax Ordinance, 2001, advance tax on purchase or transfer of immovable property.

(1) Any person responsible for registering, recording or attesting transfer of any immovable property shall at the time of registering, recording or attesting the transfer shall collect from the purchaser or transferee advance tax at the rate specified in Division XVIII of Part IV of the First Schedule.

Explanation,—For removal of doubt, it is clarified 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.

(2)The advance tax collected under sub-section (1) shall be adjustable.

(3) Any person responsible for collecting payments in installments for purchase or allotment of any immovable property where the transfer is to be effected after making payment of all installments, shall at the time of collecting installments collect from the allotee or transferee advance tax at the rate specified in Division XVIII of Part IV of the First Schedule.

(4) Nothing contained in this section shall apply to a scheme introduced by the Federal Government, or Provincial Government or an Authority established under a Federal or Provincial law for expatriate Pakistanis:

“Provided that the mode of payment by the expatriate Pakistanis in the said scheme or schemes shall be in the foreign exchange remitted from outside Pakistan through normal banking channels.”

The rate of tax to be collected under section 236K shall be 1 percent of the fair market value from a person appeared on Active Taxpayers List (ATL). The rate shall be at two percent of the fair market value from persons not appearing on the ATL.

January 12, 2020
Tax return to be valid on submission of information

KARACHI: Submission of relevant particulars or information shall make a return of income a valid document.

Officials at Federal Board of Revenue (FBR) said that taxpayers should ensure making all relevant entries before filing income tax return in order to avoid hassle at the time of scrutiny,

They said that although the tax authorities treated the income tax return as assessment order when it is filed to the FBR’s portal. However, when it is selected under defined parameters or identification of any concealment the missing entries can make problems for taxpayers, they added.

The officials also said that a taxpayer should also ensure the payment of tax as calculated on the basis of tax chart for the relevant year for which the return is filed.

They said that a return of income –

(a) shall be in the prescribed form and shall be accompanied by such annexures, statements or documents as may be prescribed;

(b) shall fully state all the relevant particulars or information as specified in the form of return, including a declaration of the records kept by the taxpayer;

(c) shall be signed by the person, being an individual, or the person’s representative where section 172 applies;

(d) shall be accompanied with evidence of payment of due tax as per return of income;

(e) shall be accompanied with a wealth statement as required under section 116; and

(f) shall be accompanied with a foreign income and assets statement as required under section 116A.

January 12, 2020
PM to announce tax relief package for traders on January 20

ISLAMABAD: Prime Minister Imran Khan is set to unveil a tax relief package for traders on January 20, 2020, as confirmed by Syed Shabbar Zaidi, the chairman of the Federal Board of Revenue (FBR), on Saturday.
(more…)

January 11, 2020
Desk audit recommended for increasing amount paid with returns

ISLAMABAD: The Federal Board of Revenue (FBR) has expressed concerns over lower than expected tax payment with return despite significant increase in return filing, a report said.

A FBR report said that the trend for filing of income tax returns had not been satisfactory in Pakistan.

Keeping in view very low compliance, FBR had initiated a Broadening of Tax Base (BTB) drive few years back, which had not started paying dividends in shape of growth in the number of filers.

The income tax returns which were just 1.5 million in Tax Year 2016 have crossed the two million mark first time in the history of FBR.

During Tax Year 2017 the number of income tax filers reached to 1.9 million and in Tax Year 2018 2.2 million.

During TY 2018 the number of return filers increased by 17.1 percent or 316,526 in absolute terms.

This performance in terms of number of returns is satisfactory but payment with returns has a meager growth of 3 percent, which is the matter of concern.

The desk audit of filed returns can be helpful increasing the amount paid with returns.

January 10, 2020
No advance tax on domestic electricity consumers on billed amount below Rs75,000

KARACHI: The domestic consumers of electricity whose monthly billed amount is below Rs75,000 are not liable to pay advance income tax.

According to Section 235A of Income Tax Ordinance, 2001, the domestic electricity consumers are subject to payment of advance income tax, officials of Federal Board of Revenue (FBR) said.

As per tax rate, a domestic consumer is liable to pay 7.5 percent advance income tax in case of above monthly bill is Rs75,000 or above.

However, there is zero percent advance income tax in case the monthly billed amount is below Rs75,000.

Section 235A. Domestic electricity consumption.-

(1) There shall be collected advance tax at the rates specified in Division XIX of Part IV of the First Schedule on the amount of electricity bill of a domestic consumer.

Explanation.— For removal of doubt, it is clarified that for the purposes of this section, electricity consumption bill referred to in sub-section (2) means electricity bill inclusive of sales tax and all incidental charges.

(2) The person preparing electricity consumption bill shall charge advance tax under sub-section (1) in the manner electricity consumption charges are charged.

(3) Tax collected under this section shall be adjustable against tax liability.

January 10, 2020
FBR extends date for filing sales tax, federal excise return

The Federal Board of Revenue (FBR) announced on Friday an extension for filing sales tax and federal excise returns for November 2019. Taxpayers now have until January 13, 2020, to submit their returns.
(more…)

January 10, 2020
FBR may fix Rs20,000 per year as income tax for shopkeepers

ISLAMABAD: Federal Board of Revenue (FBR) likely to fix an amount of Rs20,000 per year as income tax for shopkeepers operating business in a covered area up to 150 square feet.

This fixed rate shall be for shopkeepers not in categorized areas.

Sources in FBR said that the fixed tax rates likely to be for area up t 150 square feet and for area above 150 square feet and less than 300 square feet. The rate of tax will be different for category A shopkeepers and other than this category shopkeepers.

A person having shop with area of up to 150 square feet in category A area than the tax rate shall be Rs35,000.

A person having shop with covered area above 150 square feet and not exceeding 300 square feet and located in other than category A the fixed tax likely be Rs25,000.

Meanwhile, a person having shop with covered area above 150 square feet and not exceeding 300 square feet and located in a category area A the fixed tax shall be Rs40,000 per year.

The sources said that there shall be an option to small shopkeepers to pay two percent as income tax of the turnover.

The sources said that the FBR has finalized income tax return form tax year 2019 for small shopkeepers. This form shall be simple and one-page as committed by the FBR.

Following is the draft income tax return form for retailers. The draft from has not been issued officially. The sources said that there may be changes in the final format to be issued by the FBR.

January 10, 2020
FBR to update major initiatives under agreement with traders associations

ISLAMABAD: Federal Board of Revenue (FBR) to update major initiatives regarding small shopkeepers and traders on January 22, 2020.

A meeting of traders associations with FBR officials was held on Thursday at FBR House, Islamabad. Both the sides agreed on completing formation market committees within next two days.

It is also decided to hold a joint meeting on January 22, 2020 in which the FBR will announce major initiatives taken as per agreement signed on October 30, 2019.

Following is the 11-point agreement between the tax authorities and traders associations signed on October 30, 2019:

01. The tax rate shall be lowered to 0.5 percent from 1.5 percent for traders having turnover up to Rs100 million.

02. No liability on a trader having up to Rs100 million to collect / deposit withholding tax on transactions.

03. Threshold of annual electricity bill of Rs600,000 for mandatory sales tax registration has been increased to Rs1.2 million.

04. Turnover tax for sectors having lower returns will be revisted with consultation with traders associations.

05. Tax issues of jewelers will be resolved in consultation with jewelers associations.

06. The renewal license fees on middlemen will be revisited.

07. To resolve traders taxation issues a desk at FBR headquarters will be set up with immediate effect. A BS-20/21 officer will be designated to resolve the traders’ problems.

08. For new registration of traders a simple income tax return form in Urdu Language will be introduced. Trade associations will cooperation in FBR’s registration drive.

09. Which trader will be exempted from registration having 1000 square feet shop will be decided by traders committees.

10. The registration of those retailers engaged in wholesale business will be decided in consultation with traders community.

11. The FBR will take no action on sales transactions without CNIC information till January 31, 2020.

January 9, 2020
Sale integration mandatory for retailer consuming electricity above Rs1.2 million

KARACHI: A retailer, who is consuming electricity above Rs1.2 million in a year, the online integration through point of sale has been made mandatory.

Definition of the term Tier I retailer has been elaborated to include a retailer falling in any one or more of the categories contained in said definition.

A retailer whose cumulative electricity bill for last 12 consecutive months exceeded Rs 600,000 was included in definition of Tier I retailer.

The said limit of Rs 600,000 has been enhanced to Rs 1,200,000 through Tax Laws (Second Amendment) Ordinance, 2019.

Further, Federal Board of Revenue (FBR) has been empowered to prescribe any person or class of persons to be considered a Tier-I Retailer.

The amended definition of Tier-I Retailer is as under:

“Tier-1 retailer” means a retailer falling in any one or more of the following categories, namely:–

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 center, 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;

e) a retailer, whose shop measures one thousand square feet in area or more; and

f) any other person or class of persons as prescribed by the Board.

January 9, 2020
FBR allows filing Annexure H for July-August 2019 to claim sales tax refund

ISLAMABAD: Federal Board of Revenue (FBR) has allowed taxpayers to submit their stock position for the period July – August 2019 up to February 15, 2020 in order to claim sales tax refunds under newly only verification and issuance system.

In an official memorandum issued on Thursday, the FBR condoned the time limit for filing of Annexure – H for the tax period July – August 2019 up to February 15, 2020.

Annexure-H is a statement for providing stock position by taxpayers along with monthly sales tax return.

The FBR from July 01, 2019 introduced expeditious payment of sales tax refunds within 72 hours subject to the true filing of Annexure – H.

Recently, Karachi Tax Bar Association (KTBA) highlighted this issue and urged the tax authorities to resolve for facilitating exporters and manufacturers.

The KTBA pointed out that as per the amendments made in Sales Tax Rules, 2006 vide SRO no. 918(I)/2019 dated August 7, 2019, mechanism for expeditious processing of refund claim has been devised only for manufacturers-cum- exporters.

As per the Rules, refund will be treated as having been filed only after filing of Annexure H of the Sales Tax return, for which deadline of 120 days has been prescribed in the Rules and the same can be extended for a period of 60 days on the basis of approval from the Commissioner.

However, the rules are silent about the mechanism for processing of Sales Tax refunds incase Annexure H has not been filed by manufacturer-cum-exporter for any reason. Considering the legal and legitimate right of the taxpayer to claim adjustment / refund of the input tax, either of the following two option be considered by the FBR for facilitation of exporters:

Allow filing of Annexure H without any time limit [present time limit of 4 months be abolished and taxpayer be allowed to claim refund as and when required] ii. Incase present limit of 4 months cannot be abolished, registered persons be allowed at least to alternatively file refund on annual basis after the end of the tax year.

Apart from the above, Annexure H is only being allowed to be filed to taxpayers who have filed the said Annexure from sales tax returns of July 2019 and onwards. Instead of claiming refund, some taxpayers have reported sales tax carried forward balance in their sales tax returns from July 2019 onwards. In case they now intend to file Annexure H from the current month,

FBR’s online portal does not allow such taxpayers to enter opening balance of inventory / raw materials as the said field in blocked for editing. This limitation should be removed and taxpayers should be allowed to file Annexure H for any specific month, for which they intend to claim refund.

From apparent mechanism being followed by the system, it appears that those taxpayers who have not filed Annexure H for the month of July 2019 will never be allowed to file Annexure H for any subsequent month. This apparent anomaly should be resolved at earliest.

January 9, 2020