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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.

  • Traders given tax incentives

    Traders given tax incentives

    KARACHI: Federal Board of Revenue (FBR) has allowed tax concession to traders to bring them into tax net.

    The tax concessions have been granted through Tax Laws (Second Amendment) Ordinance, 2019.

    Tax experts at PwC A F Ferguson Chartered Accountants said that pursuant to the agreement between representatives of federal government and trade bodies on October 30, 2019; certain concessions have been allowed to traders through the Second Amendment Ordinance.

    The term ‘trader’ has been defined to mean an individual engaged in business of buying and selling of goods in the same state, including a retailer and a wholesaler but excluding a distributor.

    The concessions provided to traders are as under:

    (i)The general rate of minimum tax payable (under section 113 of the Income Tax Ordinance 2001) has been reduced from 1.5 percent to 0.5 percent for tax year 2020 for traders having turnover up to Rs100 million.

    However, for traders who have filed income tax returns for tax year 2018, the tax liability for tax years 2019 and 2020 should not be less than the tax liability for tax year 2018, to become eligible for reduced rate of minimum tax of 0.5 percent.

    (ii)Individual having turnover of Rs. 50 million or more in any of the preceding tax years is liable to deduct tax under section 153 while making payments against supply of goods, services and contracts.

    Through the Second Amendment Ordinance, traders being individuals having turnover up to Rs100 million have been exempted from deducting tax under section 153 while making payment against supply of goods, services and contracts.

    The board is expected to clarify the year with respect to which turnover of Rs100 million will be calculated by the trader.

  • Taxpayers’ declarations to be checked for money laundering

    Taxpayers’ declarations to be checked for money laundering

    ISLAMABAD: Financial Monitoring Unit (FMU) has been allowed to obtain information of taxpayers from tax authorities to check income tax returns and other declarations for money laundering and terror financing.

    The FMU has been granted access to taxpayers’ data through amendment introduced to Section 216 of the Income Tax Ordinance, 2001. The amendment has been brought through Tax Laws (Second Amendment) Ordinance, 2001.

    Under Section 216 of the Income Tax Ordinance, 2001, public servants are barred from disclosing any information relating to income tax filings, evidences or proceedings of any taxpayer.

    Certain exceptions to this general prohibition are also contained in the said section whereby information may be disclosed to specified persons, organizations or authorities.

    By way of an amendment made through the Second Amendment Ordinance, Financial Monitoring Unit (FMU) established under the Anti-Money Laundering Act, 2010 has been included in the list of such exceptions which do not fall within the ambit of confidentiality clause contained in Section 216, tax experts at PwC A F Ferguson Chartered Accountants said.

    This amendment is intended to enable FMU to better implement anti-money laundering procedures by directly obtaining necessary information from public servants.

  • FBR empowered for closure of automatic audit selection

    FBR empowered for closure of automatic audit selection

    ISLAMABAD: Federal Board of Revenue (FBR) has been empowered to conclude cases which were automatic selected for audit.

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  • Procedure for making correction in cash payment receipt issued

    Procedure for making correction in cash payment receipt issued

    ISLAMABAD: Federal Board of Revenue (FBR) has notified procedure for making correction in computerized payment receipt (CPR).

    The FBR issued a circular on Friday stating that the electronic procedure for correction of CPR had been updated in IRIS software and following e-procedure would be followed for the correction of CPR of income tax, sales tax and federal excise duty.

    The FBR said that the scope of changes would be restricted to the following ares:

    a. Change of name, address, National Tax Number (NTN)/Computerized National Identity Card (CNIC).

    b. Change in tax year/tax period

    c. change in payment code/payment section.

    The FBR said that online application for the changes should be submitted through Iris software. An applicant is required to provide documents, included: copy of CPR; in case of mistake made by withholding agent, letter from withholding agent and affidavit from the taxpayer on stamp paper that amendment may be made in CPR; for correction of NTN/CNIC in CPR, affidavit from the person on whose name the payment has been deposited mistakenly.

    The FBR said that the chief commissioner shall designate an officer in his office for such purpose. In case, where scope of correction falls in different territorial jurisdiction, the chief commissioner to who such application has been made shall forward such application electronically to the chief commissioner where such CPR was recorded incorrectly.

    Change in CPR will only take place in the system of FBR for all accounting purpose and the taxpayer will be entitled to take such credit accordingly.

  • Withholding agent condition withdrawn on individuals with turnover up to Rs100 million

    Withholding agent condition withdrawn on individuals with turnover up to Rs100 million

    ISLAMABAD: Federal Board of Revenue (FBR) has withdrawn the condition on individuals to act as withholding agent in case the business turnover is up to Rs100 million.

    The government through Tax Laws (Second Amendment) Ordinance, 2019 introduced major change to Income Tax Ordinance, 2001.

    Under section 153 of the Ordinance, individuals having turnover of Rs50 Million or above in any of the preceding Tax Years are obliged to act as withholding tax agents whilst making payments for supply of goods, rendering of services or for execution of contracts.

    “Henceforth traders, being individuals and having turnover up to Rs100 million shall not be required to act as a withholding agent under section 153 of the Ordinance,” according to the FBR.

    Tax experts explained that individual having turnover of Rs50 million or more in any of the preceding tax years is liable to deduct tax under section 153 while making payments against supply of goods, services and contracts.

    Through the Second Amendment Ordinance, traders being individuals having turnover up to Rs100 million have been exempted from deducting tax under section 153 while making payment against supply of goods, services and contracts.

    However, the FBR may clarify the year with respect to which turnover of Rs100 million will be calculated by the trader.

  • Exemption on electricity bills for commercial, industrial consumers withdrawn

    Exemption on electricity bills for commercial, industrial consumers withdrawn

    ISLAMABAD: Federal Board of Revenue (FBR) has withdrawn the exemption of advance income tax on electricity bills to industrial and commercial consumers.

    The exemption has been withdrawn through Tax Laws (Second Amendment) Ordinance, 2019.

    The FBR said that in terms of clause (66) of Part-IV of the Income Tax Ordinance, 2001 exemption from collection of advance tax under section 235 of the Ordinance on the electricity bills of commercial and industrial consumers was available to the five export oriented sectors who fulfill the twin conditions of falling under the zero rated regime of sales tax and being registered in sales tax as exporters or manufacturers.

    The zero rating regime for the five export–oriented sectors has now been abolished, therefore, consequent amendment in clause (66) of Part-IV of the Second Schedule has been made to remove the legal anomaly.

  • Commissioner empowered to cancel business license

    Commissioner empowered to cancel business license

    ISLAMABAD: The commissioner of Inland Revenue has been empowered to cancel business license of person on violation of tax laws.

    An amendment has been made to Section 181D of Income Tax Ordinance, 2001 through Tax Laws (Second Amendment) Ordinance, 2019 to empower commissioner to impose fine and penalty and cancel business license.

    Federal Board of Revenue (FBR) in salient features to tax amendment ordinance said that in order to document business activity section 181D of the Ordinance was inserted through the Finance Act, 2019 whereby it was made mandatory for every person engaged in any business, profession or vocation to obtain and display a business license as prescribed by the board.

    In order to complement efforts towards implementation of this scheme the Commissioner is being empowered to impose a fine of Rs.20,000/- in the case of a taxpayer deriving income chargeable to tax under the Ordinance and Rs.5,000/- in all other cases.

    Moreover, the Commissioner shall also be empowered to cancel a business license after providing an opportunity of being heard if a person fails to notify any change in particulars within 30 days of such change or if a person is convicted of any offence under any Federal Tax Law.

  • Minimum rate reduced to 0.5%

    Minimum rate reduced to 0.5%

    ISLAMABAD: The government has reduced the minimum tax rate to 0.5 percent from 1.5 percent for traders having turnover up to Rs100 million.

    Federal Board of Revenue (FBR) issued salient features to explain changes made to Income Tax Ordinance, 2001 through Tax Laws (Second Amendment) Ordinance, 2001.

    The FBR said that the standard rate of minimum tax under section 113 of the Income Tax Ordinance, 2001 is being reduced from 1.5 percent to 0.5 percent in the case of traders having turnover up to Rs.100 million for the Tax Year 2020.

    However, traders having turnover up to Rs.100 million who have filed their returns for the Tax Year 2018 will be obliged to pay tax equal to or more than the tax paid for the Tax Year 2018 for the Tax Years 2019 and 2020.

    Moreover, a trader has been defined as an individual engaged in the buying and selling of goods in the same state including a retailer and a wholesaler, however, distributors have been ousted from the scope of this definition.

    Under section 153 of the Ordinance, individuals having turnover of Rs.50 million or above in any of the preceding Tax Years are obliged to act as withholding tax agents whilst making payments for supply of goods, rendering of services or for execution of contracts.

    Henceforth traders, being individuals and having turnover up to Rs.100 million shall not be required to act as a withholding agent under section 153 of the Ordinance.

  • Tax Amendment Ordinance: advance income tax on mobile phone import reduced

    Tax Amendment Ordinance: advance income tax on mobile phone import reduced

    ISLAMABAD: In a significant move aimed at promoting digital accessibility and e-commerce in Pakistan, the government has reduced the advance tax on the import of mobile phones.

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  • Exemption in import certificates facilitates manufacturers

    Exemption in import certificates facilitates manufacturers

    ISLAMABAD: The government has facilitated manufacturers in obtaining exemption certificates for import of raw material.

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