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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.

  • Sales Tax Act 1990: FBR may appoint special panels for audit

    Sales Tax Act 1990: FBR may appoint special panels for audit

    KARACHI: Federal Board of Revenue (FBR) has been empowered under sales tax law to appoint special audit panels for conducting audit of any registered person.

    The updated Sales Tax Act, 1990 issued by the FBR, the Section 32A explains the powers of the revenue body for appointment of special audit panels.

    Section 32A: Audit by Special Audit Panels

    Sub-Section (1): The Board may appoint as many special audit panels as may be necessary, comprising two or more members from the following, –

    (a) an officer or officers of Inland Revenue;

    (b) a firm of chartered accountants as defined under the Chartered Accountants Ordinance, 1961 (X of 1961);

    (b) a firm of cost and management accountants as defined under the Cost and Management Accountants Act, 1966 (XIV of 1966); or

    (d) any other person as directed by the Board,

    to conduct audit of a registered person or persons, including audit of refund claims and forensic audit and the scope of such audit shall be determined by the Board or the Commissioner Inland Revenue on a case-to-case basis. In addition, the Board may, where it considers appropriate, also get such audit conducted jointly with similar audits being conducted by provincial administrations of sales tax on services.

    Sub-Section (2): Notwithstanding that records of a registered person have been audited by an officer appointed under section 30, the Board or a Commissioner may direct special audit panel appointed under sub-section (1) to audit the records of any registered person.

    Sub-Section (3): Every member of special audit panel appointed under sub-section (1), shall have the powers of an officer of Inland Revenue under sections 25, 37 and 38.

    Sub-Section (4): Each special audit panel shall be headed by a chairman who shall be an officer of Inland Revenue.

    Sub-Section (5): If any one member of the special audit panel, other than the chairman, is absent from conducting an audit, the proceedings of the audit may continue and the audit conducted by the special audit panel shall not be invalid or be called in question merely on the ground of such absence.

    Sub-Section (6): The Board may prescribe rules in respect of constitution, procedure and working of special audit panel.

  • Sales Tax Act 1990: return filing requirement by registered persons

    Sales Tax Act 1990: return filing requirement by registered persons

    KARACHI: A sales tax registered person is required to file true and correct sales tax return on monthly basis by providing details of supplies and persons whom the supplies were made during the period.

    According to updated Sales Tax Act, 1990 issued by Federal Board of Revenue (FBR), the Section 26 explained the requirement of filing sales tax return by registered persons.

    Section 26: Return

    Sub-Section (1): Every registered person hall furnish not later than the due date a true and correct return in the prescribed form to a designated bank or any other office specified by the Board [FBR], indicating the purchases and the supplies made during a tax period, the tax due and paid and such other information, as may be prescribed;

    Provided that the Board may, by notification in the official Gazette, require any person or class of persons to submit return on quarterly basis:

    Provided further that the Board may, by notification in the official Gazette, require any person or class of persons to submit such return as may be prescribed annually in addition to the monthly return or quarterly return:

    Provided also that the return filed electronically on the web or any magnetic media or any other computer readable media as may be specified by the Board shall also be deemed to be a return for the purpose of sub-section (1) and the Board may, by notification in the official Gazette, make rules for determining eligibility of the data of such returns and e-intermediaries who will digitize the data of such returns and transmit the same electronically under their digital signatures.

    Sub-Section (2): omitted

    Sub-Section (3): A registered person may, subject to approval of the Commissioner Inland Revenue having jurisdiction, file a revised return within one hundred and twenty days of the filing of return under sub-section (1) or, as the case may be, sub-section (2), or under clause (a) or clause (b) of section 27, to correct any omission or wrong declaration made therein.

    Sub-Section (4): Notwithstanding the penalties prescribed in section 33, if a registered person wishes to file revised return voluntarily along with deposit of the amount of tax short paid or amount of tax evaded along with default surcharge, whenever it comes to his notice, before receipt of notice of audit, no penalty shall be recovered from him:

    Provided that in case the registered person wishes to deposit the amount of tax as pointed out by the officer of Inland Revenue during the audit, or at any time before issuance of the show cause notice, he may deposit the evaded amount of tax, default surcharge under section (34), and twenty five percent of the penalty payable under section 33 along with the levied return:

    Provided further that in case the registered person wishes to deposit the amount after issuance of show cause notice, he shall deposit the evaded amount of sales tax, default surcharge under section 34, and full amount of leviable penalty under section 33 along with the revised return and thereafter, the show cause notice, shall stands abated.

    Sub-Section (5): The Board may, by notification in the official Gazette, require any person or class of persons, for any goods of such description or class, to furnish such summary or details or particulars pertaining to the imports, purchases and supplies during any tax period or periods, in such format as may be specified.

  • FBR imposes ban on tax officials’ leaves

    FBR imposes ban on tax officials’ leaves

    ISLAMABAD: Federal Board of Revenue (FBR) has imposed ban on its officials for availing any kind of leave, including ex-Pakistan.

    In a circular issued on Friday, the FBR said that it had been observed with concern that the Field Formations of FBR are forwarding requests for grant of leaves, including ex-Pakistan leaves on daily basis despite the fact that the fourth quarter of the current financial year has started and the entire tax machinery is required to accelerate its efforts to achieve the assigned budgetary targets through full determination and devotion.

    In view of the above, the competent authority has desired that requests for grant of ex-Pakistan leaves may not be forwarded to the board by the respective Heads of Field Formations till June 30, 2019.

    All such cases will be processed in the board at the beginning of next financial year.

    Similarly local leaves /leaves of other kind may also not be granted liberally during the fourth quarter of the current financial year and may only be allowed in the light of special circumstances / hardship cases.

  • FBR selects only 2.3pc income tax audit cases out of total filers, World Bank informed

    FBR selects only 2.3pc income tax audit cases out of total filers, World Bank informed

    ISLAMABAD: Federal Board of Revenue (FBR) has informed the World Bank that the tax body has significantly reduced the number of audit selection this year.

    In Audit Policy 2017, FBR selected 7.5 percent cases for audit out of the total filers.

    However, in Audit Policy 2018, FBR has selected 2.3 percent of income tax cases and 2.5 percent of sales tax cases for audit out of the total filers.

    Senior officials of the FBR informed the World Bank team at a meeting held at FBR headquarters.

    On the subject of audit selection of cases, World Bank team was informed that FBR has carried out parametric selection of cases using new business intelligence tools.

    The process has significantly reduced the number of cases selected for audit.

    The World Bank team was informed about the tax reforms introduced by FBR for medium and small sized companies on Ease of Doing Business.

    Abbas Ahmed Mir, Chief (BDT-IT) and Ms. Saba Ijaz, Secretary (BDT-IT) attended the meeting from FBR side.

    FBR Officers briefed the World Bank team about the launch of e-payment of taxes through Alternate Delivery Channels (ADC) which came into effect since March 2018.

    Through Alternative Delivery Channels, the taxpayers can now pay their taxes through ATM, internet banking or mobile banking which has saved taxpayers time and resources.

    FBR team also apprised World Bank team on the reduction of income tax rate from 25 percent in tax year 2018 to 24 percent in tax year 2019 for the small companies.

    Income tax rate will keep on reducing by 1 percent every year till 2023 when it will be 20 percent.

    FBR officers also clarified the Sales Tax Law relating to capital asset purchase and adjustment of input tax under section 8B of Sales Tax Act 1990.

  • Sales Tax Act 1990: tax officials authorized to access record

    Sales Tax Act 1990: tax officials authorized to access record

    KARACHI: The sales tax law has authorized tax officials to access record maintain by registered persons for the purpose of investigation and audit.

    According to updated Sales Tax Act, 1990 issued by the Federal Board of Revenue (FBR), the Section 25 explained maintenance of record by taxpayer and authority of tax department to access the record and conduct audit.

    Section 25: Access to record, documents, etc.

    Sub-Section (1): A person who is required to maintain any record or documents under this Act or any other law shall, as and when required by Commissioner, produce record or documents which are in his possession or control or in the possession or control of his agent; and where such record or documents have been kept on electronic data, he shall allow access to the officer of Inland Revenue authorized by the Commissioner and use of any machine on which such data is kept.

    Sub-Section (2): The officer of Inland Revenue authorized by the Commissioner, on the basis of the record, obtained under sub-section (1), may, once in a year, conduct audit:

    Provided that in case the Commissioner has information or sufficient evidence showing that such registered person is involved in tax fraud or evasion of tax, he may authorize an officer of Inland Revenue, not below the rank of Assistant Commissioner, to conduct an inquiry or investigation under section 38:

    Provided further that nothing in this sub-section, shall bar the officer of Inland Revenue from conducting audit of the records of the registered person if the same were earlier audited by the office of the Auditor-General of Pakistan:

    Provided also that audit under this section shall be conducted only once in every three years.

    Sub-Section (3): After completion of Audit under this section or any other provision of this Act, the officer of Inland Revenue may, after obtaining the registered person’s explanation on all the issues raised in the audit shall pass an order under section (11).

    Sub-Section (4): Omitted

    Sub-Section (5): Notwithstanding the penalties prescribed in section 33, if a registered person wishes to deposit the amount of tax short paid or amount of tax evaded along with default surcharge voluntarily, whenever it comes to his notice, before receipt of notice of audit, no penalty shall be recovered from him:

    Provided if a registered person wishes to deposit the amount of tax short paid or amount of tax evaded along with default surcharge during the audit, or at any time before issuance of show cause notice he may deposit the evaded amount of tax, default surcharge under section 34, and twenty five per cent of the penalty payable under section 33:

    Provided further that if a registered person wishes to deposit the amount of tax short paid or amount of tax evaded along with default surcharge after issuance of show cause notice, he shall deposit the evaded amount of tax, default surcharge under section 34, and full amount of the penalty payable under section 33 and thereafter, the show cause notice, shall stand abated.

    Explanation.– For the purpose of sections 25, 38, 38A, 38B and 45A and for removal of doubt, it is declared that the powers of the Board, Commissioner or officer of Inland Revenue under these sections are independent of the powers of the Board under section 72B and nothing contained in section 72B restricts the powers of the Board, Commissioner or Officer of Inland revenue to have access to premises, stocks, accounts, records, etc. under these sections or to conduct audit under these sections.

  • Freezing bank account, raid only on discovery of evasion: KCCI

    Freezing bank account, raid only on discovery of evasion: KCCI

    KARACHI: Karachi Chamber of Commerce and Industry (KCCI) has recommended that harsh measures of freezing bank account and raid should only be undertaken on discovery of massive tax evasion.

    A delegation of KCCI held discussions on Budget Proposals for Federal Budget 2019-2020 with Chairman Federal Board of Revenue (FBR) Jehanzaib Khan and his team at a meeting held at FBR House in Islamabad on Thursday.

    The KCCI team suggested that such harsh actions will only be taken in case of when evasion of very large amount is detected and only when concrete evidence is available rather than carrying out random raids on business entities.

    KCCI’s delegation, which was led by Chairman Businessmen Group & Former President KCCI Siraj Kassam Teli, comprised of Vice Chairmen BMG Haroon Farooki and Anjum Nisar, General Secretary BMG AQ Khalil, President KCCI Junaid Esmail Makda and Former Senior Vice President Muhammad Ibrahim Kasumbi while Dr. Hamid Ateeq Sarwar Member (Inland Revenue Policy), Muhammad Javed Ghani Member (Customs Policy) and Chief of Income Tax, Chief of Sales Tax and Chief of Excise Duty and others were also present at the meeting.

    During the meeting, consensus was developed on various major issues and the FBR officials, while agreeing to most of KCCI’s budget proposals, assured to implement the same in the upcoming budget.

    The FBR Officials, while responding to KCCI’s proposal, agreed to rationalize the tax structure for import of raw materials by commercial importers and manufacturers.

    They also committed to review and curtail the discretionary powers vested to the officials of Inland Revenue which are a source of harassment and extortion of business and industrial community.

    KCCI delegation highlighted all major issues including issues pertaining to the Income Tax, Sales Tax and discretionary powers along with concessions & exemptions in various sectors of the economy which have resulted in the distortion of the tax regime.

    In his remarks, Chairman BMG & Former President KCCI Siraj Kassam Teli pointed out that the current tax regime, relevant laws and discretionary powers were being used to harass the business and industrial community and were hindering economic and industrial growth.

    “These laws have to be reformed in order to create a conducive environment for growth and liberalization of trade and also for the revival of economic activities”, he added.

    On the occasion, a comprehensive presentation was also given to the FBR team in which major taxation issues were highlighted and remedial steps were also given for ease of doing business and enhanced revenue generation.

  • Sales Tax Act 1990: six years record required to be maintained

    Sales Tax Act 1990: six years record required to be maintained

    As per Section 24 of the Sales Tax Act, 1990, a person engaged in taxable supplies is mandated to preserve records and documents for a period of six years, effective from the end of the tax period to which such records or documents relate.

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  • FBR amends requirement of cash withdrawal information by banks

    FBR amends requirement of cash withdrawal information by banks

    ISLAMABAD: Federal Board of Revenue (FBR) on Wednesday issued new instructions to banks regarding providing details of cash withdrawal by filers and non-filers.

    The FBR issued SRO 469(I)/2019 dated April 17, 2019 to amend SRO 1165(I)/2018 dated September 28, 2018. The amendment has been made regarding amount deducted on cash withdrawal from banks by filers and non-filers during a month.

    Through SRO 1165(I)/2018, the FBR changed the reporting criteria for banks under Income Tax Rules, 2001. Under the revised reporting criteria banks have been required to provide information of persons who have withdrawn cash exceeding Rs50,000 in a day and tax deductions thereon for filers and non-filers, aggregating to Rs 1 million or more during a month.

    The banks are required to provide information of cash withdrawal including name of person, CNIC, address, amount withdrawn during a month.

    However, through the latest SRO the FBR added a column of amount of tax deducted to the table of information.

  • Sales Tax Act 1990: requirement of issuing tax invoice

    Sales Tax Act 1990: requirement of issuing tax invoice

    KARACHI: A person making taxable supplies is required to issue serially numbered tax invoice at the time of making supply of goods.

    According to updated Sales Tax Act, 1990 issued by Federal Board of Revenue (FBR), the Section 23 of the Act explained the requirement of issuing tax invoice.

    Section 23: Tax Invoices

    Sub-Section (1): A registered person making a taxable supply shall issue a serially numbered tax invoice at the time of supply of goods containing the following particulars, namely: –

    (a) name, address and registration number of the supplier;

    (b) name, address and registration number of the recipient;

    (c) date of issue of invoice;

    (d) description and quantity of goods;

    (e) value exclusive of tax;

    (f) amount of sales tax; and

    (g) value inclusive of tax:

    Provided that the Board may, by notification in the official Gazette, specify such modified invoices for different persons or classes of persons:

    Provided further that not more than one tax invoice shall be issued for a taxable supply.

    Sub-Section (2): No person other than a registered person or a person paying retail tax shall issue an invoice under this section.

    Sub-Section (3): A registered person making a taxable supply may, subject to such conditions, restrictions and limitations as the Board may, by notification in the official Gazette, specify, issue invoices to another registered person electronically and to the Board as well as to the Commissioner, as may be specified.

    Sub-Section (4): The Board may, by notification in the Official Gazette, prescribe the manner and procedure for regulating the issuance and authentication of tax invoices.

  • Sales tax auditors form association against FBR’s unfair treatment

    Sales tax auditors form association against FBR’s unfair treatment

    KARACHI: The officers of Sales Tax have formed an association to voice against biased treatment of Federal Board of Revenue (FBR).

    A statement issued on Tuesday said that Senior Auditors of BS-16 and Audit Officers of BS-16 had formed the association against unfair treatment of the FBR.

    They said that the sales tax officers had been continuously ignored after the integration of services by the FBR.

    They said that the BS-18 audit officers had been compelled to work under BS-16 and BS-19 officers of Income Tax.

    The statement said that the situation was frustrating as officers having 20 years experience were compelled to work under inexperienced income tax officers. This situation has also jeopardized the revenue collection efforts.

    The statement pointed out that sales tax officers having higher education caliber including MBA, MCOM, ICMA etc, had been deprived of promotions. Instead those officers were upgraded in the name of promotions.

    It said that the sales tax wing was major arm of FBR and contributing huge sum in the shape of revenue collection. But the FBR is continuously ignoring the experience of sales tax officers, which is resulting in massive revenue shortfall.

    The association requested Prime Minister Imran Khan, Finance Minister Asad Umar and State Minister Hamad Azhar to take notice of unfair treatment of FBR and resolve the issue.