The Federal Board of Revenue (FBR) has undertaken a significant reshuffle in the Inland Revenue Service (IRS), announcing the transfers and postings of 153 officers in the latest round of administrative changes.
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The Federal Board of Revenue is Pakistan’s apex tax agency, overseeing tax collection and policies. Pakistan Revenue is committed to providing timely updates on the Federal Board of Revenue to its readers.
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FBR transfers 45 senior customs officers of BS-19-20
The Federal Board of Revenue (FBR) of Pakistan has undertaken a major reshuffle, transferring and posting 45 senior officers from grades BS-19 and BS-20 of the Pakistan Customs Service (PCS).
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FED on tobacco to promote documentation: experts
KARACHI: Tax experts believed that newly imposed federal advance excise duty (FED) on tobacco purchase will not impact farmers but manufacturers and would dent the massive tax theft in the tobacco sector.
They said that tax evaders are pressurizing the FBR through farmers for withdrawal of this major documentation measure and creating a false impression of farmers being taxed.
Recently, Khyber Pakhtunkhwa Farmers Rights Protection Association (KPFRPA) has opposed the advance excise duty and wrongly associated it with farmers.
READ MORE: Pakistan Tobacco’s profit falls on high taxes
Spokesperson of FBR clarifies that, “FED on un-manufactured Tobacco has been enhanced from Rs 10/per kg to Rs 390/per kg w.ef 23.08.2022, through promulgation of Tax Laws (Second Amendment) Ordinance,2022, in terms of S.No 7 of Table 1 of First Schedule to the Federal Excise Act 2005.”
He added that the FED is chargeable on unmanufactured Tobacco for manufacturers of cigarettes by the Green LEAF Threshing Units (GLT Units) after processing and conversion of tobacco green leaf as defined under sub-section (2A) of section 2 of the Federal Excise Act 2005.
He said that the amount of FED is adjustable in terms of section 6 of the Federal Excise Act 2005, from the amount of duty collected. Therefore, the main purpose of imposition of FED on unmanufactured tobacco is the documentation dormant undocumented segments of Tobacco industry.
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Furthermore, he added that no FED is imposed or chargeable on raw tobacco leaf supplied by the tobacco growers/farmers to the GLT Units.
Experts believe that the imposition of advance excise duty has been instrumental in documentation of the purchase of tobacco by manufacturers of cigarettes and other tobacco products as all manufacturers who purchase tobacco from farmers must process tobacco through GLT plants.
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It is pertinent to mention that the previous government had increased the tax on tobacco from Rs. 10 per kg to Rs. 300 per kg, however, it had to retract the decision due to pressure from lobby sitting in power corridors, related to illegal cigarette producers.
The government must take a strong stand on this decision. Otherwise, it may help the rise in illicit trade as it will once again give these illegal manufacturers the opportunity to hide their actual tobacco purchases and channel the unlawfully gained revenues from this evasion into marketing and fiscal violations.
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FBR invites proposals for new retailers tax scheme
ISLAMABAD: The Federal Board of Revenue (FBR) is formulating new tax scheme for retailers and in this regard the authority has invited proposals from stakeholders.
The Chairman FBR invited proposals regarding the features of the proposed tax scheme that would serve the purpose of facilitating filing of income tax returns as well as ensuring revenue for the country.
READ MORE: Pakistan amends laws to tax retailers
The government has withdrawn the fixed tax on retailers through the recently promulgated Ordinance. Any new scheme of tax on retailers will be planned and implemented in consultation with the traders.
The Chairman FBR held a detailed meeting with the representatives of traders from all across the country at the FBR House Islamabad on Thursday afternoon. About 21 representatives of Markazi Tanzeem e Tajiraan Pakistan attended the meeting and some participants joined through video link.
READ MORE: FBR allows tax refund deducted through electricity bills
The traders appreciated the initiative of active consultative approach taken by the FBR and put forth various suggestions on the issue.
Earlier on August 25, a meeting with the representatives from all across Pakistan under All Pakistan Anjuman e Tajiraan was also held by the Chairman FBR in Islamabad.
READ MORE: Pakistan decides to roll back fixed tax scheme
While addressing the participants of the two meetings, the Chairman FBR resolved to keep follow-up meetings at the FBR headquarters and also at the regional level so that, through consultation and consensus, a feasible and workable scheme of taxation for retailers & traders is evolved.
The traders were requested to make in-house deliberations amongst themselves and firm up their suggestions for the future tax scheme to be rolled out next month.
The next round of meetings will be held with the traders’ bodies next week.
READ MORE: FTO investigates tax collection through electricity bills
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Pakistan allows tax exemption on tomato, onion imports
ISLAMABAD: Pakistan on Wednesday granted exemption of income tax and sales tax on imports of tomato and onion during next four months.
In this regard, the Federal Board issued notifications in this regard. The FBR issue SRO 1639(I)/2022 to allow withholding income tax exemption on import of tomato and onion imported till December 31, 2022.
READ MORE: FBR collects Rs948 billion as tax revenue during 2MFY23
Similarly, another SRO 1640(I)/2022 was issued to allow sales tax exemption on import of tomato and onion during September – December 2022.
Previously, on August 30, 2022, in a meeting at the Ministry of National Food Security and Research (MNFSR), it was decided that the Ministry will issue import permits of onion and tomatoes within 24 hours.
The Ministry has also proposed to FBR to waive-off taxes and levies on import of onion and tomatoes.
It is expected that this will be made effective on immediate basis. These steps are taken to ensure a supply of the essential commodity in the market and to stabilize the prices.
READ MORE: FBR announces tax exemptions for flood relief operation
According to the details, the importers will be allowed to import onion and tomatoes.
Ministry of National Food and Security has directed the Department of Plant Protection (DPP) to facilitate the import and ensure that there are no hindrances for importers.
MNFSR has taken on-board all the stakeholders with an aim to ensure a supply of the essential commodities to the consumers.
Furthermore, a contact group to facilitate imports is created, where importers will be able to share their problems. While a team at Ministry of National Food Security will monitor the situation and will take necessary action for redressal.
READ MORE: KTBA demands suspending further tax due to practical issues
Ministry of National Food Security and Research has taken the above decisions to ensure that onion and tomatoes are available in the market at reasonable rates to the consumers.
Pakistan Embassies in Iran, Afghanistan, UAE and other countries have been requested to assist imports. Ministry of National Food Security and Research, with stakeholders, will continue to take necessary steps to ensure food security in the country in the times when crops have been heavily damaged because of recent floods and rains.
READ MORE: FBR gets 3.38 million active taxpayers by August 28, 2022
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FBR collects Rs948 billion as tax revenue during 2MFY23
ISLAMABAD: The Federal Board of Revenue (FBR) has collected Rs948 billion as tax revenue during first two months (July – August) of fiscal year 2022/2023, according to provisional data released on Wednesday.
The FBR surpassed the revenue collection target of Rs926 billion set for the period.
READ MORE: FBR announces tax exemptions for flood relief operation
According to the provisional data for the month of August 2022, the FBR has collected net revenue of Rs. 489 billion, which has exceeded the target of Rs. 483 billion against Rs. 448 billion collected during the same period, last year.
These figures would further improve after the book adjustments have been taken into account. These collections are the highest ever in the month of August.
This outstanding revenue performance is a reflection of FBR’s resolve to build on its growth trajectory despite floods, zero rating on POL products, and import compression, the FBR said.
READ MORE: KTBA demands suspending further tax due to practical issues
On the other hand, the gross collection increased from Rs. 462 billion during August last year to Rs. 526 billion, showing an increase of 14 per cent.
Likewise, the amount of refunds disbursed during August was Rs. 37 billion compared to Rs. 14.3 billion paid last year, showing an increase of 161 per cent. This is reflective of FBR’s strong commitment to fast-track refunds and thereby prevent liquidity shortages in the industry.
The significant revenue increase in August is largely the outcome of various policy and revenue measures introduced by the government in Finance Act 2022. Unlike in the past, there is a visible focus on taxing the rich and affluent.
READ MORE: FBR gets 3.38 million active taxpayers by August 28, 2022
Owing to this paradigm shift, the growth in domestic Income Tax is almost 38 per cent which is a remarkable shift towards direct taxation. Likewise, there is a significant upsurge in Advance Tax collected during August, which is 72 per cent increase from the corresponding period of the previous year.
Provisional collection of Income Tax, Sales Tax, Federal Excise and Customs Duty were respectively Rs.165 billion, Rs. 218 billion, Rs.24 billion and Rs. 82 billion as against Rs.124 billion, Rs. 223 billion, Rs. 23 billion and Rs.77 billion during the corresponding period of the previous year.
READ MORE: Tax rates on mobile phone, internet users during 2022-2023
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FBR announces tax exemptions for flood relief operation
ISLAMABAD: Federal Board of Revenue (FBR) on Tuesday announced major tax exemptions for flood relief operation.
The FBR issued SRO 1634(I)/2022 dated August 30, 2022 to allow the tax exemption.
In order to enable the exemption, the FBR amended Second Schedule of the Income Tax Ordinance, 2001. It is pertinent to mention that tax is levied on imported goods under Section 148 of the Ordinance.
According to the amendment: “(123) The provision of Section 148 shall for a period of ninety days not apply to goods required and imported for relief operation for flood affectees, duly certified by the National Disaster Management Authority (NDMA) or the Provincial Disaster Management Authority (PDMA).”
The FBR issued another SRO 1635(I)/2022 dated August 30, 2022 to allow exemption from sales tax on goods imported for flood relief operation.
Sales tax exemption has been granted with effect from August 24, 2022 subject to the conditions and restrictions.
According to the FBR, import of all goods received, in the event of a natural disaster or other catastrophe, as gift and relief consignments or any goods received as gift or donation from a foreign government or organization by the federal or provincial governments or any public sector organization.
However, this exemption is subject to the same conditions as are envisaged for the purpose of apply zero-rate of customs duty under the Customs Act, 1969.
Through SRO 1636(I)/2022 dated August 30, 2022, which stated that the federal government has exempted for a period of ninety days the import and supply of the goods as certified by the NDMA or PDMA for relief operation for flood affectees, from the whole of the sales tax.
Similarly, SRO 1637(I)/2022 dated August 30, 2022 has been issued to exempt federal excise duty leviable on the goods as ceritifed by NDMA or PDMA for relief operation for flood affectees.
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KTBA demands suspending further tax due to practical issues
Karachi Tax Bar Association (KTBA) on Tuesday demanded the tax authorities to immediately suspend the application of further sales tax due to implementation of amendments brought through Finance Act, 2022.
KTBA President Syed Rehan Hasan Jafri in a letter to Asim Ahmad, chairman of Federal Board of Revenue (FBR), stated that before the changes brought about by the Finance Act, 2022, further tax at 3 per cent under section 3(1)(A) of the Sales Tax Act, 1990, was only required to be charged and paid on taxable supplies made to a person, who is liable to be registered under the Sales Tax Act, 1990 but had not obtained a Sales Tax Registration Number.
READ MORE: FBR gets 3.38 million active taxpayers by August 28, 2022
The Finance Act, 2022 has broadened the scope of applicability of further tax on supplies made to registered persons who are not active taxpayers. The above change in law has brought about various practical issues and hindrances in its implementation which are being discussed below in the ensuing paras.
In pursuance of the above change, a registered person making taxable supplies is required to check active taxpayer status of a person at the time of issuance of invoice.
This condition has created quite a hassle for them to check and verify the particulars of each customer at the time of filing of sales tax return.
It may be noted that in various cases, there are hundreds of customers to whom thousands of invoices are issued.
Previously, the FBR had its own mechanism to identify the registered person, if the person is active or not.
“Therefore, it is requested that similar feature may be enabled by the FBR for the ease of taxpayers or alternatively kindly device an amicable way through which the above condition can be eased for the registered person,” KTBA president said.
READ MORE: Tax rates on mobile phone, internet users during 2022-2023
The term “active taxpayer” as defined in Clause (1) of section (2) of the Act which inter-alia provides that following persons would not be termed as active taxpayers –
— who fails to file the return of income under section 114 of the Income Tax Ordinance, 2001 by the due date; and
— who fails to file quarterly or annual withholding tax statement under section 165 of the Income Tax Ordinance, 2001.
The KTBA said that the above conditions are quite harsh, and it is practically impossible for a RP to be aware of the fact that whether its customer has filed (i) return of income by the due date, and (ii) quarterly/annual withholding tax statements under section 165 the Ordinance.
It may be noted that active taxpayer status of a person is updated in March each year based on the status of filing of return of income for the latest completed tax year. Even if the return of income is not filed by the due date, the person would appear in active taxpayer list (“ATL”) for income tax purposes by way of paying a penalty.
READ MORE: FBR launches campaign to ensure return filing by due date
However, the condition to become an active taxpayer for sales tax purposes stipulates that only the person who have filed return of income by the due date would be an active taxpayer.
Therefore, even in cases where a person is appearing in the ATL for income tax purposes, may not be an active taxpayer for sales tax. Consequently, you would agree that it is practically impossible for a RP to confirm the status of its customer whether he is an active taxpayer or not.
In addition to the above, for a RP to achieve active taxpayer status for sales tax, he needs to file quarterly/annual withholding tax statements under section 165 of the Ordinance. Interestingly, there is no option on the IRIS portal which may reflect filing status of the quarterly/annual withholding tax statements under section 165 of the Ordinance of a RP. Accordingly, again it is major impediment based on which a person could not determine active taxpayer status of its customers.
In view of the above, it is humbly requested that rather than stipulating these conditions, the above definition may be linked with the active taxpayer status under the Ordinance.
The active taxpayer status reflection on online verification portal for sales return is based on filing of monthly sales tax returns irrespective of the fact that these are filed by the due dates or not. “This does not align with the condition provided in the definition of active taxpayer in the Act,” Jafri added.
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Moreover, online portal does not have any option to check the status of the person on any given specific date rather it reflects the status on the given time. Therefore, if a person wants to verify the status of its customer on any given date, he is unable to check the same from the online portal. It may be noted that for income tax purposes, active taxpayer status of a person could be checked on any given specific date.
Further, the active taxpayer status is updated on the FBR Portal on a real time basis, and therefore, it is difficult to track the status of any customer from the date of issuance of the invoice to the declaration of such invoice.
“You would recollect that for income tax purposes, when a payment is reported in the quarterly withholding tax statement under section 165 of the Ordinance, the portal automatically identifies the person as an active taxpayer or otherwise and simultaneously calculates the amount of applicable withholding tax.
“Likewise, it is requested that Annexure – C of the sales tax return may also be automatically linked with the active taxpayer status under the Act and if a person is not an active taxpayer, the portal may automatically calculate further tax on such sales. This would enable effective monitoring of the above change in law and its application. Alongside, this would also cater to the situations where further tax could not be charged due to a mistake or an inadvertent error,” according to the letter.
Even otherwise, until such an option is optimized in sales tax return, the option to manually levy and charge further tax may be enabled in the sales tax return to discharge further tax liability.
The KTBA urged the FBR chairman that the application of further tax onto persons other than active taxpayers may be kept in abeyance till the issues identified above are resolved in an amicable manner.
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FBR gets 3.38 million active taxpayers by August 28, 2022
ISLAMABAD: The Federal Board of Revenue (FBR) has issued a list of 3.38 million taxpayers on Monday through weekly updated Active Taxpayers List (ATL).
According to the latest ATL 3,376,699 taxpayers had filed their income tax returns by August 28, 2022 for tax year 2021.
READ MORE: Tax rates on mobile phone, internet users during 2022-2023
The ATL will also include names of those taxpayers who will file their income tax returns for the tax year 2021 in coming days till the ATL remained applicable.
The FBR issues ATL weekly basis on Monday to update the names of persons who filed their income tax returns during the week.
ATL provides taxpayers to get concession in payment of lower withholding tax rates or amount. The FBR issues ATL for the new tax year on the first day of March every year. Therefore, the existing ATL will prevail till February 28, 2023.
READ MORE: FBR launches campaign to ensure return filing by due date
According to the FBR the ATL is a central record of online Income Tax Return filers for the previous Tax Year.
It further says that ATL is published every financial year on the 1st March and is valid up to the last day of February of the next financial year. For example, Active Taxpayer List for Tax year 2020 was published on 1st March 2021 and will be valid till 28th February 2022. Similarly, Active Taxpayer List for Tax year 2021 will be published on 1st March 2022 and will be valid till 28th February 2023.
The ATL is updated on every Monday on the Federal Board of Revenue (FBR) website.
The FBR said that a person’s name will be part of the current ATL, if the Tax Return filed pertains to the Tax year of the relevant ATL. For example, to be part of the ATL published on 1st March 2021, a person must have filed a Tax return for the Tax year 2020. Similarly, to be a part of the ATL published on 1st March 2022, a person must have filed a Tax Return for the Tax year 2021.
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Restriction on including a person’s name on ATL, if the person has not filed Tax Return by the due date specified by Income Tax authorities was introduced through Finance Act, 2018. For example, to be part of the ATL published on 1st March 2022, a person must file a Tax Return by the specified due date for the Tax year 2021.
However, through Finance Act, 2019 a person’s name can be part of ATL, even if the person has filed Tax Return after the due date specified by Income Tax authorities.
Furthermore, a surcharge for placement on ATL after due date of filing of Tax Return will be charged as under:
Company: Rs20,000
Association of Persons: Rs10,000
Individuals: Rs1,000
A company or an AOP shall be included in the ATL, whose return is not to be filed due to incorporation or formation after 30th day of June relevant to the Tax year pertaining to the ATL.
READ MORE: FBR transfers six IRS officers of BS-19-20
Joint account holders as an entity shall be deemed to be part of ATL if any of the persons in the joint account have met the criteria of being included in the ATL.
Bank account held in the name of a minor shall be considered part of ATL if the parents, guardians of the minor or any person who has deposited money in minor’s account are deemed to have met the criteria of being included in the ATL.
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Tax rates on mobile phone, internet users during 2022-2023
KARACHI: The Federal Board of Revenue (FBR) has issued amended income tax law to notify the tax rates on users of mobile phones and internet during 2022-2023.
FBR issued Income Tax Ordinance, 2001 updated up to June 30, 2022 incorporating changes made through the Finance Act, 2022.
READ MORE: FBR launches campaign to ensure return filing by due date
The revenue body collects these taxes under Section 236 of the Income Tax Ordinance, 2001.
Under this section, in the case of telephone subscriber (other than mobile phone subscriber) where the amount of monthly bill exceeds Rs1,000, then the tax rate shall be 10 per cent of the exceeding amount of bill.
Similarly, in the case of subscriber of internet, mobile telephone and pre-paid internet or telephone card, the tax rate shall be 15 per cent of the amount of bill or sales price of internet pre-paid card or pre-paid telephone card or sale of units through any electronic medium or whatever form.
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According to the Section 236: Telephone and internet users.- (1) Advance tax at the rates specified in Division V Part IV of the First Schedule shall be collected on the amount of –
(a) telephone bill of a subscriber;
(b) prepaid cards for telephones;
(c) sale of units through any electronic medium or whatever form; and
(d) internet bill of a subscriber; and
(e) prepaid cards for internet.
(2) The person preparing the telephone or internet bill shall charge advance tax under sub-section (1) in the manner telephone or internet charges are charged.
READ MORE: FBR transfers six IRS officers of BS-19-20
(3) The person issuing or selling prepaid cards for telephones or internet shall collect advance tax under sub-section (1) from the purchasers at the time of issuance or sale of cards.
(3A) The person issuing or selling units through any electronic medium or whatever form shall collect advance tax under sub-section (1) from the purchaser at the time of issuance of sale of units.
(4) Advance tax under this section shall not be collected from Government, a foreign diplomat, a diplomatic mission in Pakistan, or a person who produces a certificate from the Commissioner that his income during the tax year is exempt from tax.