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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.

  • Tax incentives proposed for making new investments

    Tax incentives proposed for making new investments

    KARACHI: Karachi Tax Bar Association (KTBA) has suggested tax authorities to allow tax incentives for new investments in order to promote industrialization in the country.

    The KTBA in its proposals for budget 2022/2023 suggested the Federal Board of Revenue (FBR) to allow tax credit for making new investments by amending sections 65B, 65D and 65E of the Income tax Ordinance, 2001.

    READ MORE: Tax credit extension for employment generation

    The tax bar said sections 65B, 65D and 65E are related to tax credit for investment, newly established industrial undertaking and industrial undertaking established before July 01, 2011.

    “These are not currently available to the taxpayers for new investments,” it said. Therefor it is not encouraging new investment.

    READ MORE: Reintroduction of tax credit on registered sales proposed

    “Tax credits may be provided for making investment in fresh/ existing industrial undertakings, such as tax credit under 65B of the Ordinance which may be restored. Simultaneously, time limit U/s.s 65D and 65E may be further extended up to June 30, 2025,” the tax bar said, adding that it will promote industrialization and new investment in the country.

    READ MORE: Amendment sought in incentive to Greenfield industry

    Besides, the KTBA also sought extension of tax credit on employment generation under section 64B of the Income Tax Ordinance, 2001. The tax bar said a manufacturing entity was allowed a tax credit of 2 per cent subject to maximum tax credit of 10 per cent on employing every 50 employees registered with Employees Old-Age Benefit Institution (EOBI) and Sind Employees Social Security Institution (SESSI). This credit is restricted for the companies formed up to tax year 2019. The tax bar due restriction, effort to generate documented employment would go in vein.

    READ MORE: FBR invites Sales Tax proposals for budget 2022/2023

    The KTBA proposed that the tax credit for employment generation by manufacturers under section 64B of the Ordinance should be extended up to Tax Year 2025 at least. “It is an excellent provision for promoting employment generation along with documentation of the same,” the tax bar added.

  • Tax credit extension for employment generation

    Tax credit extension for employment generation

    KARACHI: The Federal Board of Revenue (FBR) has been suggested to expand the tax credit on employment generation in order to create opportunities of employment.

    Karachi Tax Bar Association (KTBA) in its proposals for budget 2022/2023 submitted to the FBR sought extension of tax credit on employment generation under section 64B of the Income Tax Ordinance, 2001.

    READ MORE: Reintroduction of tax credit on registered sales proposed

    The tax bar said a manufacturing entity was allowed a tax credit of 2 per cent subject to maximum tax credit of 10 per cent on employing every 50 employees registered with Employees Old-Age Benefit Institution (EOBI) and Sind Employees Social Security Institution (SESSI).

    READ MORE: Amendment sought in incentive to Greenfield industry

    This credit is restricted for the companies formed up to tax year 2019. The tax bar due restriction, effort to generate documented employment would go in vein.

    The KTBA proposed that the tax credit for employment generation by manufacturers under section 64B of the Ordinance should be extended up to Tax Year 2025 at least.

    READ MORE: FBR invites Sales Tax proposals for budget 2022/2023

    “It is an excellent provision for promoting employment generation along with documentation of the same,” the tax bar added.

    The KTBA also proposed the tax credit on 90 per cent sales should be also extended to persons making 90 per cent of purchases from persons registered under the Sales Tax Act, 1990 as well. The tax credit should also cover entities providing services and duly registered with the provincial sales tax authorities.

    It will provide the much-desired stimulus to the documentation of the economy, the KTBA added.

    READ MORE: FBR invites income tax proposals for budget 2022/2023

  • Reintroduction of tax credit on registered sales proposed

    Reintroduction of tax credit on registered sales proposed

    KARACHI: Karachi Tax Bar Association (KTBA) has suggested the tax authorities to reintroduce tax credit on registered sales in order to broaden the tax base.

    The KTBA in its proposals for budget 2023/2023 urged the Federal Board of Revenue (FBR) to reintroduce the tax credit on registered sales by making amendment in Section 65A of the Income Tax Ordinance, 2001.

    READ MORE: Amendment sought in incentive to Greenfield industry

    The tax bar said to provide incentive for documentation of economy and increase of the tax base a tax credit of 2.5 per cent of tax liability was offered to manufacturers for Tax year 2009 who were making 90 per cent of their sales to persons registered under the Sales Tax Law. The tax credit was increased to 3 per cent by Finance Act, 2016. However, this Tax credit was deleted by Finance Act, 2017.

    READ MORE: FBR invites Sales Tax proposals for budget 2022/2023

    Due to deletion from the tax law, years of efforts to document the economy has been pushed backwards and that too without any warning and rationale.

    Therefore, it is proposed the tax credit on 90 per cent sales should be also extended to persons making 90 per cent of purchases from persons registered under the Sales Tax Act, 1990 as well.

    READ MORE: FBR invites income tax proposals for budget 2022/2023

    The tax credit should also cover entities providing services and duly registered with the provincial sales tax authorities.

    It will provide the much-desired stimulus to the documentation of the economy, the KTBA added.

    READ MORE: Budget 2022/2023 to be presented in first week of June

  • Amendment sought in incentive to Greenfield industry

    Amendment sought in incentive to Greenfield industry

    KARACHI: The Federal Board of Revenue (FBR) has been urged to amend provisions related to incentive to Greenfield industrial undertaking.

    According to proposals for budget 2022/2023 presented by Karachi Tax Bar Association (KTBA), incentive had been defined under Section 2(27A) of Income Tax Ordinance, 2001 related to Greenfield industrial undertaking.

    READ MORE: FBR invites Sales Tax proposals for budget 2022/2023

    The definition of Greenfield was introduced by Finance Act, 2020 through introduction of section 2(27A). One of the conditions to qualify as a Greenfield Industrial undertaking is that it is using any process or technology that has not earlier been used in Pakistan and subjecting this with requirement to get approval from Pakistan Engineering Board.

    READ MORE: FBR invites income tax proposals for budget 2022/2023

    The tax bar said the incentive is though enshrined in the books yet it is not practically availed due to onerous requirement relating to novel technology.

    The KTBA proposed to delete the condition relating to use of any process and technology not earlier used in Pakistan under this definition. “This condition is impracticable in an economy like Pakistan which in still in process of adopting new technology and has no research and development of its own to bring new technical expertise.”

    READ MORE: Budget 2022/2023 to be presented in first week of June

    Abolishing this requirement would create opportunities for local businessmen to acquire technology from developed world and lay foundation for industry and manufacturing.

    This can also result in import substitution which is much needed for our country, the tax bar suggested.

    READ MORE: MoC invites tariff proposals for budget 2022/2023

  • Tax slabs reduction may be considered: FBR chairman

    Tax slabs reduction may be considered: FBR chairman

    KARACHI: Dr. Muhammad Ashfaq Ahmed, chairman, Federal Board of Revenue (FBR) on Tuesday said reduction in income tax slabs may be considered.

    Addressing the business community at Federation of Pakistan Chambers of Commerce and Industry (FPCCI) said that existing income tax slabs were implemented after due consideration.

    Earlier, the business community pointed out high number of tax slabs in the Income Tax Ordinance, 2001.

    READ MORE: Withholding tax should be on income: FBR Chairman

    Commenting on requirement of Computerized National Identity Card (CNIC) on transactions, he said this condition was introduced three years ago. The FBR has gathered bulk of information due to this condition. Further, many cases of using fake CNICs for making transactions were also reported, he added.

    The FBR chairman said that retailers had positively responded to integration of Point of Sales (POS) in Karachi. “Many issues will be resolved with improvement in supply chain,” he added.

    The business community raised the issues of audit notices. Dr. Ashfaq said that action would be taken if audit notices were not responded. “The audit notices should be responded with documentary evidence,” he said.

    READ MORE: UAE favorite hiding for Pakistan assets: Dr. Ashfaq

    About the tax laws, he said that foreign companies investment in Pakistan are unaware about our domestic laws, he said and assured that the FBR would facilitate both local and foreign investors to understand tax laws.

    Earlier, Anjum Nisar, Chairman, Businessmen Panel (BMP) said that delay in tax refunds create liquidity issues for industries. He said if taxpayers delays in compliance then he is subject to penalty and surcharges. Similarly, this should be apply to tax officials, he added.

    Irfan Iqbal Sheikh, President FPCCI, put forward the concerns and complaints of the business, industry and trade community of Pakistan to the Federal Board of Revenue during the detailed visit of its Chairman, Dr. Ashfaq Ahmed; along with the top brass of FBR.

    READ MORE: FBR explains cash discount under sales tax laws

    FPCCI President said that excessive and unsubstantiated tax notices; maladministration and corrupt elements; requirement of buyers’ CNIC copy; huge backlog of refund cases; double taxation; misuse of erstwhile FATA & PATA exemptions; higher rates of corporate, sales and withholding taxes; mandatory POS integration with FBR; multiplicity of income tax slabs and SRO culture are the major impediments in reforming the taxation system and broadening of the tax base.

    Irfan Iqbal Sheikh added that 29 percent corporate tax and 17 percent sales tax are too high for economic growth, industrialization and employment generation; and, rates of these taxes should be gradually and progressively brought down. He elaborated that no country of the world has ever progressed in the absence of industrialization; while commending the recently announced industrial growth package of the federal government.

    READ MORE: FBR amends fresh property valuations for Islamabad

    Engr. M.A. Jabbar, VP FPCCI, emphasized that we have to do away with the notice manufacturing practices of the taxation machinery as that prohibits the new taxpayers to register themselves into the system to avoid unnecessary regulatory interferences.

    Dr. Ashfaq Ahmed, Chairman FBR, expressed his willingness to have policy deliberations over FPCCI’s demand of reducing audit period to three years from the current six years. He also apprised the session that FBR has performed exceedingly well despite the debilitating economic conditions arising out of COVID-19 pandemic and have collected record taxes. He also expressed his optimism that FBR can soon achieve a Tax-to-GDP ratio of 12 per cent.

  • Withholding tax should be on income: FBR Chairman

    Withholding tax should be on income: FBR Chairman

    Karachi, March 14, 2022 – The Chairman of the Federal Board of Revenue (FBR), Dr. Muhammad Ashfaq Ahmed, emphasized the need for a shift in the approach to withholding tax (WHT), suggesting that it should be levied on income rather than transactions. He made these remarks during an address at the Karachi Chamber of Commerce and Industry (KCCI) on Monday.

    (more…)
  • Adjustment restrictions hamper return filing by retailers

    Adjustment restrictions hamper return filing by retailers

    Retailers falling under Tier-1 have informed the Federal Board of Revenue (FBR) that they were unable to file monthly sales tax returns due to denial of adjustment by IRIS portal.

    A number of retailers jointly sent a letter to FBR chairman apprising about unfavorable behavior of IRIS Portal by denying adjustment against credit notes issued by Tier-1 retailers.

    READ MORE: FBR announces winners of third POS invoice draw

    The retailers drew attention of the FBR chairman towards Section 9 of the Sales Tax Act, 1990 read with Rule 20 of the Sales Tax Rules, 2006, tax invoice issued by a registered person can be amended/modified/cancelled through issuance of credit note as a result of cancellation of supply of return of goods or a change in the nature of supply or change in the value of the supply.

    They highlighted that sales made by Tier-1 retailers, as defined in clause 43A of Section 2 of the Sales Tax Act, 1990, to the end consumers are integrated with the FBR computerized system for real time reporting of sales in line with the Rules.

    READ MORE: FBR identifies 1,421 retailers for tax integration

    The FBR chairman has been informed that in case of sales return, credit note (sales return invoice) is issued by Tier-1 retailers in accordance with the relevant provisions of the Sales Tax Act, 1990. “IRIS portal of the FBR is also accepting this position and accepting credit notes issued by Tier-1 retailers, however, surprisingly, sales tax adjustment, relating to credit notes, which have been allowed in one month are being added back in sales tax liability of the next month in the IRIS based sales tax return.”

    The retailers said: “… this practice of the sales tax return portal is strictly against the law.”

    READ MORE: FBR makes rules for sealing retail outlets

    They said that if such illegal restrictions are imposed on Tier-1 retailers, who have invested huge amounts in hardware as well as software for integration of sales tax reporting with the FBR, how would it be possible for the FBR to attract other retailers to get themselves registered with the FBR. “Instead of appreciating the efforts of Tier-1 retailers, they are being denied their legal and legitimate right of sales tax adjustment on credit notes.”

    Due to serious flaw in the online sales tax return filing portal, a majority of Tier-1 retailers are still unable to file sales tax return for the month of January 2022 onward.

    The FBR chairman has been urged to direct concerned authorities to resolve the issue at the earliest to enable Tier-1 retailers to submit their sales tax return.

    READ MORE: POS invoice verification for prize scheme surges by 63%

  • UAE favorite hiding for Pakistan assets: Dr. Ashfaq

    UAE favorite hiding for Pakistan assets: Dr. Ashfaq

    Dr. Muhammad Ashfaq Ahmed, the Chairman of the Federal Board of Revenue (FBR), has drawn attention to the United Arab Emirates (UAE) as a preferred destination for parking offshore undisclosed funds by Pakistan nationals.

    (more…)
  • FBR explains cash discount under sales tax laws

    FBR explains cash discount under sales tax laws

    ISLAMABAD: The Federal Board of Revenue (FBR) has explained cash discount related to invoices issued through Point of Sale (POS) by Tier-1 retailers.

    The FBR explained through an official note dated March 17, 2022 that cash discount has been allowed in the form of reduction of prices in seasonal sales / sales and the consideration in money is received after cash discount has been allowed.

    It is clarified that the value of supply for sales tax purpose is the actual value received in monetary terms excluding the amount of sales tax and not the gross value. “Hence, the sales tax will be calculated and charged on the actual or discounted price accordingly,” the FBR added.

    The FBR previously issued clarification in this regard through the official order dated October 13, 2021 on the standardized format of the sales tax invoice notified through SRO 1006(I)/2021 dated August 09, 2021.

    The revenue body said that representations from the taxpayers and bar councils were received seeking further clarification of the ‘trade discount’.

    It said that value of supply as per section 2 (46) of the Sales Tax Act, 1990 in respect of taxable supply means the consideration in money which the supplier receives from the recipient for that supply but excluding the amount of tax.

    In the previous explanation dated October 13, 2021, the FBR clarified that the discount if any to be given by a retailer has to be depicted on the invoice horizontally i.e. from left to right.

    READ MORE: Trade discount should be displayed on invoice: FBR

    “The captions such as total, sales tax, discount allowed appearing at the bottom of the invoice are standalone notations and do not necessarily add or subtract one another.”

  • FBR amends fresh property valuations for Islamabad

    FBR amends fresh property valuations for Islamabad

    ISLAMABAD: The Federal Board of Revenue (FBR) on Tuesday made changes to property valuation tables for the capital city.

    The FBR issued SRO 428(I)/2022 dated March 15, 2022 to a make amendment in the SRO 342(I)/2022 dated March 02, 2022.

    Through the latest SRO the FBR withdrew the property valuation tables for DHA Phase 1 – 5 and DHA Valley for both residential and commercial plots.

    READ MORE: FBR re-notifies valuation of immovable properties

    The following entries in the valuation tables have been deleted for residential immovable properties:

    62DHA Phase 1Any size30,000
    63DHA Phase 2Any size35,000
    64DHA Phase 2 ExtnAny size8,264
    65DHA Phase 3Any size16,529
    66DHA Phase 4Any size9,917
    67DHA Phase 5Any size19,835
    68DHA ValleyAny size8,264

    Similarly, following entries in the valuation tables have been deleted for commercial immovable properties:

    171DHA Phase 1Commercial plot23,900
    172DHA Phase 2Commercial plot22,200
    173DHA Phase 2 ExtnCommercial plot9,183
    174DHA Phase 3Commercial plot9,183
    175DHA Phase 4Commercial plot9,183
    176DHA Phase 5Commercial plot18,365
    177DHA ValleyCommercial plot2,755

    The FBR on December 01, 2021 issued fresh and updated valuation tables for around 40 major cities of the country. However, the FBR deferred the implementation of the new valuations of immovable properties till January 15, 2022 and further deferred till January 31, 2022. The FBR once again deferred the implementation on the valuation table till February 28, 2022.

    The revised tables of valuation of immovable properties have been issued and implemented on March 02, 2022.

    READ MORE: FBR allows 20-year old house value to open plot