Section 196 of the Income Tax Ordinance, 2001, updated up to June 30, 2021, explicitly declares that obstructing an income tax authority in the discharge of their functions is now a punishable offense.
(more…)Tag: Federal Board of Revenue
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.
-
Prosecution for not declaring foreign assets
Section 195A of Income Tax Ordinance, 2001 explains the prosecution for not declaring foreign assets.
The Federal Board of Revenue (FBR) issued the Income Tax Ordinance, 2001 updated up to June 30, 2021. The Ordinance incorporated amendments brought through Finance Act, 2021.
Following is the text of Section 195A and 195B of Income Tax Ordinance, 2001:
195A. Prosecution for non-compliance with notice under section 116A.— Any person who, without reasonable excuse, fails to comply with a notice under sub-section (2) of section 116A; shall commit an offence punishable on conviction with imprisonment up to one year or with a fine up to fifty thousand Rupees or both.
195B. Prosecution for enabling offshore tax evasion.– Any enabler who enables, guides or advises any person to design, arrange or manage a transaction or declaration in such a manner which results in offshore tax evasion, shall commit an offence punishable on conviction with imprisonment for a term not exceeding seven years or with a fine up to five million Rupees or both.
(Disclaimer: The text of above section is only for information. Team PkRevenue.com makes all efforts to provide the correct version of the text. However, the team PkRevenue.com is not responsible for any error or omission.)
-
Prosecution for making false, misleading statements
Section 195 of Income Tax Ordinance, 2001 describes the prosecution for making false or misleading statements.
The Federal Board of Revenue (FBR) issued the Income Tax Ordinance, 2001 updated up to June 30, 2021. The Ordinance incorporated amendments brought through Finance Act, 2021.
Following is the text of Section 195 of Income Tax Ordinance, 2001:
195. Prosecution for making false or misleading statements. — (1) A person who –
(a) makes a statement to an income tax authority that is false or misleading in a material particular; or
(b) omits from a statement made to an income tax authority any matter or thing without which the statement is misleading in a material particular,
shall commit an offence punishable on conviction –
(i) where the statement or omission was made knowingly or recklessly, with a fine or imprisonment for a term not exceeding two years, or both; or
(ii) in any other case, with a fine.
(2) A person shall not commit an offence under sub-section (1) if the person did not know and could not reasonably be expected to have known that the statement to which the prosecution relates was false or misleading.
(3) “Entry against S.No 10 in column (2) of the Table in sub-section (1) of section 182” shall apply in determining whether a person has made a statement to an income tax authority.
(Disclaimer: The text of the above section is only for information. Team PkRevenue.com makes all efforts to provide the correct version of the text. However, the team PkRevenue.com is not responsible for any error or omission.)
-
Prosecution for improper use of NTN Certificate
Section 194 of the Income Tax Ordinance, 2001, updated up to June 30, 2021, now explicitly prescribes prosecution for the improper use of the National Tax Number (NTN) Certificate.
(more…) -
Three years imprisonment for undeclared offshore asset
Section 192B of Income Tax Ordinance, 2001, updated up to June 30, 2021, now prescribes severe penalties, including imprisonment for up to three years, for individuals who fail to declare offshore assets or provide inaccurate particulars.
(more…) -
FBR refutes reports of date extension for return filing
The Federal Board of Revenue (FBR) has categorically refuted recent reports suggesting a possible extension of the deadline for filing income tax returns for the tax year 2021.
(more…) -
International payment gateway setup discussed
ISLAMABAD: Finance Minister Shaukat Tarin on Tuesday presided over a meeting on the establishment of Pakistan International e-payment gateway (IPG).
The IPG will pave the way for financial inclusion and payment digitization which is a sub-component of the 09-pillars of the E-Commerce policy.
Federal Minister for IT & Telecommunication Syed Amin-ul-Haque, Adviser on Commerce Abdul Razak Dawood, CEO NITB Syed Hussain Abbas Kazmi, Secretary Commerce, senior policy analyst and other senior officers participated in the meeting.
Dr. Reza Baqir, Governor State Bank of Pakistan (SBP) joined the meeting through a video link.
A consultative session was held with all relevant stakeholders to identify gaps between payment solutions available domestically and its integration with international payment gateway solution providers to promote e-commerce.
The Adviser on Commerce briefed the participants about the current digital financial landscape in the country.
SBP governor outlined steps being taken for the financial inclusion of domestic banks.
Federal Minister for IT and Telecom assured full facilitation in the provision of enabling environment to the service providers as needed under IPG.
In his remarks, the Finance Minister directed the authorities to follow best international practices and devise a way forward for implementing an international payment gateway ensuring transparency and due consultation with key stakeholders both in public and private sectors.
The Finance Minister constituted a 04-member Committee headed by the Secretary of Commerce and comprising representatives of the Ministry of Commerce, Finance Division and Federal Board of Revenue (FBR).
The Finance Minister further directed to seek input from the President, Pakistan Banking Association (PBA) and leading market players from the private sector to understand their requirements and present a framework for further deliberation after 04 weeks.
In his concluding remarks, the Finance Minister stated that Government will be the facilitator and regulator in a journey towards implementing IPG. The establishment of an international e-payment gateway will improve consumer confidence in E-Commerce through global connectivity
-
Failure to keep record to attract two years imprisonment
Section 193 of Income Tax Ordinance, 2001, updated up to June 30, 2021, now emphasizes that a taxpayer may face two years imprisonment on failure to keep record.
(more…) -
Two years jail for income concealment
Income Tax Ordinance, 2001 has specifically outlined two years jail for concealment of income. Section 192A of the Income Tax Ordinance, 2001, as amended through the Finance Act, 2021 and updated until June 30, 2021, outlines serious legal consequences for concealment of income. According to this provision, any individual who deliberately hides their income or provides inaccurate details during tax proceedings can face strict legal action.
(more…) -
Technical issues in return filing, KTBA tells FBR
KARACHI: Karachi Tax Bar Association (KTBA) in a letter to the chairman of the Federal Board of Revenue (FBR) sent on Tuesday, highlighted technical issues in filing return of income for tax year 2021.
It is commendable that the FBR issued the return form for tax year 2021 on July 01, 2021. “It is however, return filers and tax consultants alike are not satisfied with the classification of income set in IRIS, and otherwise are experiencing various computational errors, glitches etc.,” Muhammad Zeeshan Merchant, President, KTBA said in the letter.
The KTBA highlighted following technical issues:
1) COMPUTATION OF CAPITAL GAINS TAX ON DISPOSAL OF IMMOVABLE PROPERTY U/S. 37
The provisions of Section 37(1A) of the Income Tax Ordinance, 2001 (Ordinance) prescribes mode of taxation of gain on disposal of an immovable property on the basis of holding period of the property and the amount of taxable gain; whereas the amount of taxable gain is effectively reduced by 25% with each additional year of holding and finally taxable value is reduced to ‘0’ if the holding period exceeds four years. Correspondingly a variable tax rates are prescribed in Division VIII of Part I of the First Schedule.
Although, law prescribes taxation of gain of immovable property on net amount (refer sub-section (3A) Section 3A) but conversely the return works out the tax liability on gross amount of gain.
2) LOSS ON DISPOSAL OF SECURITIES U/S. 37A
Similarly, in line with Section 37A, unadjusted loss on disposal of securities during the Tax Year 2019 and onwards shall be carried forward to subsequent three tax year or is adjustable only against the gain of the person’s gain on disposal of securities in succeeding three years. Conversely, the web portal does not have any enabling/dedicated field / tab to declare the amount of loss sustained on disposal of securities and carried forward to future tax periods. Moreover, if such a loss on capital gain of securities is reported under the existing tab the same is resulting in a negative amount of tax that ultimately results in incorrect tax computation.
3) INCORRECT WORKING OF TAX DEPRECATION U/S. 22
In order to restrict claim of depreciation upto 50% to first time return filers a proviso to Section 22(2) is inserted via Finance Act 2020 which to the exclusion of Special Tax Year 2021 is expressly applicable w.e.f. July 2020; however, IRIS portal is applying this restriction in cases of Special Tax Year.
4) INITIAL ALLOWANCE ON PLANT & MACHINERY U/S. 23
Subject to certain restrictions initial allowance @ 25% is allowed against plant and machinery on the strength of proviso to Section 23 (read with Part II of the Third Schedule). The IRIS web portal is presently not catering this scenario in line with law resulting in an incorrect computation of tax depreciation.
5) TAX ON FEE FOR TECHNICAL SERVICES / ROYALTY OF A NON-RESIDENT PERSON
Under the provisions of Section 152(1) read with Sections 6 and 8 of the Ordinance, the tax deducted on payment of Pakistan-sourced Royalty and Fee for Technical Services of a non-resident person is a Final Tax. The online return form is presently classifying it under ‘minimum tax tab’ resulting in a incorrect higher tax liability.
6) DISCREPANCIES IN DETAILS AVAILABLE ON FBR ONLINE PLATFORMS
For past few years, the FBR has started sharing information regarding WH/advance taxes through “FBR Maloomat” and recently via “MIS”. It is, however, as of today the information at times is patchy and is not complete and correct either. Given that, it is suggested that unless the scheme is fully operational, tax deduction certificates will continue to be acceptable and no adverse inference should be taken for discrepancies on this score.
7) SIMPLIFIED RETURN FOR SMEs
A simplified scheme for manufacturing SMEs (having turnover upto 250 m) is introduced by adding Section 110E read with Fourteenth Schedule through Finance Act, 2021. It is however, in patent disregard for Section 237, no draft return for this purpose was notified and a return is uploaded on the portal without any notification as well as without following the conditions of Rule 34A putting validity of the return in jeopardy. A few anomalies in this return (though still not notified) are also experienced by us and is shared below for your appreciation:
The return is accepting turnover in excess of Rs. 250(M) in revenue tab which ought to be restricted to Rs. 250(M).
It is not applying correct rate of tax in case a person who opts not to avail FTR and creating incorrect tax liability. Screen shots from return is shared below for your understanding.
It has also been observed that an assignment for re-filing of SME return afresh is available to a person who already had filed its return; without any recourse for a revised return.
Although law requires dedicated registration SME at IRIS portal however, the portal sans this feature as yet; needless to add that selection from “attribute tab” is not an apt option for this purpose.
8) DISCLOSURE OF TAX COLLECTED UNDER SECTION 236D
Through the Finance Act, 2020, the advance tax on function and gatherings has been withdrawn which is practically applicable from July 1, 2020, it is however persons following Special Tax Year are yet to claim this collection/deduction whereas this filed has been removed from the return. It is therefore, suggested that field should be reinstated to claim tax deduction who are entitled for that.
9) WEALTH STATEMENT FOR NON-RESIDENT INDIVIDUALS
It has been observed that statement of wealth for tax year 2021 is pre-populated with opening balance of last year’s closing balance without considering the tax residency of a person. Consequently, non-resident individuals who otherwise is not required to file a wealth statement cannot proceed to file a return of income in the presence of such unnecessary disclosure.
10) DISCREPANCIES IN TAX COMPUTATION OF A COMMERCIAL IMPORTER
Through Finance Act, 2019, the facility of FTR for commercial importers has been abolished. In order to cater the transition period, the FBR has made appropriate changes in the computation of tax liability of commercial importer like impact of closing and opening stocks. However, IRIS web portal is not catering the impact of closing / opening stock which is resulting in an incorrect tax computation.
11) INCOME ATTRIBUTION WITH RESPECT TO MINIMUM TAXATION U/S. 153 AND U/S. 234A
It has been observed that IRIS web portal is presently computing and attributing income of persons associated to Section 153 and Section 234A on certain predefined and programmed formula.
It is suggested that such persons should be allowed to compute and attribute their incomes based on facts instead of predefined or programmed formula and relevant field should be relaxed.
12) COMPUTATION OF FOREIGN INCOMES
Though tabs for various classification of incomes has now been catered in the return of income it has however, been observed that portal is computing tax for all streams of income on the basis of business income.
For the purpose of better appreciation of all issues in correct and true spirit and to create a harmonized approach, we suggest you that a joint meeting (physical or online) between the representatives of KTBA and FBR’s Policy, Legal, IT/PRAL Divisions should be fixed (preferably in current week) at mutual convenience. The KTBA will be glad to assist the FBR’s technical team and join hand for the earliest resolution of the issues.