Tax credits for various provisions of law have outlined by the Federal Board of Revenue (FBR) as explained under Section 65 of the Income Tax Ordinance, 2001.
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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 explains taxation of erstwhile FATA/PATA industries
ISLAMABAD: The Federal Board of Revenue (FBR) has explained tax treatment of erstwhile FATA/PATA domiciled industries after amendment brought through Finance Act, 2021.
The FBR in a circular No. 03 issued on Tuesday said a number of significant amendments have been introduced through Finance Act, 2021 in the Sales Tax Act, 1990 as applicable to various industries located in erstwhile FATA/PATA regions.
The most important change brought about by the Finance Act 2021, is vis-A-vis the new entry No. 74 added in 8th Schedule to the Sales Tax Act, 1990, to charge sales tax at the rate of 16 per cent on all “goods supplied from tax-exempt areas of erstwhile FATA/PATA to the taxable areas.”
Accordingly, a FATA/PATA-domiciled person having status of “active taxpayer” in terms of Section 2(1) of the Sales Tax Act, 1990 would continue to import raw materials for consumption at his own manufacturing site against deposit of post-dated cheques (PDC) in line with its determined installed production capacity.
The importation, transportation, exemption (from import-stage income tax), and consumption of raw materials have been elaborately dealt with vide FBR‘s CGO # 1 of 2021, Circular # 5 of 2021, Circular # 9 of 2021 and Circular No.13 of 2021, which continue to be applicable.
In order to facilitate the operationalization of benefits laid down in the law, the FATA/PATA-domiciled industrial units may acquire installed capacity determination certificate (ICDC) from the Khyber Pakhtunkhwa Department of Industries or the Ministry of Industries, Government of Pakistan.
The Commissioner concerned shall accept the ICDC presented until he has reasons to believe that the actual capacity installed is less than the capacity determined and certified.
“It goes without saying that only the goods meant for value addition are to be imported and not finished products,” the FBR said.
In order to undertake foolproof surveillance of exit points from non-taxable to taxable territories, Inland Revenue Enforcement Network (IREN) check posts under Section 40D of the Sales Tax Act, 1990 are being established and functionalized to ensure that due tax is paid at the rate of 16 per cent on goods supplied into taxable territories.
The Regional Tax Office (RTO), Peshawar shall also establish a tax office in Malakand Division for prompt release of consignments, processing of consumption and exemption certificates and effective and timely implementation of law in letter and spirit.
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Withholding tax rates on property income for 2021-2022
The Federal Board of Revenue (FBR) has issued updated rates of withholding tax on income from the property for the year 2021-2022.
The withholding tax shall be collected by every prescribed person from the recipients of rent of the immovable property.
The FBR collects withholding tax on income from property under Section 155 of the Income Tax Ordinance, 2001.
WITHHOLDING TAX CARD 2021/2022
Following are the rates of withholding tax:
Any payment made on account of rent of the immovable property
(A) In case of individual or Association of Person (AOP):
1. Where the gross amount of rent does not exceed Rs, 300,000: There shall be no tax.
2. Where the gross amount of rent exceeds Rs, 300,000 but does not exceed Rs, 600,000: the tax rate shall be 5 per cent of the gross amount exceeding Rs, 300,000.
3. Where the gross amount of rent exceeds Rs. 600,000 but does not exceed Rs. 2,000,000: The tax rate shall be Rs. 15,000 plus 10 per cent of the gross amount exceeding Rs. 600, 000.
4. Where the gross amount of rent exceeds Rs. 2,000,000: the tax rate shall be Rs. 155,000 plus 25 per cent of the gross amount exceeding Rs. 2,000, 000.
B) in case of the company: the tax rate shall be 15 per cent.
The tax deducted under Section 155 of Income Tax Ordinance, 2001 is adjustable.
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Sales tax exemption granted to medical equipment
The Federal Board of Revenue (FBR) has granted sales tax exemption on the import of essential medical equipment. The FBR issued SRO 1007(I)/2021 on Monday, listing a comprehensive array of medical goods that will be exempted from sales tax, aiming to facilitate the procurement and availability of critical equipment.
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CTO Karachi seals three retail shops on POS failure
In a determined move to enforce compliance with the newly introduced Point of Sale (POS) integration system, a tax office of the Federal Board of Revenue (FBR) has taken stringent measures by sealing three retail shops in Karachi for failing to install POS machines.
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Tax authority files benami property case against banker
A tax office of the Federal Board of Revenue (FBR) has filed a reference against the chairman of a prominent Islamic bank, accusing him of engaging in benami transactions to obtain properties.
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Notification sought for simplified return for SME taxpayers
KARACHI: The Federal Board of Revenue (FBR) has been urged to issue a simplified income tax return forms for taxpayers of small and medium enterprises (SMEs).
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FBR launches prize scheme for POS customers
ISLAMABAD: Federal Board of Revenue (FBR) on Monday launched prize scheme for customers of retailers, who integrated their sales through Point of Sales (POS) with the tax system.
The FBR issued SRO 1005(I)/2021 for launching the prize scheme for customers of tier-1 retailers, who have integrated their retail outlets with the FBR computerized system for real-time reporting of sales and mystery shopping in respect of verification of invoices from such retailers.
Procedure for prize scheme.—
The customers of integrated tier-1 retailer, whose names and CNICs are notified through random computerized draw shall be entitled to prizes in respect of their purchases from the integrated tier-1 retailers.
The customers shall verify the electronically generated invoice of integrated retailers either through “tax asaan” application or by sending sms to number 9966.
The application shall notify the customer regarding the status of invoice either as “verified” or “unverified”.
In case of verified invoice, the customer shall furnish one time, the following detail to the online system, namely: Name; CNIC; and Mobile number
Names and CNICs of the customers shall be included in the random computerized draw upon fulfillment of the requirement.
In case of unverified invoice, the customer shall report the same through system. The Board shall conduct enquiry and take appropriate action under the relevant provisions of law.
The computerized draw for the prizes shall be held in the first week of every month starting from the month of August, 2021 at the FBR Headquarters and the invoices of the immediately preceding month shall be entered in the draw.
Draw winners shall be required to perform biometric verification, at the nearest e-sahulat facility of NADRA and submit scanned copy on “tax assan” application. After successful biometric verification, winners shall be required to provide their IBAN through “tax asaan” application.
The total prize money and the denomination of the prizes shall be decided on month to month basis by the Board.
Procedure for mystery shopping.—
Mystery shopping shall be conducted by a person or the firm, duly authorized by the Board.
The person or firm authorized by the Board under sub-rule (1), shall carry out mystery shopping on random basis from tier-1 retailers.
The person or firm authorized by the Board under sub-rule (1), shall verify the invoices from the online system of FBR and in case of fake or invalid invoice, report the matter to the Board for necessary action as per relevant provisions of the Act and the rules thereunder.
Any other person may, in case of fake or invalid invoice, report the matter to the Board for necessary action as per relevant provisions of the Act and the rules thereunder.
The informer may claim reward on the basis of the detection and recovery made in consequence of fake or invalid invoice in terms of provisions of section 720 of the Act.
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Point of sale machines allowed tax credit
Section 64D of Income Tax Ordinance, 2001 has allowed tax credit for installing point of sale machine.
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 64D of the Income Tax Ordinance, 2001:
64D. Tax credit for point of sale machine.—(1) Any person who is required to integrate with Board’s computerized system for real time reporting of sale or receipt, shall be entitled to tax credit in respect of the amount invested in purchase of point of sale machine.
(2) The amount of tax credit allowed under sub-section (1) for a tax year in which point of sale machine is installed, integrated and configured with the Board’s computerized system shall be lesser of—
(a) amount actually invested in purchase of point of sale machine; or
(b) rupees one hundred and fifty thousand per machine.
(3) For the purpose of this section, the term point of sale machine means a machine meant for processing and recording the sale transactions for goods or services, either in cash or through credit and debit cards or online payments in an internet enabled environment.
(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.)
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Employment generation gets tax credit
The Federal Board of Revenue (FBR) has allowed tax credit for employment generation under Section 64B of Income Tax Ordinance, 2001 to taxpayers who set up new manufacturing unit and employed persons registered with Employees Old Age Benefits Institution (EOBI).
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