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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.

  • Penalty imposed for non-declaration of business bank account

    Penalty imposed for non-declaration of business bank account

    ISLAMABAD: The Federal Board of Revenue (FBR) has been authorized to impose penalty on taxpayers who fail to declare their bank accounts.

    According to budget 2021/2022 commentary issued by KPMG Taseer Hadi & Co. the Finance Bill 2021 proposed a new definition of “business bank account” to mean a bank account utilized by the taxpayer for business transaction declared to the Commissioner through original or modified registration form prescribed under section 181.

    The form under section 181is available on IRIS wherein the taxpayer is required to declare bank account which would be treated as business bank account.

    The Bill proposes to beef-up the documentation of taxpayer by prescribing specific penalty and prosecution provisions on non-declaration of bank account.

    Where any person fails to declare business bank account(s), in his registration application or fails to amend his registration profile to declare existing business bank account(s), such person shall pay a penalty of Rs. 10,000 for each day of default since the date of submission of application for registration or date of opening of undeclared business bank account whichever is later subject to minimum penalty of Rs.100,000 per undeclared bank account. This provision is proposed to be effective from 1st October 2021.

  • Tarin directs FBR to ensure tracking progress of installed POS machines

    Tarin directs FBR to ensure tracking progress of installed POS machines

    ISLAMABAD: Minister for Finance and Revenue Shaukat Tarin on Tuesday directed the tax authorities to ensure effective tracking progress of installed Point of Sale (POS) machines and provide post deployment support to the retailers.

    He further directed to determine the total volume of sales by retailers to effectively tap the revenue generation through POS system after adjustment of input and output taxes. He directed to establish a cell at FBR HQ to fast track the progress on POS integration.

    Minister for Finance & Revenue Shaukat Fayaz Ahmed Tarin visited FBR Headquarters on Tuesday and held a meeting with FBR officers.

    The agenda of the meeting was to devise a strategy to increase integration of retailers with the Point of Sales System of FBR.

    The meeting also discussed the way forward to bring identified potential taxpayers into tax net. Special Assistant to the Prime Minister on Finance & Revenue Dr. Waqar Masood Khan and Chairman FBR Asim Ahmad along with other members of FBR were present in the meeting.

    Chairman FBR while briefing said that the licensing of IT companies for installation and configuration of POS System would be completed by the end of August.

    He further briefed that monitoring cells would be formed in each RTO headed by respective Chief Commissioner to supervise the POS integration for achieving desired results. Minister for Finance and Revenue directed to ensure effective tracking progress of installed POS machines and provide post deployment support to the retailers. He further directed to determine the total volume of sales by retailers to effectively tap the revenue generation through POS system after adjustment of input and output taxes. The finance minister directed to establish a cell at FBR HQ to fast track the progress on POS integration.

    The meeting under the Chair of Minister for Finance & Revenue also discussed the strategy to increase the tax net possibilities.

    FBR Team briefed that sizeable number of potential taxpayers have been identified after retrieving available data of their withholding taxes through third party sharing.

    Chairman FBR briefed that efforts are being made to bring all the identified potential taxpayers into tax net. Minster for Finance and Revenue directed to remove all hurdles in bringing the identified potential taxpayers into tax net. He directed to further identify the potential taxpayers on the basis of third party data being received through credible sources.

    The Minister stressed on the need to finalize the modalities of third party audit which would not only increase the tax net but would also generate much needed revenue. The meeting ended after it was decided to hold regular meetings to pursue the targets on fast track basis.

  • FBR explains exemption withdrawal not new tax

    FBR explains exemption withdrawal not new tax

    ISLAMABAD: The Federal Board of Revenue (FBR) on Monday explained that withdrawal of exemption and concession does not mean imposition of new taxes.

    Clarifying to a news report, the FBR said that withdrawal of exemption and reduced rates should not be confused with imposition of new taxes.

    It is very clearly and candidly informed that the present budget proposals do not contain any new item for taxation of pensions or major components of salary as initially discussed.

    Omission of Clause (39) of Part I of Second Schedule to the Income Tax Ordinance, 2001 is only of technical nature. This clause provided exemption to re-imbursement of expenditure incurred by employee on behalf of the employer organization.

    This type of transaction cannot form part of the salary in any circumstances. The omission has been made only because there were some interpretations of the courts that were not in accordance with the actual purpose of this clause.

    The clause has accordingly been omitted to avoid multiple interpretations or confusions. The figures of revenue generation of Rs.1.82 billion reported by the Express Tribune in this regard are absolutely unwarranted and misleading.

    The clause has accordingly been omitted to avoid multiple interpretations or confusions. The figures of revenue generation of Rs.1.82 billion reported by the Express Tribune in this regard are absolutely unwarranted and misleading.

    However, profit on debt or markup component on provident fund has been proposed to be taxed @ 10% as a separate block of income only if such markup exceeds Rs.500, 000 in a tax year.

    FBR firmly believes that this change will not result in any significant burden on taxpayers.

    Slight changes on account of traveling allowance of newspapers employees, free supply of food or other perquisites etc. and salary of seafarers that was wholly exempt have been proposed for rationalization of salary tax regime rather than as revenue generation measure.

    Tax rate on capital market transactions has been lowered from 15% to 12.5% in order to encourage ordinary people to invest their savings in the stock market tradable securities.

    This change will result in enhanced savings and investment in an activity that will lead to industrial expansion and economic growth.

    Needless to highlight, an enhanced confidence in stock market ultimately translates into raising funds/money by initial public offerings (IPOs) by existing companies or new companies joining the field.

    The incentive has been offered for promoting sustainable and inclusive economic growth.

    Ministry of Finance and FBR are always open to positive critique for making changes if any required in the proposals, however, take a strong exception to undue, unwarranted and unjustified criticism.

  • Tax officers empowered to arrest persons for concealing income

    Tax officers empowered to arrest persons for concealing income

    ISLAMABAD: The Federal Board of Revenue (FBR) has introduced a significant amendment to the Income Tax Ordinance, 2001, through the Finance Bill, 2021, empowering tax officers to arrest individuals in cases of income concealment.

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  • FBR, SBP to make procedure for tax payment on export of services

    FBR, SBP to make procedure for tax payment on export of services

    ISLAMABAD: The government has imposed income tax on export of services and in this regard Federal Board of Revenue (FBR) and State Bank of Pakistan (SBP) will make procedure for payment of tax.

    According to budget 2021/2022 documents, the Finance Bill 2021 proposed a new section 154A for imposition of income tax on export of services.

    The proposed new section is as follow:

    “154A. Export of Services.– (1) Every authorized dealer in foreign exchange shall, at the time of realization of foreign exchange proceeds on account of the following, deduct tax from the proceeds at the rates specified in Division IVA of Part III of the First Schedule –

    (a) exports of computer software or IT services or IT enabled services in case tax credit under section 65F is not available;

    (b) services or technical services rendered outside Pakistan or exported from Pakistan;

    (c) royalty, commission or fees derived by a resident company from a foreign enterprise in consideration for the use outside Pakistan of any patent, invention, model, design, secret process or formula or similar property right, or information concerning industrial, commercial or scientific knowledge, experience or skill made available or provided to such enterprise;

    (d) construction contracts executed outside Pakistan; and

    (e) other services rendered outside Pakistan as notified by the Board from time to time;

    (2) The tax deductible under this section shall be a final tax on the income arising from the transactions referred to in this section, upon fulfilment of the following conditions –

    (a) return has been filed;

    (b) withholding tax statements for the relevant tax year have been filed; and

    (c) sales tax returns under Federal or Provincial laws have been filed, if required under the law;

    (d) no credit for foreign taxes paid shall be allowed.

    (3) The provisions of sub-section (2) shall not apply to a person who does not fulfill the specified conditions or who opts not to be subject to final taxation:

    Provided that the option shall be exercised every year at the time of filing of return under section 114.

    (4) Where a taxpayer, while explaining the nature and source of any amount, investment, money, valuable article, expenditure, referred to in section 111, takes into account any source of income which is subject to final tax in accordance with the provisions of this section, he shall not be entitled to take credit of a sum that can be reasonably attributed to the business activity or activities mentioned in sub-section (1).

    (5) The Board in consultation with State Bank of Pakistan shall prescribe mode, manner and procedure of payment of tax under this section.

    (6) The Board shall have power to include or exclude certain services for applicability of provisions of this section.”

  • FBR allowed probe foreign income beyond past five years

    FBR allowed probe foreign income beyond past five years

    ISLAMABAD: The Federal Board of Revenue (FBR) has been authorized to probe foreign income of a taxpayers beyond past five years as time limitation in this regard has been withdrawn through Finance Bill 2021.

    According to budget 2021/2022 documents, the Finance Bill 2021 proposed amendment to Section 114 of the Income Tax Ordinance, 2001.

    It is proposed amendment in sub-section (5) of Section 114, to insert new proviso, namely:–

    “Provided further that the time-limitation provided under this sub-section shall not apply if the Commissioner is satisfied on the basis of reasons to be recorded in writing that a person who failed to furnish his return has foreign income or owns foreign assets.”

  • FBR issues draft return forms for Tax Year 2021

    FBR issues draft return forms for Tax Year 2021

    ISLAMABAD: The Federal Board of Revenue (FBR) has issued draft income tax return form for Tax Year 2021 to enable tax payers to file their returns from July 01, 2021.

    The FBR issued SRO 730(I)/2021 dated June 11, 2021 to issue draft income tax return forms for salaried persons, business individuals, Association of Persons and corporate entities.

    The FBR invited comments on the draft income tax return forms within seven days from the issuance of the SRO.

    Last year the FBR had taken strict stance by not extending the last date for filing income tax returns beyond December 08, 2020 in case of salaried persons, business individuals and Association of Persons.

    Further, it had also announced that the return filing for tax year 2021 would be started from July 01, 2021.

    The last date for filing income tax returns by salaried persons, business individuals, AOPs and companies having special year is September 30. Meanwhile, the due date for filing income tax returns by corporate entities having normal fiscal year is December 31.

  • FBR grants Rs1,314 billion as exemptions, concessions in 2020/2021

    FBR grants Rs1,314 billion as exemptions, concessions in 2020/2021

    ISLAMABAD: Federal Board of Revenue (FBR) has granted an amount of Rs1,314 billion as exemptions and concessions during outgoing fiscal year 2020/2021.

    According to Economic Survey of Pakistan issued on Thursday, the cost of exemptions and concessions increased by 14.26 percent during the outgoing fiscal year when compared with Rs1,150 billion in fiscal year 2019/2020.

    According to tax expenditures details the exemptions/concession in income tax increased by 18.52 percent to Rs448 billion during fiscal year 2020/2021 as compared with Rs378 billion in the last fiscal year.

    The cost of exemptions and concessions in sales tax posted an increase of 11.58 percent to Rs578.45 billion during fiscal year 2020/2021 when compared with Rs518.81 billion in the last fiscal year.

    The exemptions and concessions in customs duty increased by 13.74 percent to Rs287.77 billion in the outgoing fiscal year 2020/2021 as compared with Rs253.11 billion in the last fiscal year.

  • FBR directs IR offices to dispose of all refund cases by July 31

    FBR directs IR offices to dispose of all refund cases by July 31

    ISLAMABAD: Federal Board of Revenue (FBR) has directed tax offices to dispose all pending refund claims by July 31, 2021.

    The FBR also facilitated exporters by enhancing risk parameters for release of sales tax refunds.

    In a letter to all chief commissioners of Inland Revenue, the FBR said that it had been decided to enhance refund risk parametric check from 12 percent to 15 percent of export value in cases of partially-integrated manufacturing concerns and commercial exporters.

    The process for the purpose is:

    That, all exporters would continue to file their refund claims through FASTER module;

    That, refund claims up to 12 percent of export value will be automatically processed by FASTER system;

    That, any amount exceeding 12 percent will be deferred and marked to the field office concerned for processing and sanctioning;

    That, field offices will thoroughly scrutinize the claim to ascertain its admissibility and genuineness;

    That, after satisfying themselves as regards the admissibility and genuineness of the refund, filed officers will sanction the refund whereby RPOs shall appear in CSTRO’s payment system in a separate especially earmarked stream;

    That, CSTRO will release payment in all genuine cases falling within the range of 12 percent to 15 percent of export value;

    That, no refund claims beyond 15 percent of export value would be sanctioned / paid under any circumstances.

    The FBR said that all cases marked to the field involving higher refund-to-export ratio, by their very nature, are to be taken as high risk cases, and put to stringent levels, of both pre and post-refund audit so as to optimally safeguard the exchequer against any undue release on this account.

    Further, the FBR directed all field formations to speedily dispose of all pending cases either accepting or rejecting the refund, but no claim, on whatever count, be kept pending beyond July 31, 2021.

  • Sales tax rates slashed on kerosene, light diesel

    Sales tax rates slashed on kerosene, light diesel

    ISLAMABAD: The government has announced cut in sales tax rates on kerosene oil and light diesel in order to absorb the price hike on petroleum products.

    In this regard the FBR issued SRO 726(I)/2021 on Tuesday to comply with the decision of the government for keeping the POL prices intact by absorbing a hike in prices through downward adjustment in sales tax rates.

    The sales tax rate on kerosene oil has been reduced to 10.07 percent from the previous rate of 15.44 percent. Similarly, the sales tax rate on light diesel oil has been reduced to 3.67 percent from 7.56 percent. Meanwhile, the sales tax rates on petrol and high speed oil have been kept unchanged at 17 percent.

    According to an official statement issued on May 31, 2021, the prime minister had decided to maintain the prices of petroleum products as they were on May 17, 2021.

    “The government has not increased the prices of petroleum products since April 16, 2021 by adjusting sales tax and petroleum levy so that there is no corresponding increase in the prices of essential items and maximum relief is provided to the common man.”