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ISLAMABAD: The tax authorities have reduced penalty amount to half on making false or misleading statement under various sections of Income Tax Ordinance, 2001.
Through Tax Laws (Second Amendment) Ordinance, 2021 promulgated a day earlier, the penal amount under Section 182 for misleading or false statement has been reduced to 50 percent from 100 percent of the amount of tax shortfall.
Under Serial No. 10 of Section 182: any person who makes a false or misleading statement to an Inland Revenue Authority either in writing or orally or electronically including a statement in an application, certificate, declaration, notification, return, objection or other document including books of accounts made, prepared, given, filed or furnished under this Ordinance, then such person shall pay a penalty of twenty five thousand rupees or 50 percent of the amount of tax shortfall whichever is higher:
Provided that in case of an assessment order deemed under section 120, no penalty shall be imposed to the extent of the tax shortfall occurring as a result of the taxpayer taking a reasonably arguable position on the application of this Ordinance to the taxpayers’ position.
Through the latest ordinance, the penalty for misleading information under Section 114A has also been imposed. Section 114A is related to taxpayers’ profile.
ISLAMABAD: Federal Board of Revenue (FBR) on Friday extended the last date for updating taxpayer profile up to June 30, 2021.
The FBR issued Circular No. 14 of 2021 on March 26, 2021 to extend the date for updating taxpayer profile from March 31, 2021 to June 30, 2021.
The date has been extended on the request of the tax bars that coronavirus cases were on the rise and most of the offices were working with 50 percent strength.
Updating profile by all the taxpayers registered under Section 181 of the Income Tax Ordinance, 2001 and other conditions specified by the Federal Board of Revenue (FBR) is a mandatory requirement under Section 114A of the Ordinance.
Through Finance Act, 2020, the Section 114A was introduced to make the updating profile mandatory for following persons:
(a) every person applying for registration under section 181;
(b) every person deriving income chargeable to tax under the head, “Income from business”;
(c) every person whose income is subject to final taxation;
(d) any non-profit organization as defined in clause (36) of section 2;
(e) any trust or welfare institution; or
(f) any other person prescribed by the Board.
The FBR explained the newly introduced section as: “Complexity of return forms is an embodiment of the complexity of tax law. Nevertheless, there is a dire need to simplify return forms without compromising on data required to verify accuracy of the declared version.”
The FBR said that instead of endeavoring to obtain all the relevant information in the income tax return, a new section has been added wherein taxpayers profile may be prescribed in order to capture data relevant to the taxpayer.
It said that persons who are already registered before September 30, 2020 and are deriving business or incomes subject to final taxation, trusts, welfare institutions, non-profit organizations and such other persons prescribed by the FBR are proposed to file a profile on or before December 31, 2020, which is not extended up to March 31, 2021.
Persons who obtain their registration after September 30, 2020 are proposed to furnish such profile within 90 days of registration. In case of any change in particulars of information, such persons shall update their profile within 90 days of the change in particulars. The profile contains information relevant to income regarding bank accounts, utility connections, business premises including all manufacturing, storage or retail outlets operated or leased by the taxpayer, types of businesses and such other information as may be prescribed by the FBR.
The FBR said that if a person fails to furnish or update a taxpayer’s profile within the due date or time period as extended by the FBR under Section214A, such person shall not be included in the active taxpayers list for the latest tax year ending prior to the aforesaid due date or extended date.
However, upon filing or updating the profile, such persons shall be allowed to be placed on the active taxpayers list upon payment of surcharge which is Rs20,000 in the case of a company, Rs10,000 in the case of an association of persons and Rs1,000 in the case of an individual.
Further, a penalty for non-filing or not updating of profile is also proposed at the rate of Rs2,500 for each day of default subject to minimum penalty of Rs10,000.
ISLAMABAD: First year allowance has been withdrawn that was allowed on installation of plant and machinery by any industrial unit. The concession has been withdrawn through Tax Laws (Second Amendment) Ordinance, 2021.
The first year allowance has been abolished that was available under Section 23A of Income Tax Ordinance, 2001 at the rate of 90 percent. An initial allowance was available at 25 percent for installation of plant and machinery, according to officials of the Federal Board of Revenue (FBR).
The omitted section 23A was:
First Year Allowance.—(1) Plant, machinery and equipment installed by any industrial undertaking set up in specified rural and under developed areas or engaged in the manufacturing of cellular mobile phones and qualifying for exemption under clause (126N) of Part I of the Second Schedule and owned and managed by a company shall be allowed first year allowance in lieu of initial allowance under section 23 at the rate specified in Part II of the Third Schedule against the cost of the “eligible depreciable assets” put to use after July 1, 2008.
(2) The provisions of section 23 except sub-sections (1) and (2) thereof, shall mutatis mutandis apply.
(3) The Federal Government may notify “specified areas” for the purposes of sub-section (1).
ISLAMABAD: Federal Board of Revenue (FBR) on Thursday reminded taxpayers to update their profile by March 31, 2021 to avoid penal action.
“Statutory deadline for furnishing/updating of taxpayers’ profile under section 114A of the Income Tax Ordinance, 2001 is March 31, 2021,” the FBR said and urged taxpayers to update profile before the deadline in order to avoid penal consequences under the law.
Updating profile by all the taxpayers registered under Section 181 of the Income Tax Ordinance, 2001 and other conditions specified by the Federal Board of Revenue (FBR) is a mandatory requirement under Section 114A of the Ordinance.
Through Finance Act, 2020, the Section 114A was introduced to make the updating profile mandatory for following persons:
(a) every person applying for registration under section 181;
(b) every person deriving income chargeable to tax under the head, “Income from business”;
(c) every person whose income is subject to final taxation;
(d) any non-profit organization as defined in clause (36) of section 2;
(e) any trust or welfare institution; or
(f) any other person prescribed by the Board.
The FBR explained the newly introduced section as: “Complexity of return forms is an embodiment of the complexity of tax law. Nevertheless, there is a dire need to simplify return forms without compromising on data required to verify accuracy of the declared version.”
The FBR said that instead of endeavoring to obtain all the relevant information in the income tax return, a new section has been added wherein taxpayers profile may be prescribed in order to capture data relevant to the taxpayer.
It said that persons who are already registered before September 30, 2020 and are deriving business or incomes subject to final taxation, trusts, welfare institutions, non-profit organizations and such other persons prescribed by the FBR are proposed to file a profile on or before December 31, 2020, which is not extended up to March 31, 2021.
Persons who obtain their registration after September 30, 2020 are proposed to furnish such profile within 90 days of registration. In case of any change in particulars of information, such persons shall update their profile within 90 days of the change in particulars. The profile contains information relevant to income regarding bank accounts, utility connections, business premises including all manufacturing, storage or retail outlets operated or leased by the taxpayer, types of businesses and such other information as may be prescribed by the FBR.
The FBR said that if a person fails to furnish or update a taxpayer’s profile within the due date or time period as extended by the FBR under Section214A, such person shall not be included in the active taxpayers list for the latest tax year ending prior to the aforesaid due date or extended date.
However, upon filing or updating the profile, such persons shall be allowed to be placed on the active taxpayers list upon payment of surcharge which is Rs20,000 in the case of a company, Rs10,000 in the case of an association of persons and Rs1,000 in the case of an individual.
Further, a penalty for non-filing or not updating of profile is also proposed at the rate of Rs2,500 for each day of default subject to minimum penalty of Rs10,000.
ISLAMABAD: The government to withdraw a large number of tax exemptions through an ordinance on Thursday after the approval of President of Pakistan.
The federal cabinet has approved the amendments to the Income Tax Ordinance, 2001 to withdraw tax exemptions. Tax Laws (Second Amendment) Ordinance, 2021 to be promulgated after the approval of the president.
The executive board of International Monetary Fund (IMF) approved $500 million for Pakistan under Extended Fund Facility (EFF) on Wednesday.
Withdrawal of income tax exemption was one of the conditions for the IMF disbursement.
According to the draft ordinance approved by the federal cabinet, significant amendments have been made to Second Schedule of the Income Tax Ordinance, 2001.
The second schedule is related to tax exemptions and concessions granted to different sectors of the economy and individual entities.
The concessionary regime for Non-Profit Organization (NPOs) has been redrafted and limited the scope of exemption and concession.
Sources in the Federal Board of Revenue (FBR) said that most of the exemptions had been converted with the tax credit.
Many provisions related to tax exemptions have been deleted that were already expired, the sources added.
KARACHI: Federal Board of Revenue (FBR) has been urged to withdraw the mandatory requirement of Computerized National Identity Card (CNIC) on buying and selling under Sales Tax Act, 1990 till the time a sufficient number gets register for sales tax.
Karachi Chamber of Commerce and Industry (KCCI) has highlighted the issue as by amendment to Section 8 (Sub-Sec.1, Clause M) of Sales Tax Act, and addition of 10th Schedule, it is mandatory to provide CNIC number of Unregistered person in the invoice. Similar statute has been added U/S.19A of Federal Excise Act, Sec.216A to ITO and Sec.156A of Customs Act.
Moreover 3 percent further tax is also charged on sales to unregistered buyers even if the CNIC number is provided, which is totally unjust and tantamount to penalizing the registered persons who have to bear the burden of 3 percent further tax.
The chamber said that rather than generating more revenue, this provision has resulted in proliferation of undocumented cash transactions.
With hardly 45000 registered entities in Sales Tax Regime, it is very hard to find a registered buyer. This has affected the entire supply chain including manufacturers, importers and traders in Documented Sector and has led to greater advantage for smugglers and undocumented sectors as they do not have to face any such condition. Many registered person are now forced to issue flying invoices to registered persons to overcome CNIC condition and avoid 3 percent Further Tax.
The chamber recommended that requirement of CNIC should not be mandatory till the time that number of registered persons in Sales Tax regime has substantially increased.
Providing CNIC number should be optional and may be treated at par with STRN if provided in the Sales Tax Return.
Further Tax on supplies to unregistered buyer should not be charged if CNIC number is provided in Sales Tax Return.
In case CNIC number of unregistered buyer of Raw Materials is not provided, VAT may be charged at 1.7 percent on sellers of Raw Material.
Giving rationale, the chamber said that it will discourage cash economy and encourage documentation by placing the trust in registered persons.
Discourage Fake and Flying invoices which are issued to avoid 3 percent further tax.
Enhance business transactions through banking channels and promote growth.
A provisional assessment is calculation of tax due on a person who has failed to file income tax return for a tax year. A commissioner of Inland Revenue of Federal Board of Revenue (FBR) has been empowered to make provisional assessment of such person under Income Tax Ordinance, 2001.
According to Tenth Schedule of Income Tax Ordinance, 200, the Provisional assessment is:
(1) Where for a tax year person’s tax has been collected or deducted in accordance with rule 1 and the person fails to file return of income for that tax year within the due date provided in section 118 or as extended by the Board, the Commissioner shall notwithstanding anything contained in sub-sections (3) and (4) of section 114, within sixty days of the due date provided in section 118 or as extended by the Board make a provisional assessment of the taxable income of the person and issue a provisional assessment order specifying the taxable income assessed and tax due thereon.
(2) In making the provisional assessment under sub-rule (1), the Commissioner shall impute taxable income on the amount of tax deducted or collected under rule 1 by treating the imputed income as concealed income for the purposes of clause (d) of sub-section (1) of section 111:
Provided that the provision of section 111 shall be applicable on unexplained income, asset or expenditure in excess of imputed income treated as concealed income under this rule.”
“Explanation.- For the removal of doubt it is clarified that the imputable income so calculated or concealed income so determined shall not absolve the person so assessed, from requirement of filing of wealth statement under sub-section (1) of section 116, the nature and source of amounts subject to deduction or collection of tax under section 111, section of audit under section 177 or 214C or subsequent amendment of assessment as provided in rule 8 and all the provisions of the Ordinance shall apply.”
KARACHI: Metro Pakistan, a leading chain of stores, has integrated its sales with the Federal Board of Revenue (FBR) for real-time monitoring of transactions.
A statement said on Tuesday said that METRO Pakistan in collaboration with the FBR, has completed integration of all its Point of Sales (POS) with the latest Electronic Device System (EDS) introduced by the FBR.
The state-of-the-art system will allow the small retailers, medium retailers, and large tier-1 retailers to report and record their sales in real-time for taxation purposes and will ensure the sales tax paid by the customers at the POS counter and the GST at the cash counter will be deposited in the system.
The inauguration ceremony for the new system was held at METRO Store Islamabad with a live demonstration.
Dr. Waqar Masood Khan, the Special Assistant to Prime Minister on Revenue, was the Chief Guest, whereas Dr. Philipp Deichmann, Deputy Head of Mission, Embassy of Federal Republic of Germany in Pakistan, graced the occasion as the Guest of Honor, along with number of other of distinguished guests from the business community.
Speaking at the ceremony, Marek Minkiewicz, Managing Director METRO said: “METRO Pakistan is a prime example of foreign investment and fully respects the laws of the land, maintains its global high standards for social responsibility, and cooperates with the Government to the extent possible.
“METRO Pakistan supports and strengthens the documented economy and is an important exchequer collector.
“It is one of the largest tax collector in shape of Sales Tax and Income Tax in the Wholesale/Retail sector, from its Customers and Suppliers, and depositing the same in Government treasury. On average METRO Pakistan is collecting Rs.8.1billion per annum”.
Elaborating further, Asim Israr, Director Finance METRO added “After implementation of this integration at all tiers, there would be no hurdles left for the growth of wholesale and retail sector to flourish and also minimize any need for interaction between the taxpayer and tax-departments”.
He also thanked the FBR team lead by Director General Retail Sajidullah Siddique for their guidance, support and cooperation in successful implementation of the project.
Expressing his views at the occasion, the Chief Guest Dr. Waqar Masood Khan said: “I am extremely pleased that METRO and FBR have put in a lot of effort to implement current system and have worked for the betterment of the business and country.
I am hopeful that once all tiers will be covered by the government, the business community will enjoy a new viable, tax compliant integrated business model, something that will serve as a benchmark for our country in the future”.
Guest of Honour Dr. Philipp Deichmann, said: “I am impressed with the automation drive being introduced in tax system to facilitate the taxpayers and increase revenue. Pakistan’s economy is improving, however, the country need to focus on cohesive economic policies, improve tax regime to widen tax base and streamline lengthy litigation procedures to promote ease of doing business and attract more investment”.
The ceremony was followed by live demonstration session for the attendees, including METRO staff, Customers, Retailers, and businessmen present.
ISLAMABAD: Around 60,000 taxpayers paid surcharge for including their names in Active Taxpayers List (ATL) for tax year 2020 during the week ended March 21, 2021.
According to weekly updated ATL -2020 issued on March 22, 2021 by the Federal Board of Revenue (FBR), the number of active taxpayers increased to 2.43 million on the basis of return filed / surcharge payment for appearance on the ATL.
The number of active taxpayers was 2.37 million in the preceding week.
The FBR issued the ATL for the tax year 2020 on March 01, 2020 and the total number of active taxpayers on the list was 2.17 million.
The appearance of taxpayers’ name on the ATL guarantees exemption from withholding tax on various transactions and reduction of withholding tax rate.
The FBR includes names of only those taxpayers, who file their annual returns within due date or it was extended by commissioner appeals on the basis of request filed by the taxpayers.
However, late filers can also enlist their names on the ATL after payment of surcharge.
The payment of surcharge is Rs1,000 for individuals, Rs10,000 for Association of Persons and Rs20,000 is for corporate entities.
ISLAMABAD: A minimum penalty of Rs10,000 has been prescribed for one day after deadline for updating taxpayer profile under Section 114A of the Income Tax Ordinance, 2001.
The updating profile by a taxpayer has been mandatory through Finance Act, 2020. The last date for updating the profile is March 31, 2021.
According to Section 182 of Income Tax Ordinance, 2001 any person who is required to furnish or update a taxpayer’s profile but fails to furnish or update within due date then such a person shall pay a penalty of Rs2,500 for each day of default from the due date subject to a minimum penalty of Rs10,000.
According to the Section 114A:
Taxpayer’s profile.-(1) Subject to this Ordinance, the following persons shall furnish a profile, namely:-
(a) every person applying for registration under section 181;
(b) every person deriving income chargeable to tax under the head, “Income from business”;
(c) every person whose income is subject to final taxation;
(d) any non-profit organization as defined in clause (36) of section 2;
(e) any trust or welfare institution; or
(f) any other person prescribed by the Board.
(2) A taxpayer’s profile-
(a)shall be in the prescribed form and shall be accompanied by such annexures, statements or documents as may be prescribed;
(b) shall fully state, in the specified form and manner, the relevant particulars of –
(i) bank accounts;
(ii) utility connections;
(iii) business premises including all manufacturing, storage or retail outlets operated or leased by the taxpayer;
(iv) types of businesses; and
(v) such other information as may be prescribed;
(c) shall be signed by the person being an individual, or the person’s representative where section 172 applies; and
(d) shall be filed electronically on the web prescribed by the Board.
(3) A taxpayer’s profile shall be furnished,-
(a) on or before the 31st day of December, 2020 in case of a person registered under section 181 before the 30th day of September, 2020; and
(b) within ninety days registration in case of a person not registered under section 181 before the 30th day of September, 2020.
(4) A taxpayer’s profile shall be updated within ninety days of change in any of the relevant particulars of information as mentioned in clause (b) of sub-section (2).
Through Circular No. 08 of 2020, the FBR extended the date of furnishing of taxpayer’s profile from December 31, 2020 to March 31, 2021.
