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.

FBR chairman visits Karachi to boost revenue collection

ISLAMABAD: The Chairman of Federal Board of Revenue (FBR) Muhammad Javed Ghani to hold meetings with senior officials of Inland Revenue and Pakistan Customs on Monday January 18, 2021 to discuss measures to boost revenue collection during second half of the current fiscal year.

The chairman will hold meetings during his visit to Karachi on January 18, 2021.

According to the visit schedule, the chairman will meet Chief Commissioners Inland Revenue of Large Taxpayers Office (LTO), Medium Tax Office (MTO), Corporate Tax Office (CTO), Regional Tax Office (RTO)-I and RTO-II.

The chairman will also meet chief collector of Customs enforcement and chief collector of customs appraisement. The chairman will also meet director generals of Input-Outpu Coefficient Organization (IOCO), Transit Trade, Valuation and Research and Analysis.

FBR sources said that the meetings would focus on revenue collection during the second half (January – June) of fiscal year 2020/2021.

The FBR needs to collect tax at a difficult growth rate of 45.5 percent in second half (January – June) of fiscal year 2020/2021 to achieve full year revenue collection target of Rs4,963 billion.

According to provision figures released by the FBR’s net collection for the first half (July – December) of fiscal year was at Rs2,204 billion as compared with Rs2,101 billion in the same period of the last fiscal year, showing a growth of five percent.

The FBR also missed the revenue collection target for the first half by slight margin. The collection target for the first half of the current fiscal year was Rs2,210 billion.

January 18, 2021
Adjustment of expenses allowed against property income

ISLAMABAD: The Federal Board of Revenue (FBR) has said that adjustment of expenses on property income has been allowed if a taxpayer opted to pay income tax under the head of individual income.

Sources in FBR said that through Finance Act, 2016, a dual tax treatment was introduced for property income of individuals/A0Ps and companies.

Individuals and AOPs had to pay fixed amount of tax on gross rentals at the rates specified in Division VIA of Part-I of First Schedule.

However, certain deductions were allowable for computing property income in case of a company.

A new sub-section (7) was added to Section 15A through Finance Act, 2019 to enable Individuals/A0Ps to opt for normal tax regime and claim deductions against gross rentals as provided in the law.

But that option was available only to those individuals and AOPs who derived income from property in excess of Rs.4 million.

The Finance Act, 2020 has removed this condition by making amendment in sub-section 7 of section 15A.

Now all individuals/A0Ps are allowed to claim deductions against gross rental income if they opt to pay tax at rates given in Divisions I of Part-I of First schedule to the Ordinance.

Furthermore, deduction in respect of administration and collection charges under clause (h) of Section 15A has been reduced from 6% to 4% of the rent chargeable to tax.

January 17, 2021
Transfer of foreign assets required to be declared in annual return

ISLAMABAD: A person makes transaction or transfer of foreign assets during a tax year is required to declare the same in annual return.

Officials in the Federal Board of Revenue (FBR) said that according to Income Tax Ordinance, 2001 a person having foreign assets or foreign income is required to file annual return of income and wealth statement.

The law also makes mandatory for the person to declare any foreign assets transferred to any other person during the tax year and the consideration for the said transfer.

Section 116A of the Income Tax Ordinance, 2001 explains the return filing requirement for a person having foreign income and assets statement.

Section 116A. Foreign income and assets statement.

(1) Every resident taxpayer being an individual having foreign income of not less than ten thousand United States dollars or having foreign assets with a value of not less than one hundred thousand United States dollars shall furnish a statement, hereinafter referred to as the foreign income and assets statement, in the prescribed form and verified in the prescribed manner giving particulars of—

(a) the person’s total foreign assets and liabilities as on the last day of the tax year;

(b) any foreign assets transferred by the person to any other person during the tax year and the consideration for the said transfer; and

(c) complete particulars of foreign income, the expenditure derived during the tax year and the expenditure wholly and necessarily for the purposes of deriving the said income.

(2) The Commissioner may by a notice in writing require any person being an individual who, in the opinion of the Commissioner on the basis of reasons to be recorded in writing, was required to furnish a foreign income and assets statement under sub-section (1) but who has failed to do so to furnish the foreign income and assets statement on the date specified in the notice.

January 17, 2021
Committee may recommend reduction in withholding tax provisions

ISLAMABAD: A committee constituted to simplify taxation procedures may recommend a reduction in the number of withholding tax provisions and measures for enhancing the revenue collection.

Sources in the Federal Board of Revenue (FBR) said that a technical committee was constituted on September 17, 2020, for simplification of all taxation procedures.

They said that the committee likely to submit its recommendations during next month for incorporation into the budget.

The committee was assigned to propose measures to reduce the dependence on withholding taxes, minimum tax, advance tax, etc.

According to the terms of reference (TOR), the committee would identify distortion, anomalies, and inequalities in the taxation system which cause difficulties for taxpayers, or discourage investment, industrialization, and documentation, and propose solutions.

Further, the committee is also required to propose measures for simplification of all taxation procedures, in a manner that does not compromise revenue collection and documentation.

The committee is also required to propose measures for improvement in the temporary importation and manufacturing bond schemes in order to enhance their scope and facilitate direct and indirect exporters throughout the value chain.

The committee has been asked to propose remedies for issues relating to adjustment of input tax paid against services subjected to sales tax by the provinces.

Meanwhile, the committee shall also identify issues hindering the smooth processing of refund claims through the FASTER system.

January 16, 2021
Criteria for selection, conduct of income tax audit

Islamabad: The Federal Board of Revenue (FBR) has adopted a criteria for selection and conduct of income tax audit under Section 214C of the Income Tax Ordinance, 2001.

The criteria have been explained under updated Income Tax Rules, 2002, tax officials said.

Selection and conduct of audit.-

(1) This rule shall apply to selection of cases for audit by the FBR under section 214C of the Income Tax Ordinance, 2001 (XLIX of 2001).

(2) The following steps shall be followed for selection of cases for audit through a computer ballot on random and parametric selection basis for tax years mentioned therein, namely:-

(a) data of all returns (e-filed and manually filed) shall be utilized as a basic data;

(b) the Board shall decide the cases of persons or classes of persons which are to be excluded from audit selection and such exclusions shall be publicized each year through FBR’s web-portal for information, prior to the process of balloting or selection;

(c) cases falling under exclusions shall be identified and such cases shall be excluded from the data to be used for balloting;

(d) the data of the remaining cases shall be utilized for computer ballot for audit selection;

(e) for each tax year cases for audit shall be selected in accordance with the predetermined percentage, to be publicized through FBR’s web-portal, and prior to the balloting process, each year;

(f) immediately after computer ballot, the lists of selected case shall be generated and placed on FBR’s web-portal;

(g) the whole balloting system for audit selection shall be based only on the NTNs/ CNICs of the filers;

(h) the NTNs and CNICs of the cases selected for audit shall be communicated to concerned RTOs and LTUs as per their respective jurisdictions;

(i) for the purpose of selection of cases on parametric basis, risk parameters for persons or classes or persons to be used for balloting, wherever necessary, shall be determined by the Board, as under:-

(A) risk parameters for persons or classes of persons to be used for balloting shall be determined by the Board;

(B) audit selection parameters may be based upon the following:-

(I) financial ratios for the year viz a viz the history of the case;

(II) financial ratios viz a viz industrial, sectoral or national ratios;

(III) industrial comparisons or bench marks;

(IV) quantum of losses or refunds beyond certain thresholds; or

(V) compliance history; and

(j) computer balloting process in both categories of selection for audit shall be held in the presence of representatives from Chambers of Commerce and Industries and representatives of Tax Bar Associations.

(3) The cases selected for audit by the Board shall be processed and the Commissioner Inland Revenue concerned shall issue intimation letter to the taxpayer about the selection of his case for audit with the following details:-

(a) section under which selection has been made;

(b) tax year for which the case has been selected for audit;

(c) mode of selection whether random or parametric;

(d) compliance requirements on the part of taxpayer e.g.-

(i) provision of prescribed books of accounts;

(ii) supporting information and documents, etc;

(iii) computerized data, access to computerized data or provision of attested hard copies of computerized data.

(4) On completion of examination of books of accounts, data or information under this rule the discrepancies, if found, shall be intimated to the taxpayer for obtaining taxpayers’ explanation, in the form of audit report, seeking taxpayer’s explanation on these points.

(5) Explanations of the taxpayer, where found not acceptable, shall be intimated to the taxpayer, through a notice under section 122(9) of the Income Tax Ordinance, 2001 about the amendment in assessment along with the rationale or basis of such amendment and necessary amendment in assessment order shall be passed under section 122 of the said Ordinance after affording adequate opportunity of hearing to the taxpayer.”

January 15, 2021
FBR promotes Customs officers to BS-18

Islamabad: Federal Board of Revenue (FBR) on Friday notified promotion of officers of Pakistan Customs Service (PCS) from BS-17 to BS-18.

The following BS-17 officers of Pakistan Customs Service are promoted to BS-18 on regular basis with immediate effect:-

1. Nawabzada Kamran Khan Jogezai

2. Ubaidullah

3. Farhat H. Khan

4. Ali Mohtashim Minhas

5. Muhammad Hamza Lak

6. Abeer Javaid

7. Sadaf Noor Elahi

8. Quratulain Ramay

9. Umair Zahid

10. Syeda Sadaf Ali Shah

11 . Shah Samad Hamadani

12. Akmal Shahzad

13. Saleem Tahir

14. Ameer Ahmad

The FBR said that the officers may actualize their promotions at their present place of posting.

The officers, who are drawing performance allowance, will continue to draw the same after promotion.

Through another notification the FBR said that officers Pakistan Customs Service from BS-17 to BS-18 were considered for promotion by the Departmental Promotion Committee on December 31, 2020.

The committee recommended the following officers for promotion subject to completion of satisfactory missing Performance Evaluation Reports (PERs) mentioned against each without adverse remarks.-

Malik Muhammad Ahmed 01.07.2019 to 15.02.2020

All Asad 01.10.2019 to 30.06.2020

Shakeel Ahmed 01.07.2019 to 30.06.2020

Mustafa Zamir 01.07.2018 to 02.02.2019

Ms. Asma Javed Paracha 01.07.2019 to 30.06.2020 2.

The promotion of above named officers shall be notified on meeting the said condition, the FBR added.

January 15, 2021
FBR invites customs proposals for budget 2021/2022

The Federal Board of Revenue (FBR) has opened the floor for customs duty proposals as part of the preparations for the federal budget for the fiscal year 2021/2022.
(more…)

January 15, 2021
Budget 2021/2022 to focus on easing tax burden: Member IR

Karachi: The upcoming federal budget will ease the burden on the industrial sector to reduce the cost of doing business to facilitate industrial and exporters, Dr. Muhammad Ashfaq, Member Inland Revenue (Operations), Federal Board of Revenue (FBR), said on Friday.

The Member was addressing the members of Karachi Chamber of Commerce and Industry (KCCI) during his four day visit to the city.

The Member said that the FBR was working on a policy to reduce the cost of doing business.

He said that it was encouraging that export orders were increasing. Further, a report of the State Bank of Pakistan (SBP) pointed out a reduction in the cost of doing business.

“The budget 2021/2022 will focus on reducing the cost of production. Further, the priority will be easing the tax burden on the industrial sector,” the Member added.

FBR receives numerous budget suggestions every year, he said, adding that the KCCI should send essential proposals.

The Member said that the condition of CNIC was part of the statute. He also said that audit was part of the taxation system.

He said that the FBR would introduce a new tax policy in the next three months. The Member said that refunds would be paid when claimed.

January 15, 2021
Sales tax registration may be suspended on non-filing of returns for six consecutive months

ISLAMABAD: Federal Board of Revenue (FBR) may suspend sales tax registration of a taxpayer who fails to file returns for six consecutive months, officials said on Thursday.

The officials said that a commissioner of Inland Revenue may suspend registration of a taxpayer, if the person is found to have issued fake invoices, evaded tax or committed tax fraud without prior notice, pending further inquiry.

Suspension of registration can occur due to the following possibilities:

Non-availability of the registered person at the given address;

Refusal to allow access to business premises or refusal to furnish records to an authorized Inland Revenue Officer;

Abnormal tax profile, such as taking excessive input tax adjustments, continuous carry-forwards, or sudden increase in turnover;

Making substantial purchases from or making supplies to other blacklisted or suspended person;

Non-filing of sales tax returns by a registered person for six consecutive months;

On recommendation of a commissioner of any other jurisdiction;

Any other reason to be specified by the Commissioner;

Impact of Suspension

Commissioner shall issue written order to the concerned registered person detailing the reasons for suspension. The order shall also be provided to all other Large Taxpayer Units (LTUs)/Regional Tax Offices (RTOs), the FBR‘s computer system, the STARR computer system and the Customs Wing computer system for information and necessary action as per law;

Suspension of registered person will make them ineligible to avail input tax adjustment/refund. Similarly, no input tax adjustment/refund shall be allowed to any other registered persons on the basis of invoices issued by such suspended person (whether issued prior to or after such suspension);

The suspended registered person will be issued a show cause notice (through registered post or courier service) within seven days of issuance of order of suspension by the Commissioner. The registered person will have an opportunity of hearing with fifteen days of the issuance of such notice clearly indicating that the will be blacklisted. In case of non-availability of the suspended person at the given address, the notice may be placed on the main notice Board of the LTO/RTO;

Where the show cause notice is not issued within seven days of the order of suspension, the order of suspension shall become invalid;

To become part of the Active Taxpayer List (ST), the Active Taxpayer must be a registered person who does not fall in the following categories:

Blacklisted or whose registration is suspended or blocked;

Failed to file return by the due date for two consecutive tax periods;

Failed to file Income Tax Return by the due date;

Failed to file two consecutive monthly or annual withholding tax statement.

A non-active taxpayer may be restored to active taxpayer status:

If the respective RTO/LTO recommends the same to FBR after conducting audit or other investigation; Competent Authority, Appellate Authority, Court or FTO orders for the restoration.

January 14, 2021
Member IR (Operations) holds meetings with tax officials, industry to boost revenue collection

KARACHI: Dr. Muhammad Ashfaq, Member Inland Revenue (Operations) of the Federal Board of Revenue (FBR) has launched a round of meetings with tax officials and industrialists during his four–day visit to Karachi starting from January 14, 2021.

FBR sources on Thursday said that the Member IR had a busy schedule, which included meeting with the tax offices and chambers/associations.

The sources said that the meetings would focus on revenue collection during the first half of the current fiscal year.

During his meeting with chambers and associations, the member would encourage the industrials to contribute towards revenue collection.

According to the schedule, the member will kick off the visit to meet with an industrialist on Thursday evening.

The member on Friday will meet with office bearers of Karachi Chamber of Commerce and Industry (KCCI) and Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA). On the same day, the Member will meet the senior officials of the Medium Tax Office (MTO) and Corporate Tax Office (CTO) to review the revenue collection performance.

On Saturday, the member will hold meetings with representatives of the Pakistan Yarn Merchant Association (PYMA) and Karachi Tax Bar Association (KTBA). On the same day, the Member will also hold a meeting with office-bearers of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI).

On Sunday, the Member is scheduled to meet Chief Commissioners Inland Revenue to discuss the revenue performance.

January 14, 2021