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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.

  • Annual tax return filing by due date falls 29 percent

    Annual tax return filing by due date falls 29 percent

    ISLAMABAD: Filing of annual income tax returns fell by 29 percent for tax year 2020 by due date as compared with number of return filed by due date for tax year 2019.

    The FBR on Wednesday said that it had received around 1.8 million income tax returns for tax year 2020 by the due date i.e. December 08, 2020, which was extended from September 30, 2020. Since the FBR has refused to further extend the date so December 08, 2020 has been taken as the closing date for filing income tax returns for tax year 2020 without fine and penalty.

    The FBR received 2.53 million returns by due date i.e. February 28, 2020, which was extended from September 30, 2019 to October 31, 2019, then November 30, 2019, then December 16, 2019, then December 31, 2019, then January 31, 2020 and final extension granted up to February 28, 2020.

    The number of 2.53 million returns has been shown on the Active Taxpayers List (ATL) for tax year 2019 issued on March 01, 2020.

    Around 2.98 million returns for tax year 2019 have been filed till December 06, 2020 as shown in the updated weekly ATL issued on December 07, 2020.

    The latest number of returns filed for tax year 2020 has shown that it was around 39.6 percent or 1.18 million returns short when compared with latest ATL for tax year 2019.

    On the other hand the FBR on Wednesday said that it had received 1.8 million tax returns for tax year 2020 by the last date i.e. December 08, 2020 as compared with 1.73 million returns received on the same date last year, showing 4 percent growth. However, the FBR said that around 300,000 taxpayers had submitted applications for date extension by the due date. This number will also add to the total number of returns filed for tax year 2020.

    It is worth mentioning that the due date for filing income tax returns for tax year 2019 was extended up to February 28, 2020.

    Further, since the launch of ATL on March 01, 2020 or the due date of February 28, 2020 for tax year 2019 the FBR received another 450,000 returns for the same year up to December 06, 2020.

    The FBR through its press release said that its decision of not extending the date beyond December 08, 2020 was right. The decision for not extending the last date was taken to ensure discipline in return filing by due date.

    However, collection of tax with return has shown significant increase. The FBR said that collection with return increased to Rs22 billion by the due date i.e. December 08, 2020, was 63 percent higher when compared with Rs13.5 billion by the same date of the last fiscal year.

  • Electronic tax appeal filing made mandatory from January 01

    Electronic tax appeal filing made mandatory from January 01

    The Federal Board of Revenue (FBR) has made the filing of tax appeals mandatory through electronic means, effective from January 1, 2021. This shift to electronic filing aims to streamline the process and reduce the administrative burden on taxpayers and tax authorities alike.

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  • FBR finalizes return form for small manufacturers after filing expiry date

    FBR finalizes return form for small manufacturers after filing expiry date

    ISLAMABAD: Federal Board of Revenue (FBR) on Wednesday issued a simplified single-page income tax return form for small manufacturers a day after when the last date for filing income tax return was expired.

    The FBR issued SRO 1316(I)/2020 dated December 09, 2020 to notify the simplified income tax return form for individuals and Association of Persons (AOPs) having annual turnover less than Rs50 million.

    Previously, the FBR issued the draft of this form on November 26, 2020 through SRO 1261(I)/2020 for seeking feedback from stakeholders.

    The FBR issued the finalized return form for the small manufacturers for tax year 2020. Interestingly, the date for tax year 2020 has been expired on December 08, 2020 except for the corporate units which have due date for return filing till December 31, 2020.

    So far the date for return filing was not further extended beyond December 08, 2020. But it is strong believe that the date may be extended to allow small manufacturers to file return under the newly notified return form.

    Tax experts said that the FBR may not allow date extension for small manufacturers without extending the date for all taxpayers who have last return filing date on September 30 and extended up to December 08, 2020.

    They said that the FBR had allowed general extension in date for filing tax return at the time of tax amnesty in the past.

    The simplified return form of income has been issued for small scale manufacturers having turnover less than Rs50 million. A single page draft wealth statement form is also issued along with the draft return of income.

    In the draft return form, the manufacturers would be required to provide limited information about their earnings and expenditures during a year.

    The details, as per draft return of income, to be provided by the manufacturers are included: gross sale excluding sales tax and federal excise duty; cost of sales; opening stock; purchases (domestic/imports); closing stock; other direct expenses; gross profit; profit and loss expenses; total income; tax chargeable; tax payable; tax already paid through utility bills; net tax payable/refund etc.

    Similarly, the taxpayer shall require to provide details, as per draft wealth statement form, are included: immovable assets; manufacturing unit; moveable assets; business capital; investment/advance; cash in hand/bank; loan/liabilities; net assets; reconciliation of net assets; net assets current year; net assets previous year; increase/decrease in net assets; income as per return; other inflows (gift, loan, remittances, etc.); outflows (gift, loan etc.); and personal expenses.

  • Date for filing income tax returns may be extended

    Date for filing income tax returns may be extended

    ISLAMABAD: The government may announce an extension in last date for filing return of income and wealth statement for tax year 2020, sources said.

    Today i.e. Tuesday December 08, 2020 is the last date for filing income tax returns for tax year 2020. As per Income Tax Ordinance, 2001 the last date for filing tax return is September 30. However, this year the income tax return form was finalized on September 08, 2020 and as per law taxpayers should be provided statutory time limit of 90 days. Therefore, the Federal Board of Revenue (FBR) on the demand of tax bars and other stakeholders, extended the date by 90 days in one go.

    This 90-day period is expiring today and the FBR has made it clear that it will not further extend the date as statutory time limit had already been granted.

    Tax bars and business community are continuously pressing the tax authorities to extend the date as online portal IRIS was making miscalculation.

    The sources in FBR said it was agreed at the Board level that the deadline would not be extended further in order to stop the tradition of repeated extension and to ensure compliance by due date.

    However, they said that the stakeholders including business community had approached the Prime Minister through the advisor on finance to intervene and allow a reasonable time for filing the annual return.

    A large number of returns have already been filed on the FBR portal, especially the salaried persons conveniently filed their returns through wizard based application. To some estimates around half of the returns filers, who filed their returns for tax year 2020, has made compliance by evening of Monday December 07, 2020.

    Therefore, to accommodate a number of around 1.5 million on the last date is impossible. The FBR issued instructions to the field offices to facilitate the taxpayers seeking date extension through commissioner approval. Further, the FBR also allowed extension to many taxpayers through one application.

    Tax experts said that the date extension through commissioner approval was already available in the Income Tax Ordinance, 2001 and by this way this issue may not be resolved and there is need to allow general relaxation in timing.

    One of the major issues creating hurdles is significant increase in coronavirus cases. Due to resurgence of COVID the government and private sector have already slashed the work force to the half. In this scenario the return filing process through tax consultants/practitioners and third party filing may be affected.

    Pakistan Tax Bar Association (PTBA) in its letter on December 02, 2020 urged the tax authorities to extend the last date for filing income tax returns up to January 31, 2020 after considering the significant rise in coronavirus cases in the country.

    Many other issued highlighted by taxpayers and other stakeholders including calculation errors on the IRIS portal. The FBR sources said that these issues were discussed and most of those were resolved.

    The sources said that extension in date may be announced later today evening.

  • FBR decides releasing missing amounts of sales tax refunds

    FBR decides releasing missing amounts of sales tax refunds

    ISLAMABAD: Federal Board of Revenue (FBR) on Monday decided to release missing amounts of sales tax refunds that were stuck up due to design flaws in the Fully Automated Sales Tax e-Refunds (FASTER) System.

    In this regard the FBR issued Sales Tax Circular No. 03 of 2020 to prescribe standard procedure for sanctioning of missing amounts stuck in FASTER system due to system glitches.

    The FBR said that in the wake of rollback of zero-rating extended through SRO 1125 of 2011 issued under Section 3(2)(b) and (6); 8(1)(b); and 71 of the Sales Tax Act, 1990 with effect from January 01, 2012, the FASTER system was introduced to process and sanction exporters’ refunds expeditiously.

    Although, FASTER was rolled out inside the very first quarter of tax year 2020, yet it continued to malfunction on multiple counts producing suboptimal outcomes, the FBR added.

    “One evidence of FASTER’s malfunctioning was that the system would simply miss out on sales tax credits of various taxpayers stalling processing of their refund claims,” the FBR said, adding that this system glitches created problems for exporting taxpayers in terms of uncertainty and stuck-up liquidity, and for the tax administration in terms of credibility deficit.

    The FBR said that the matter was analyzed threadbare at the head office, and found out that the problem of missing amounts cropped up due to the very designing of the FASTER module plausibly on three counts, namely:

    (i) FASTER was programmed to pick the least of the three opening balances of carry forward of previous month from (a) sales tax return; (b) Annex-H; and (c) the e-RPO generated;

    (ii) FASTER module’s non-synchronization with STRIVE i.e. Serial 7a and 7b of the Sales Tax Return; and

    (iii) Misapplication of section 8b to certain exporters in FASTER module.

    “These design flaws resulted in wide-going anxiety amongst the exporters’ community as large number of missing amounts claimed by them was not being reflected on their e-RPO after processing by the system,” the FBR said, adding that the matter having two dimensions, that is, improving the system design for future glitch –free processing of refund claims in FASTER, and devising a mechanism to deal with the past missing amount cases expeditiously and judiciously, has been resolved as follows:

    (i) Future Processing Module

    The problem of opening balance has been overcome by de-linking the opening balance of Sales Tax Return and Annex – H effectively, and linking it to the previous e-RPO alone. Going forward, this improvement in the FASTER module will not only solve the issue of missing amounts arising due to opening balances but also the issue of non-synchronizing of FASTER system with the Sales Tax Return and application of Section 8B on certain exporters.

    (ii) Process of Past Missing Amounts

    The issue of past missing amounts has been solved as under:

    (a) That, in all cases wherein the missing amounts could be effectively pulled up by the system, have already been communicated to taxpayers for re-filing after adequate modifications in the refund claims/sales tax return;

    (b) That, in all remaining cases, where a taxpayer believes that a material amount of his refund claims has been unaccounted for, he may apply to the Deputy Commissioner concerned; and

    (c) That, the deputy commissioner will examine the case and after due verification, will sanction the due amount.

    The FBR directed chief commissioners concerned to keep a complete log of the pending missing amount refund cases in their formations and ensure their disposal and processing in the shortest possible time as per law.

  • FBR disappoints return filing date extension seekers with new instructions

    FBR disappoints return filing date extension seekers with new instructions

    ISLAMABAD: Federal Board of Revenue (FBR) on Monday issued new instructions to its tax offices for extension in filing income tax returns in special cases.

    The new instructions have disappointed tax consultants, practitioners and business community, who approached the FBR with request to extend the last date for filing income tax return beyond December 08, 2020.

    As only one day is left for filing income tax return for tax year 2020 the FBR issued instructions to field offices to facilitate taxpayers in granting date extension provided that requests are filed with genuine reasons for non-compliance by due date.

    The FBR has already made it clear that it would not further extend the last date for filing income tax return beyond December 08, 2020 as statutory time of 90 days granted to taxpayers for making compliance.

    It is worth mentioning that Pakistan Tax Bar Association (PTBA) in its letter on December 02, 2020 urged the FBR to extend the last date up to January 31, 2020 due to multiple reasons. The primary reasons identified by the tax bar was miscalculation in tax rate for different taxpayers.

    Further, it also identified the extraordinary situation due to coronavirus which restricted workforce to half besides halting the working activities due to lockdown imposed in various parts of the country.

    However, the FBR on Monday issued instructions to all the field offices regarding manual receipt of applications for extension to file income tax return for tax year 2020.

    The FBR again clearly mentioned that it would not further extend the date for filing income tax returns for tax year 2020. However, as per the new instructions application may be filed manually to commissioner Inland Revenue covering many taxpayers for extension in date for filing tax returns.

    The FBR directed the tax offices:

    (i) That, every Inland Revenue field formation would establish a help desk to receive manual requests for extension;

    (ii) That, one request for extension addressed to chief commissioner Inland Revenue concerned could cover multiple taxpayers provide it contains taxpayers’ name; CNIC.NTN and identification of jurisdiction.

    (iii) That the option for filing online request for extension would also be available and can be availed to the maximum degree; and

    (iv) That, extension would be granted generously to the extent possible.

    The FBR further directed the chief commissioner to ensure proper receipt of all requests, grant of extension, and report the number of requests received, and the extension granted by December 10, 2020.

  • Persons not required to file return of income

    Persons not required to file return of income

    ISLAMABAD – Under the Income Tax Ordinance, 2001, there are specific categories of persons who are not required to file an annual income tax return, as clarified in Section 115 of the law. This provision offers relief to certain individuals based on humanitarian, age-related, or residency grounds.

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  • Taxpayers entitled to get date extension for filing tax return, wealth statement

    Taxpayers entitled to get date extension for filing tax return, wealth statement

    ISLAMABAD: Taxpayers, who are unable to file income tax return and wealth statement by due date, are entitled to get date extension under tax laws by submitting application with genuine reasons.

    The Federal Board of Revenue (FBR) a day earlier issued instructions to all the chief commissioners of Inland Revenue that it would not extend the date for filing income tax return and wealth statement beyond December 08, 2020.

    However, on the other hand tax bars and taxpayers are highlighting pressing issues such as calculation errors and many others on the IRIS portal making it difficult for filing income tax returns.

    Since only three days are left for the last date for filing income tax return for tax year 2018 i.e. December 08, 2020, and the FBR so far is not showing flexibility, those taxpayers, who believe they would not able to comply with the due date, should prepare themselves for submitting applications to concerned Commissioner IR to seek date extension.

    Section 119 of the Income Tax Ordinance, 2001 allows taxpayers to file an application with logical reasons to get date extension for filing income tax return and wealth statement.

    The Section 119 of the Ordinance is reproduced below:

    Section 119: Extension of time for furnishing returns and other documents

    (1) A person required to furnish —

    (a) a return of income under section 114 or 117;

    (d) a wealth statement under section 116,

    may apply, in writing, to the Commissioner for an extension of time to furnish the return, or statement, as the case may be.

    (2) An application under sub-section (1) shall be made by the due date for furnishing the return of income, or statement to which the application relates.

    (3) Where an application has been made under sub-section (1) and the Commissioner is satisfied that the applicant is unable to furnish the return of income, or statement to which the application relates by the due date because of —

    (a) absence from Pakistan;

    (b) sickness or other misadventure; or

    (c) any other reasonable cause,

    the Commissioner may, by order, in writing, grant the applicant an extension of time for furnishing the return, or statement, as the case may be.

    (4) An extension of time under sub-section (3) should not exceed fifteen days from the due date for furnishing the return of income, employer’s certificate, or statement, as the case may be, unless there are exceptional circumstances justifying a longer extension of time:

    Provided that where the Commissioner has not granted extension for furnishing return under sub-section (3) or sub-section (4), the Chief Commissioner may on an application made by the taxpayer for extension or further extension, as the case may be, grant extension or further extension for a period not exceeding fifteen days unless there are exceptional circumstances justifying a longer extension of time.

    (6) An extension of time granted under sub-section (3) shall not, for the purpose of charge of default surcharge under sub-section (1) of section 205, change the due date for payment of income tax under section 137.

  • No extension to return filing date; statutory time already given: FBR

    No extension to return filing date; statutory time already given: FBR

    ISLAMABAD: Federal Board of Revenue (FBR) on Friday said that it has already given statutory time to taxpayers for filing income tax returns for tax year 2020.

    Therefore, no further date will be extended beyond December 08, 2020.

    The FBR in an office order intimated about the date for return filing to all the chief commissioners of Inland Revenue. However, the FBR said that taxpayers should be facilitated who request date extension explaining failure to comply with due date.

    According to the provision Section 114 of the Income Tax Ordinance, 2001, annual tax return is required to be filed by on or before September 30 every year implying a period of 90 days to taxpayers to discharge their legal obligation.

    This year, since new income tax return form was uploaded on IRIS on September 08, 2020, the deadline for filing of the tax return was extended through Circular No. 04 of 2020 on September 30, 2020 till December 08, 2020, allowing the citizens full statutorily – mandated time of 90 days in one go; piecemeal repeated extensions compromise tax administration’s credibility and adversely affect taxpayers’ perception for the future, the FBR said.

    The FBR further said that provisions of Section 119(I) of the Ordinance stipulates that a “person required to furnish a tax return under Section 114 … may apply, in writing, to the Commissioner for an extension of time to furnish the return.”

    Since the date of filing of tax returns for the tax year 2020, being December 08, 2020 is retained as the final date for the purpose, it is absolutely necessary that commissioners should grant extension in all cases of hardship of any nature.

    In order to render the entire process of filing for extension and granting of time to taxpayers for filing of tax returns, IRIS is being modified to make it facilitative and less time-consuming, according to the office order.

    The Chief Commissioners have been directed to be fully vigilant and ensure that no requests for extension remain unattended in their jurisdiction.

  • KTBA declares online income tax return form as defective

    KTBA declares online income tax return form as defective

    KARACHI: Karachi Tax Bar Association (KTBA) on Thursday declared the available income tax return form at IRIS – the web portal of Federal Board of Revenue (FBR) – as defective and taxpayers are unable to file their returns for tax year 2020.

    “Needless to state that the return of income is still defective and incomplete as certain fields are missing to date. The time prescribed of 90 days under Section 118 to file return will not start until all defects in the return of income are completely removed and the return is error free and taken to have been finalized,” the KTBA said in a letter sent to the FBR chairman.

    It is pertinent to mention here that the last date for filing income tax returns for tax year 2020 was September 30, 2020. The FBR finalized the return form on September 08, 2020. On the demand of tax bars the FBR extended the last date by 90 days to December 08, 2020.

    The tax bar further said that to incorporate/correct certain fields/errors, appropriate Rules needs to be amended which can only be made through a notification as required under section 237(3) of the Income Tax Ordinance, 2001, the KTBA added.

    Muhammad Zeeshan Merchant, President, KTBA in its letter to the FBR chairman said that the incorrect computational issues in the return of income still persist and members were facing severe difficulties and were in extreme pressure because of two main situations, which are:

    (1) they cannot file the returns on the forms presently available on the IRIS, with wrong formulas, calculating erroneous tax; and

    (2) resurgence of the currently ongoing, since many past days, the dangerous life threatening second wave of COVID-19 which has not only gripped the taxpayers but have also affected the members of KTBA in particular and tax consultants in general and their staff.

    The KTBA through its letter explained in detail about the incorrect computation of tax under various heads of income.

    The tax bar said that the members were working very hard during such extraordinary extreme and testing time, however, due to non-removal of above irritants and rising COVID-19 cases, the members are unable to file their returns of income which could transpire in low number of returns that have been filed till date.