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.

TAX YEAR 2021: FBR updates tax rates for motor vehicles registration, transfers

ISLAMABAD: Federal Board of Revenue (FBR) has updated advance tax rates for registration and transfer of motor vehicles during tax year 2021.

The FBR issued the tax rates as updated up to June 30, 2020 and will remain applicable during July 01, 2020 to June 30, 2021, if not amended.

The advance tax on motor vehicles at the time of registration and transfer of registration is governed under Section 231B of Income Tax Ordinance, 2001, which states:

Section 231B. Advance tax on private motor vehicles.—

(1) Every motor vehicle registering authority of Excise and Taxation Department shall collect advance tax at the time of registration of a motor vehicle, at the rates specified in Division VII of Part IV of the First Schedule:

“Provided that no collection of advance tax under this sub-section shall be made after five years from the date of first registration as specified in clauses (a), (b) and (c) of sub-section (6).”

(1A) Every leasing company or a scheduled bank or a non-banking financial institution or an investment bank or a modaraba or a development finance institution, whether shariah compliant or under conventional mode, at the time of leasing of a motor vehicle to a “person whose name is not appearing in the active taxpayers’ list”, either through ijara or otherwise, shall collect advance tax at the rate of four per cent of the value of the motor vehicle.

(2) Every motor vehicle registering authority of Excise and Taxation Department shall collect advance tax at the time of transfer of registration or ownership of a private motor vehicle, at the rates specified in Division VII of Part IV of the First Schedule:

Provided that no collection of advance tax under this sub-section shall be made on transfer of vehicle after five year from the date of first registration in Pakistan.

(3) Every manufacturer of a motor “vehicle” shall collect, at the time of sale of a motor car or jeep, advance tax at the rate specified in Division VII of Part IV of the First Schedule from the person to whom such sale is made.

(4) Sub-section (1) shall not apply if a person produces evidence that tax under sub-section (3) in case of a locally manufactured vehicle or tax under section 148 in the case of imported vehicle was collected from the same person in respect of the same vehicle.

(5) The advance tax collected under this section shall be adjustable:

Provided that the provisions of this section shall not be applicable in the case of –

(a) the Federal Government;

(b) a Provincial Government;

(d) a foreign diplomat; or

(e) a diplomatic mission in Pakistan.

“(6) For the purposes of this section the expression “date of first registration” means—

(a) the date of issuance of broad arrow number in case a vehicle is acquired from the Armed Forces of Pakistan;

(b) the date of registration by the Ministry of Foreign Affairs in case the vehicle is acquired from a foreign diplomat or a diplomatic mission in Pakistan;

(c) the last day of the year of manufacture in case of acquisition of an unregistered vehicle from the Federal or a Provincial Government; and

(d) in all other cases the date of first registration by the Excise and Taxation Department.

(7) For the purpose of this section “motor vehicle” includes car, jeep, van, sports utility vehicle, pick-up trucks for private use, caravan automobile, limousine, wagon and any other automobile used for private purpose.”

Explanation.— For the removal of doubt, it is clarified that a motor vehicle does not include a rickshaw, motorcycle-rickshaw and any other motor vehicle having engine capacity upto 200cc.

(1) The rate of tax under sub-sections (1) and (3) of section 231B shall be as set out in the following Table:–

S. No.	Engine capacity	Tax
(1)	(2)	(3)
1.	upto 850cc	Rs. 7,500
2.	851cc to 1000cc	Rs. 15,000
3.	1001cc to 1300cc	Rs. 25,000
4.	1301cc to 1600cc	Rs. 50,000
5.	1601cc to 1800cc	Rs. 75,000
6.	1801cc to 2000cc	Rs. 100,000
7.	2001cc to 2500cc	Rs. 150,000
8.	2501cc to 3000cc	Rs. 200,000
9.	Above 3000cc	Rs. 250,000

(2) The rate of tax under sub-sections (2) of section 231B shall be as follows:–

S. No.	Engine capacity	Tax
(1)	(2)	(3)
1.	upto 850cc	–
2.	851cc to 1000cc	5,000
3.	1001cc to 1300cc	7,500
4.	1301cc to 1600cc	12,500
5.	1601cc to 1800cc	18,750
6.	1801cc to 2000cc	25,000
7.	2001cc to 2500cc	37,500
8.	2501cc to 3000cc	50,000
9.	Above 3000cc	62,500

Provided that the rate of tax to be collected shall be reduced by 10 percent each year from the date of first registration in Pakistan.

October 11, 2020

Salient features of amnesty scheme for housing, construction sector
KARACHI: The government has announced an amnesty scheme for investors in order to boost housing/construction activities in the country at a faster pace.

Under this package sources of investment made to a housing project may not be asked if the investment made through a valid bank account by December 31, 2020 and projected identified for the investment is completed by September 2022.

According to official documents made available to PkRevenue.com following are the salient features of the scheme allowed under Section 100D of the Income Tax Ordinance, 2001:

Fixed Tax Regime for builders and developers
- Tax liability computed on the basis of square feet/yard, to be paid in quarterly installments
- New projects as well as existing incomplete project can opt for the scheme up to December 12, 2020
- Projects to be registered with Federal Board of Revenue (FBR) online through IRS portal
- Existing incomplete projects have to self declare the percentage of completion of project on the relevant date
- Projects must be completed by September 30, 2022.
Exemptions/Benefits:
- Exemption from requirement of withholding tax on purchase of building material except cement and steel
- Exemption from requirement of withholding tax on acquisition of services relating to construction except those from companies
- Permission to incorporate ten times of fixed tax paid as income in the books of accounts
- 90 percent reduction in fixed tax liability for low cost housing
- Dividend paid by builder or developer companies shall not be liable to tax and there shall be no withholding on the payment of these dividends
Exemption from Section 111 of the Income Tax Ordinance, 2001 for individuals:
- Money is deposited in a new bank account up to December 31, 2020; or
- Having ownership/title of the land invested as on April 17, 2020.
Exemption from Section 111 of the Income Tax Ordinance, 2001 for Company / Association of Persons (AOP):
- By company/AOP if:
- A single purpose company or AOP is registered between April 17, 2020 and December 31, 2020.
- Money is invested through a crossed banking instrument up to December 31, 2020; or
- Land owned by the partner/shareholder is transferred to the company / AOP up to December 12, 2020.
- Money or land invested is utilized in the project
- Project is completed by September 30, 2022
- In case of builder, grey structure is completed (top roof as per plan is laid)
- In case of a developer:
- Landscape is completed and all roads are laid up to sub-grade level
- At least 50 percent plots have been sold and at least 40 percent sale receipts have been received.
Exemption from Section 111 on purchase of:
- Plot, if:
- Plot is purchased before December 31, 2020 (complete payment is made through banking channel before December 31, 2020)
- Construction on such plot is started before December 31, 2020 and completed before September 30, 2022
- Building, if:
- Purchase is from a registered project and buyer is the first purchaser of the building
- Purchase is made before September 30, 2022 (complete payment is made through banking channel)
Exemption from Section 111 is not available for:
- Public office holders
- Public companies, REITs and companies whose income is exempt
- Proceeds of crime.
October 11, 2020
Tax on taxable income explained

ISLAMABAD: Federal Board of Revenue (FBR) has explained taxable income for collection of tax from persons or corporate entities. The FBR issued Income Tax Ordinance, 2001 updated June 30, 2020 incorporating amendments brought through Finance Act, 2020.
(more…)

October 10, 2020
FBR projects 12 percent tax to GDP ratio in three years

ISLAMABAD: The Federal Board of Revenue (FBR) is projecting tax-to-GDP ratio at 12 percent in three years after slippage of the ratio to a single digit in 2019/2020, a report said.
(more…)

October 10, 2020
FBR grants tax exemption of Rs1.1 billion on gratuity payments

Islamabad – The Federal Board of Revenue (FBR) has granted a substantial exemption of Rs1.11 billion on gratuity payments during the tax year 2020.
(more…)

October 9, 2020
Airlines’ pilots get Rs430 million tax concession on allowances

Pilots of Pakistani airlines collectively availed tax concessions amounting to Rs430 million during the tax year 2020 on allowances received from their respective employers, according to official data made available to PkRevenue.com.
(more…)

October 7, 2020
Tax exemption to LNG Terminals costs Rs732 million

ISLAMABAD: Federal Board of Revenue (FBR) has granted exemption of Rs732 million to LNG Terminal Operators and Terminal Owners during tax year 2020.

According to official documents made available to PkRevenue.com, the FBR allowed the exemption to two taxpayers engaged in LNG Terminal Operators and Terminal Owners.

The exemption is available from total income under Clause 141 of Part 1 of Second Schedule, Income Tax Ordinance, 2001.

The FBR said that profit and gains derived by LNG Terminal Operators and Terminal Owners are exempt under the income tax laws.

October 7, 2020
FBR not to ask source of money invested for housing projects by December 31: MTO Chief

KARACHI: Federal Board of Revenue (FBR) will not ask source of money to be invested till December 31, 2020 in a new housing projects, Abdul Hameed Memon, Chief Commissioner, Inland Revenue, Medium Taxpayers Office (MTO) said on Wednesday.

“This is a unique program announced by the Prime Minister of Pakistan. The tax rates have also been reduced under this package,” he said while addressing an event organized by Association of Builders and Developers (ABAD).

However, he said that those who availed the scheme will require to complete the project by September 2022.

He urged the ABAD members to avail the opportunity as growth in the construction sector would generate employment.

He said that the government through amendment in tax laws had announced the package for the construction sector. “The package has two types of benefits: immunity from questioning the source of investment; and reduced rate of income tax in the shape of a fixed tax regime for builders and developers.”

The chief commissioner said that the package would help in enhancing activities in the construction sector and result in significant economic growth.

Earlier, Abdul Hafeez, Commissioner Inland Revenue, MTO gave a detailed presentation to builders and developers on the immunity from Section 111 of Income Tax Ordinance, 2001. This section attracts penal action for persons who conceal assets from tax authorities.

The commissioner said that the section 111 would not apply to an individual if the person deposited the money in a new bank account up to December 31, 2020 or having ownership / title of the land invested as on April 17, 2020.

In case of a company or an Association of Persons (AOP), the section shall not apply if a single purpose company or AOP is registered between April 17, 2020 and December 31, 2020.

The commissioner outlined other exemptions and benefits under the tax package as the investors would have exemption from the requirement of withholding tax on purchase of building material except cement and steel.

They will also have exemption from the requirement of withholding tax on acquisition of services relating to construction except those from companies.

The persons, who are engaged in low cost housing projects, will be granted 90 percent reduction in fixed tax liability, the commissioner said.

Besides, dividends paid by builder or developer companies shall not be liable to tax and there shall be no withholding on the payment of these dividends, he added.

Chairman Association of Builders and Developers of Pakistan (ABAD) Fayyaz Ilyas has demanded of the Federal Government to extend date of registration for Incentive Package of Naya Pakistan Housing Scheme upto 31st December 2021 and also extend time period for the completion of housing projects under this scheme.

October 7, 2020
Karachi Chamber resents FBR’s decision to install surveillance cameras

The Karachi Chamber of Commerce and Industry (KCCI) has expressed strong discontent over the recent decision by Federal Board of Revenue (FBR) to monitor production activities through cameras directly connected to the main tax database.
(more…)

October 7, 2020
Teachers, researchers avail Rs2.42 billion income tax exemption

ISLAMABAD: Teachers and researchers have availed tax exemption to the tune of Rs2.42 billion on their income during Tax Year 2020, official sources said on Tuesday.

Under Clause 1(2) of Part 3 of the Second Schedule of Income Tax Ordinance, 2001, full time teachers or researchers are entitled for reduction in tax liability since 2006 and there is no sunset clause attached to this concession.

The FBR said that the tax payable by a full time teacher or a researcher, employed in a non profit education or research institution duly recognized by Higher Education Commission, a Board of Education or a University recognized by the Higher Education Commission, including government research institution, shall be reduced by an amount equal to 25 percent of tax payable on his income from salary.

Data of teachers is taken from Pakistan Bureau of Statistics (PBS) website, for the following categories of teachers: Arts/Science colleges, professional colleges, universities, secondary vocational institutions. Teachers in secondary schools have not been considered, being relatively less paid.

Latest available data is for year 2017. For 2018, an 8 percent multiplier on number of teachers is used keeping in view increase in number of teachers over past years.

Average annual salaries for different categories of teachers have been taken as following:

– Arts/Science College: Rs. 900,000

– Professional College: Rs. 1,200,000

– University: Rs. 2,400,000

– Secondary vocational institutions: Rs. 1,800,000

Separate data for researchers is not available, the FBR said.

The FBR said that approximate 133,255 teachers and researchers had availed the tax concession.

October 7, 2020