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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.

  • FBR notifies rules making mandatory for banks to share deposit, withdrawal details

    FBR notifies rules making mandatory for banks to share deposit, withdrawal details

    ISLAMABAD: Federal Board of Revenue (FBR) on Monday made it mandatory for banks to provide details of transactions including deposits and withdrawals during a month. Besides, the banks are also required to provide information of transactions made through credit/debit cards and details of persons making profit on debt through banking deposits.

    The FBR issued SRO 773(I)/2020 dated August 24, 2020 to make amendment in Income Tax Rules, 2002. The FBR previously issued draft of these rules through SRO 686(I)/2020 dated August 05, 2020.

    According to the amendments, the banks are required to provide information of persons who have deposited Rs10 million or more during a month.

    The information of person making transactions must include: CNIC/NICOP/Passport Number; Name/Title of Account; Resident/Non-Resident; Address; Telephone Number; Account Opening Date; Account Number (BAN); Business/Professional/Occupation; and Amount Deposited during a month.

    The banks are also required to provide similar information to the tax authority of a person making cash withdrawal exceeding Rs1 million during a month.

    According to the rules, the FBR also made it mandatory for banks to provide details of persons making payment through credit card payment of Rs250,000 or more during a month. The FBR sought similar information of persons making transactions from banks.

    Besides, the banks will furnish information of persons making profit on debt during a year. The banks will provide similar information of persons drawing profit on debt.

  • FBR allows sugar import at reduced rates of income tax, sales tax

    FBR allows sugar import at reduced rates of income tax, sales tax

    ISLAMABAD: Federal Board of Revenue (FBR) on Monday allowed import of sugar at reduced rate of income tax and sales tax for the quantity as approved by the government.

    The FBR issued SRO 770(I)/2020 and SRO 771(I)/2020 to amend Income Tax Ordinance, 2001 and Sales Tax Act, 1990 for allowed reduced rates of advance income tax at 0.25 percent and sales tax at one percent.

    Through SRO 771(I)/2020, the Second Schedule of Income Tax Ordinance, 2001 has been amended.

    In the Schedule, in Part- II, after the omitted clause (9A), the following new clause has been inserted, namely:—

    “(9AA) In respect of import of white crystalline sugar falling under H.S codes 1701.9910 and 1701.9920 from the 25th day of August, 2020 to the 15th day of November, 2020 (both days inclusive), tax under section 148 shall be collected at the rate of 0.25 percent provided that such imports shall not exceed three hundred thousand metric tons in aggregate, as per mode and manner prescribed by Ministry of Commerce during the said period.”

    Earlier, on August 20, 2020, the FBR issued SRO 750(I)/2020 to allow exemption of income tax on sugar import by Trading Corporation of Pakistan.

    It said: “The provisions of Section 148, in pursuance of the Cabinet Division in case No. 541/30/2020 dated August 04, 2020, not apply on import by the Trading Corporation of Pakistan of 300,000 metric tons of white sugar having PCT heading 1701.9910, 1701.9920, specification B.”

    Through S RO 770(I)/2020, it is allowed:

    The imported white crystalline sugar, falling in PCT headings 1701.9910 and 1701.9920, shall be chargeable to sales tax under clause (b) of sub-section (1) of section 3 of the Sales Tax Act, 1990, at the rate of one percent; and

    The exemption shall be applicable to white crystalline sugar to be imported during the period from 25th August, 2020 to 30th November, 2020 (both days inclusive), as per quantity, quality , mode and manner determined by the Ministry of Commerce and Textile, Government of Pakistan; and

    The imported white crystalline sugar falling in PCT headings 1701.9910 and 1701.9920 shall also be exempt from payment of minimum value addition tax as specified in the Twelfth Schedule to the Sales Tax Act, 1990.

    Earlier, the FBR issued SRO 751(I)/2020 dated August 20, 2020 to exempt whole of sales tax on import of 300,000 metric tons of white sugar (PCT 1701.9910, 1701.9920, specification B as per PSQCA standards) by Trading Corporation of Pakistan.

  • FBR updates withholding tax rates on purchase of domestic, international air tickets

    FBR updates withholding tax rates on purchase of domestic, international air tickets

    The Federal Board of Revenue (FBR) has updated the withholding tax rates on the purchase of domestic and international air tickets for the tax year 2021. According to the FBR, this update follows the incorporation of amendments made to the Income Tax Ordinance, 2001 through the Finance Act, 2020.

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  • FBR implements functional system for big taxpayers

    FBR implements functional system for big taxpayers

    ISLAMABAD: Federal Board of Revenue (FBR) has implemented a functional system separating functions of enforcement, audit and legal for big taxpayers.

    This functional system has only been introduced at the large taxpayers units (LTUs) where FBR makes assessment of taxpayers with high annual turnover.

    In order to implement the FBR has issued jurisdiction orders for LTUs Karachi, Lahore and Islamabad.

    According to an order issued on August 05, 2020 the FBR re-designated the jurisdiction of Chief Commissioner Inland Revenue and Commissioner Inland Revenue of LTU Karachi.

    The functional system has been implemented from August 10, 2020.

    The Commissioner Audit shall have powers and functions included:

    Income Tax:

    (a) Calling for information and audit of cases under Part VIII of chapter X, assessment, amendment of assessment and agreed assessment under Part II of Chapter X, charge of tax under Chapter II, computation of taxable income and total income under Chapter III and computation of taxable income under Part II of Chapter X arising out of such orders, rectification of orders related to audit and exercise of powers and functions under Section 175 and 176 or under any specific provision of law and rules provided in the Income Tax Ordinance, 2001 and Schedules thereto in respect of audit and assessment;

    (b) assessment under Section 143 and 144;

    (c) Computation of income chargeable to tax, determination of tax payable thereon, allowing credit of the tax already paid or of the determined refunds while exercising powers and performing function and mentioned at (a) and (b).

    (d) Best judgment assessment under Section 121 read with sub section 10 of Section 177 in respect of cases under audit;

    (e) Exercising powers to determine income under ‘Anti-Avoidance’ provisions contained in Chapter VIII;

    (f) Revision of assessment under Section 122A in respect of audit related cases;

    (g) imposition of penalty under Part X of Chapter X against defaulters in respect of cases under audit;

    (h) Perform any other functions in determining and computing income chargeable to tax and correct tax payable under the said Ordinance and Rules made thereunder;

    (i) To process / finalize complaints in respect of existing taxpayers’ cases;

    (j) Implementation of audit planning and audit strategy in accordance with audit guidelines and audit manuals developed by FBR or Member (Taxpayers’ Audit);

    (k) To grant approval for revision of return of income and wealth statements;

    (l) Disposal of external / internal audit paras related to audit;

    (m) Giving effect to orders of the appellate authorities / FTO orders related to audit;

    (n) Any other audit functions assigned the Chief Commissioner Inland Revenue or FBR for achieving the purpose of the Income Tax Ordinance, 2001 & Rules and Procedures framed thereunder.

    Sales Tax:

    (a) Audit and assessment of registered persons;

    (b) Risk based audit through profiling and analysis;

    (c) Recovery of un-disputed liability detected during audit;

    (d) Monitoring of audit schedule, etc.;

    (e) Maintenance and analysis of audit records and audit related database;

    (f) Post refund audit and scrutiny;

    (g) Deregistration audit;

    (h) Investigative audit in cases related for audit under Section 38 of the Sales Tax Act, 1990, and exercise of powers under Section 38A and 38B in respect of cases under audit;

    (i) Implementation of audit planning and audit strategy in accordance with audit guidelines and audit manuals developed by FBR or Member (Taxpayers’ Audit);

    (j) Disposal of external/internal audit paras related to audit;

    (k) Granting approval for the revision of returns;

    (l) Grant of extension in time/condonation of delay in respect of audit related functions as per the relevant provisions of Sales Tax Act and Rules made thereunder;

    (m) Exercise of powers under Section 38 regarding functions/assignments related to cases selected for audit;

    (n) Exercise of powers under section 45A(4) in respect of the cases related to audit functions;

    (o) Rectification of mistakes in respect of orders relating to audit functions;

    (p) Giving effect to orders of the appellate authorities/FTO orders relating to audit;

    (q) Any other audit function given by the Chief Commissioner Inland Revenue or FBR for achieving the purpose of Sales Tax Act, 1990 and Rules and Procedure framed thereunder.

    Federal Excise:

    (a) Audit and assessment of registered persons;

    (b) Risk based audit through profiling and analysis;

    (c) Maintenance and analysis of audit records and audit related database;

    (d) Implementation of audit planning and audit strategy in accordance with audit guidelines and audit manuals developed by FBR or Member (Taxpayers’ Audit);

    (f) Disposal of external / internal audit paras related to audit;

    (g) Granting approval for the revision of return;

    (h) Grant of extension in time / condonation of delay in respect of audit related functions as per the relevant provisions of Federal Excise Act 2005 and Rules made thereunder;

    (i) Rectification of mistakes in respect of orders relating to audit functions;

    (j) Exercise of powers and chapter IV of FED Act, 2005 regarding functions/assignments related to audit to the extent of conducting search of a premises;

    (k) Any other audit function given by Chief Commissioner Inland Revenue or FBR for achieving the purpose of Federal Excise Act, 2005 and Rules and procedures framed thereunder.

    The Commissioner Enforcement shall have powers and functions included:

    Income Tax:

    (a) Enforcement, recovery and collection of income tax;

    (b) Ensuring and enforcing compliance of the statutory provisions regarding filing of statutory returns, statements, furnishing of information, maintenance of prescribed accounts, documents and records; imposition of penalty and taking other action under the law against non-compliant taxpayers;

    (c) Best judgment assessment under Section 121, except in cases under audit;

    (d) Provisional Assessment under the Tenth Schedule;

    (e) Monitoring of deduction, collection and payment of tax at source by withholding/collecting agents; issuance of exemption/lower rate certificates and charging of tax on defaulting withholding/collecting agents;

    (f) Passing orders under Division IV of Part V of Chapter X of the Income Tax Ordinance, 2001;

    (g) Imposition of penalty and charging default surcharge for non-filing of statutory statements and default of withholding/payment of withholding taxes;

    (h) To make any other related action under the provisions of the Income Tax Ordinance, 2001 regarding withholding taxes;

    (i) Effect collection and recovery of tax under Part-IV and V of Chapter X;

    (j) Determine and issue refunds under Part-VI of Chapter-X including refund adjustments;

    (k) Rectification of mistakes in respect of orders relating to the enforcement functions;

    (l) Giving effect to orders of the appellate authorities / FTOs orders relating to enforcement;

    (m) Rectification of cases not related to audit;

    (n) Launching prosecution under Part-XI of Chapter-X;

    (o) Disposal of international and external audit observation / paras other than those related to audit and assessment;

    (p) Imposition of penalty under Part-X of Chapter-X except the cases under audit;

    (q) Revision of assessment under Section 122A in respect of enforcement related cases;

    (r) Grant of extension in filing of returns/statements;

    (s) Any other powers and functions not specifically assigned to any other commissioner Inland Revenue;

    (t) Exercise powers under Section 175 and 176 in respect of cases other than cases under audit;

    (u) Any other enforcement related powers and functions assigned by the Chief Commissioner Inland Revenue or FBR for achieving the purpose of the Income Tax Ordinance, 2001 and Rules and procedures framed thereunder.

    Sales Tax:

    (a) Enforcement and collection of sales tax;

    (b) Recovery action under section 11 of the Sales Tax Act, 1990 against non-filers and short-filers, and any other auction under Section 11 for enforcement related functions, except the cases under audit;

    (c) Suspension, black listing and deregistration of the registered persons;

    (d) Enforcement of returns;

    (e) Sales Tax registration;

    (f) Processing and sanctioning of refund claims filed under Section 10 and 66 of the Sales Tax Act, 1990;

    (g) Reporting of Revenues;

    (h) Disposal of international and external audit observations/paras related to enforcement functions;

    (i) Disposal of CREST discrepancies;

    (j) Industrial Surveys;

    (k) Powers and functions regarding investigation, prosecution and arrest of a person;

    (l) Implementation of enforcement planning and strategy in accordance with guidelines developed by the FBR;

    (m) Extension in time/condonation of delay regarding filing of returns/refund claims;

    (n) Authorization of zero rated/concessionary imports and local purchases;

    (o) Exercise of powers under Section 38, 38A and 38B regarding functions/assignments related to enforcement;

    (p) Exercise of powers under section 40B and 40C;

    (q) Exercise of powers under section 45A(4) in respect of cases related to enforcement functions;

    (r) Giving effect to orders of appellate authorities / FTO orders relating to enforcement;

    (s) Rectification of mistakes in respect of orders relating to enforcement functions;

    (t) Any other powers and functions not specifically assigned to any other commissioner Inland Revenue;

    (u) Any other enforcement related power function assigned by the Chief Commissioner Inland Revenue or FBR for achieving the purpose of Sales Tax Act 1990 and Rules made there under.

    Federal Excise:

    (a) Enforcement and Collection of Federal Excise;

    (b) Processing and sanctioning of refund claims filed under Federal Excise Act 2005;

    (c) Enforcement of returns and registration of persons liable to be registered;

    (d) Reporting of Revenue;

    (e) Disposal of internal and external audit observations/paras/Crest discrepancies related to enforcement functions;

    (f) Implementation of enforcement planning and strategy in accordance with guidelines developed by the FBR or Member (Enforcement and Accounting);

    (g) Extension in time / condonation of delay for filing of return;

    (h) Exercise of powers under chapter IV of the FED Act 2005 with the exception of the powers and functions assigned to Commissioners Inland Revenue Audit.

    (i) Rectification of mistakes in respect of orders relating to enforcement functions;

    (j) Any other powers and functions not specifically assigned to any other Commissioner Inland Revenue;

    (k) Any other enforcement related power and function assigned by the Chief Commissioner Inland Revenue or FBR for achieving the purpose of Federal Excise Act, 2005 and Rules and Procedures framed thereunder.

    The Commissioner Legal shall have powers and functions included:

    Income Tax:

    (a) Defending appeals before Commissioner Inland Revenue (Appeals), instituting and defending departmental appeals and references under Part-III of Chapter X, prosecution of cases instituted under any provision of the Income Tax Ordinance, 2001, filing and pursuing CPLAs in the Supreme Court of Pakistan, and representing the department in the process of liquidation;

    (b) Defending complaints before Federal Tax Ombudsman (FTO);

    (c) File/defend presentations before the President of Pakistan;

    (d) Appoint legal advisors and assign cases, wherever required, for representation before appellate fora;

    (e) Grant recognition/approval to provident funds, superannuation funds, and gratuity funds under the Sixth Schedule; and exercise all the powers under the said Schedule;

    (f) Grand of approval to Non-Profit Organizations under Section 2(36).

    (g) Any other legal functions assigned by the Chief Commissioner Inland Revenue or the FBR for achieving the purposes of Income Tax Ordinance, 2001 and Rules made thereunder.

    Sales Tax:

    (a) Preparation, institution, follow up and defense of cases before Supreme Court, High Court, Appellate Tribunal;

    (b) Preparation, follow-up and defense of cases before Commissioner (Appeals) and Alternative Dispute Resolution Committee;

    (c) Matters relating to Federal Tax Ombudsman (FTO); and

    (d) Any other legal function assigned by the Chief Commissioner Inland Revenue or the FBR for achieving the purpose of Sales Tax Act, 1990 and rules made thereunder.

    Federal Excise:

    (a) Preparation, institution, follow up and defense of cases before Supreme Court, High Court, Appellate Tribunal;

    (b) Preparation, follow-up and defense of cases before Commissioner (Appeals) and Alternative Dispute Resolution Committee;

    (c) Matters relating to Federal Tax Ombudsman (FTO); and

    (d) Any other legal function assigned by the Chief Commissioner Inland Revenue or the FBR for achieving the purpose of FED Act 2005 and rules made thereunder.

  • Withholding tax rate on educational fee updated

    Withholding tax rate on educational fee updated

    ISLAMABAD: Federal Board of Revenue (FBR) has updated withholding tax rate on payment of educational fee for tax year 2021.

    The FBR issued withholding tax card 2020-2021 (updated up to June 30, 2020) after incorporating amendment to Income Tax Ordinance, 2001 through Finance Act, 2020.

    Under Section 236I of Income Tax Ordinance, 2001, every person preparing fee voucher or challan shall collect/deduct withholding tax from the person depositing/paying fee at the time of payment of fee. The tax paid as withholding tax is adjustable against payable tax liability.

    Every Educational institution has to collect advance tax on the amount of fee (inclusive of tuition fee & all charges received by the educational institution, by whatever name called, excluding the amount which is refundable) exceeding Rs. 200,000 per annum ( other than an amount paid by way of scholarship) at the rate of five percent from the persons not appearing in the Active Taxpayers List (ATL).

    Through Finance Act, 2020 the persons filing income tax returns and are on the ATL are no more require to pay advance tax at the time of paying educational fee.

  • Withholding tax rates on sales made to retailers, wholesalers, distributors

    Withholding tax rates on sales made to retailers, wholesalers, distributors

    ISLAMABAD: Federal Board of Revenue (FBR) has issued withholding tax rates on sales made by manufacturers to retailers, wholesalers and distributors during tax year 2021.

    The FBR issued the withholding tax card 2020-2021 (updated up to June 30, 2020) incorporating amendment made to Income Tax Ordinance, 2001 made through Finance Act, 2020.

    Under section 236G of the Ordinance, every manufacture or commercial importer of electronics sugar, cement, iron and steel products, fertilizers, motorcycles, pesticides, cigarettes glass, textile, beverages, paint or foam sector shall collect/deduct withholding tax from distributor, wholesaler and dealer at the time of sale.

    Advance tax has to be collected from wholesaler, distributor and dealers at the time of sales made to them:

    In case of fertilizers the withholding tax rate shall be 0.7 percent of gross amount. The tax rate shall be increased by 100 percent in csae persons are not on the Active Taxpayers List (ATL).

    In case of other than fertilizers the tax rate shall be 0.1 percent of gross amount. The tax rate shall be 0.2 percent of gross amount if persons not on the ATL.

    The tax withheld under this section shall be adjustable.

    Under Section 236H of the Ordinance, every manufacture ,distributor, dealer, wholesaler or commercial importer of electronics, sugar, cement, iron & steel products, motorcycles, pesticides, Cigarettes glass, textile, beverages, paint or foam sector shall collect/deduct from every retailer at the time of sale.

    Advance tax has to be collected from retailers at the time of sales made to them:

    In case of electronics the withholding tax rate shall be 1 percent of the gross amount and the rate shall be 2 percent of gross amount if persons are not on the ATL.

    The withholding tax rate under this section for others shall be 0.5 percent of gross amount and the rate shall be 1 percent in case persons are not on the ATL.

    The tax collected/deducted under this section shall be adjustable.

    Under Section 236HA of the Ordinance, every person selling petroleum products shall collect/deduct withholding tax from every petrol pump operator or distributor, where such operator or distributor is not allowed a commission or discount at the time of sale of such products.

    Advance tax has to be collected on ex-depot sale price of such petroleum products at the rate of 0.5 percent of ex-depot sale price and the rate shall be 1 percent of ex-depot sale price.

    The withholding tax collected/deducted under this section shall be final.

  • FBR asks exporters to resubmit claims for stuck-up refunds

    FBR asks exporters to resubmit claims for stuck-up refunds

    ISLAMABAD: Federal Board of Revenue (FBR) on Thursday offered exporters to resubmit their refund claims which were stuck up due to any reason.

    The FBR said that sales tax refund claims of exporters, which were stuck up at pre-processing stage in Fully Automated Sales Tax e-Refund (FASTER) system due to any reason including erroneous filing stand rolled back to provide an opportunity to exporters to review and resubmit their claims after removing shortcomings by September 20, 2020.

    All such refund claimants have also been informed electronically, the FBR added.

    Two days ago, the FBR issued instructions to all chief commissioners Inland Revenue regarding sales tax refunds.

    The FBR said that it had been observed that sales tax refund claims prior to July 2019 were pending for first processing as well as deferred processing, requiring over-ruling of objections raised by Risk Management System (RMS).

    In order to liquidate the pendency of deferred claims, the FBR has already issued circular No. 01/2020 dated August 04, 2020 for rule-based over-ruling objections. “The purpose of circular is to bring uniformity into the system, and to avoid discretion and delay in processing of refunds,” the FBR added.

    The FBR also informed the chief commissioners that processing of refunds should not be stopped on pretext that some case is pending against the claimant at any adjudication or appellate forum unless there is specific stay against processing of refunds. “In cases where the discrepancies pointed out by the department relating to refund claims are held twice in favor for the claimant, refunds be processed even if field office has preferred further appeal, unless specifically barred by the appellate forum or the board.”

    The FBR directed that field formations should ensure that pending refunds of claimants are processed in routine on the basis of Circular No. 01/2020.

  • FBR exempts sales tax, income tax on sugar import

    FBR exempts sales tax, income tax on sugar import

    ISLAMABAD: Federal Board of Revenue (FBR) on Thursday exempted sales tax and income tax on import of sugar in compliance with the government decision to lower the price of the commodity.

    The FBR issued SRO 750(I)/2020 to exemption income tax and SRO 751(I)/2020 to exempt sales tax.

    Through SRO 750(I)/2020, an amendment has been made to Second Schedule of Income Tax Ordinance, 2001.

    As per the amendment a new clause 12G has been inserted to the second schedule, which states: “(12G) The provisions of Section 148 shall, in pursuance of the Cabinet Decision dated August 04, 2020, not apply on import by the Trading Corporation of Pakistan of 300,000 metric tons of white sugar having PCT heading 1701.9910, 1701.9920, specification B.”

    As per SRO 751(I)/2020, the same specification and PCT heading the import of sugar has been exempted from whole of sales tax.

    The Economic Coordination Committee (ECC) of the Cabinet in its meeting held last week of July 2020 allowed import of up to 300,000 metric tonnes of white sugar to maintain buffer stocks in the country.

    The permission was given at the ECC meeting in Islamabad with Adviser on Finance Dr. Abdul Hafeez Shaikh in the chair.

    The procurement and other modalities of sugar import will be decided by a three-member committee, comprising Secretary Industries and Production, Secretary Commerce and Secretary Finance.

  • FBR to reward for identifying fake, flying invoices

    FBR to reward for identifying fake, flying invoices

    ISLAMABAD: Federal Board of Revenue (FBR) on Wednesday announced to give reward money to those people who identify culprits involved tax evasion through fake and flying invoices.

    A statement issued by the revenue body said that it had encouraged the people to come forward and reveal the identity of the people who are involved in causing tax evasion by using fake and flying invoices.

    “FBR will grant reward to such whistle blowers under its Reward Rules,” it said.

    The name of the whistle blowers will be kept secret.

    The information can be given to the Director Intelligence and Investigation Inland Revenue on office number 0519260167 and fax number 0519260156.

    The FBR announced in the wake of strict action launched against tax evaders involving in fake and flying business.

    In this regard FBR chairman issued directions to all the FBR field offices to expedite operation against tax evasion and play active role to stop the menace of fake and flying invoices.

    Meanwhile, implementing the directions, the Karachi Field Office of FBR has taken action against a fake business unit which was involved in evading duties and taxes at import stage under SRO 1125.

    The said unit was also issuing fake and flying invoices in the market due to which the buyers were claiming input adjustment and refunds.

    The said unit has committed tax fraud and caused heavy loss of Rs. 210 million to the pubic exchequer. The principal accused Mubarak Khan has been arrested.

    Similarly, another case of tax evasion of Rs. 105 million has been unearthed. The tax evasion was taking place by issuance of fake and flying invoices.

    FBR Multan office has confiscated the counterfeit and non-duty paid cigarettes. In another case, FBR Karachi office has received a complaint of Rs. 1 billion money laundering. The investigations are underway.

  • FBR issues draft return forms for tax year 2020

    FBR issues draft return forms for tax year 2020

    ISLAMABAD: Federal Board of Revenue (FBR) on Wednesday issued draft forms for filing income tax returns tax year 2020.

    The FBR issued SRO 745(I)/2020 and invited comments from stakeholders on the draft return forms within seven days from the date of issuance of the draft forms.

    The FBR issued the draft forms filing annual income tax returns electronically by salaried persons, business individuals, association of persons (AOPs) and companies.

    The FBR said that the return form shall be applicable for tax year 2020.

    The draft return forms tax year 2020 can be downloaded here.