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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 updates withholding tax rates on sale, purchase of immovable properties

    FBR updates withholding tax rates on sale, purchase of immovable properties

    ISLAMABAD: Federal Board of Revenue (FBR) has updated the withholding tax rates on sale and purchase of immovable properties for tax year 2021.

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

    Under Section 236C of Income Tax Ordinance, 2001 the withholding tax is to be collected on seller of immovable property.

    Every person registering, recording or attesting or transfer including local authorities, housing authorities, housing society co-operative society and registrar or properties shall collect withholding tax from seller of immoveable property at the time of registering, recording or attesting the transfer.

    The tax rate shall be one percent of the gross amount of the consideration received. In case of person not appearing on the Active Taxpayers list (ATL) the tax rate shall be two percent of the gross amount of the consideration received.

    The withholding tax shall be minimum tax if property is acquired and disposed off within the same tax year; otherwise the tax shall be adjustable.

    Advance tax, under this section, is not be collected if the immovable property is held for a period exceeding four years.

    Under Section 236K of Income Tax Ordinance, 2001 the withholding tax shall be collected from purchaser of immovable property.

    Under Section 236K (1) every person registering, recording or attesting or transfer including local authorities, housing authorities, housing society, co-operative society and registrar or properties shall deduct/collect withholding tax from the purchaser of immovable property at the time of registering, recording or attesting the transfer.

    The withholding tax rate shall be one percent of the fair market value. In case the person is not on the ATL the tax rate shall be two percent of the fair market value.

    The withheld tax shall be adjustable against total payable tax liability.

    Section 236K (3) of the Ordinance deals with advance tax on payment of installment in respect of purchase of allotment of immovable property where transfer is to be effected after making payment of all installments.

    Any person responsible for collection of payment in installment shall deduct/collect from the purchaser or allottee of the immovable property at the time of payment of installment.

    The tax rate shall be one percent of the fair market value. In case the person is not on the ATL the tax shall be two percent of the fair market value.

    The tax shall be adjustable against total tax liability.

  • FBR apologizes diplomat over show cause notice

    FBR apologizes diplomat over show cause notice

    ISLAMABAD: Federal Board of Revenue (FBR) has apologized over sending show cause notice to a foreign diplomat by an adjudication collection.

    In a tweet message, FBR spokesman said that it had been noticed that Customs Collectorate (Adjudication) Islamabad had sent a notice to the foreign diplomat.

    “Sending a notice to a foreign diplomat is against Vienna Convention which provides immunity to the foreign government officials and representatives of an embassy,” the spokesman said.

    On the directives of the FBR the Customs office amending the show cause notice and seizure report.

    The spokesman said that in the due course the FBR apologized the foreign diplomat over the act of the collectorate.

  • FBR chairman to hold e-Katcheri for taxpayers

    FBR chairman to hold e-Katcheri for taxpayers

    ISLAMABAD: Javaid Ghani, Chairman, Federal Board of Revenue (FBR) will listen to problems faced by taxpayers through e-Katcheri on Friday August 21, 2020.

    The chairman will be available for taxpayers through telephone number # 051-111772772 between 10:00AM to 11:00AM on Friday August 21, 2020..

    The program has been launched in compliance with the directive of the prime minister to conduct e-Khuli Katcheri to stay in contact with the public by all available means and provide them accessible platform to raise their issues for timely resolution.

    The taxpayers facilitation wing of the FBR recently circulated about the program directing that e-Katcheri would be conducted by every tier of FBR in the second week of every month on regular basis.

    The FBR directed all the tax offices to ensure that all proceedings of the e-Katcheri are property recorded and tasks should be assigned to concerned officers accordingly.

    The tax offices have also been directed to submit performance report on the outcome of the meeting with public.

    In the wake of COVID-19, the tax authorities shall conduct one e-Katcheri at all tiers of FBR in the second week of every month. In the backdrop of COVID-19, only e-Katcheris shall be conducted for the time being until normalcy of the situation.

  • Withholding tax rates updated for telephone subscribers

    Withholding tax rates updated for telephone subscribers

    ISLAMABAD: Federal Board of Revenue (FBR) has updated withholding tax rates for tax year 2021 to be paid by telephone subscribers for using phone services.

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

    Under Section 236 of Income Tax Ordinance, 2001 person preparing telephone / Internet bill or issuing / selling prepared card for mobile phones / Internet shall deduct/collect withholding tax from telephone subscribers, Internet subscriber, purchaser of Internet Prepaid Cards, telephone subscriber and purchaser of prepaid telephone cards along with payment of telephone bill or at the time of issuance of or sales of prepared cards.

    The withholding tax rates shall be:

    (a) Telephone subscribers and internet

    Monthly bill up to Rs, 1000: Nil

    Bill exceeding 1,000: 10 percent

    (b) in the case of subscriber of internet, mobile telephone and pre-paid internet or telephone card the withholding tax rate shall be 12.5 percent of the amount of bill or sales price of internet pre-paid card or prepaid telephone card or sale of units through any electronic medium or whatever form.

    The collected/deducted withholding tax shall be adjustable against total payable tax liability.

  • Tax to GDP ratio slips to 11.4 percent in FY20

    Tax to GDP ratio slips to 11.4 percent in FY20

    ISLAMABAD: Tax to GDP ratio has slipped to 11.4 percent in fiscal year FY20 (2019/2020) when compared with 11.6 percent in the preceding fiscal year, according to statistics released by the finance ministry.

    The size of Gross Domestic Product (GDP) has been measured at Rs41,727 billion in fiscal year 2019/2020 as compared with Rs38,559 billion in the preceding fiscal year.

    The total tax collection was recorded at Rs4,747 billion during the fiscal year under review as compared with Rs4,473 billion in the preceding fiscal year.

    The tax contribution of the federal government was recorded at Rs4,334 billion and contribution of the provincial government was Rs413 billion during fiscal year 2019/2020.

    Whereas, the tax contribution of the federal government was at Rs4,061.62 billion and the contribution of the provincial governments was Rs402 billion in the fiscal year 2018/2019.

    The collection of the Federal Board of Revenue (FBR) was at Rs3,998 billion in the fiscal year 2019/2020 as against Rs3,829 billion in the preceding fiscal year.

    However, the FBR’s revenue collection to the GDP fell to Rs9.58 percent in fiscal year 2019/2020 as against 9.93 percent in the preceding fiscal year.

    The collection of direct taxes was recorded at Rs1,524 billion in fiscal year 2019/2020 as compared with Rs1,445.6 billion in the preceding fiscal year.

    Out of the total direct taxes, the collection of property tax was at Rs9.65 billion as compared with Rs7.02 billion.

    The collection of tax on goods and services increased to Rs1,855 billion in fiscal year 2019/2020 as compared with Rs1707 billion in the preceding fiscal year.

    The collection of other taxes recorded increase to Rs732.58 billion in fiscal year 2019/2020 as compared with Rs627.65 billion in the preceding fiscal year.

    The duty/tax collection on the international trade recorded decline to Rs626.38 billion in fiscal year 2019/2020 as compared with Rs685 billion in the preceding fiscal year.

  • FBR updates withholding tax rates for electricity consumers

    FBR updates withholding tax rates for electricity consumers

    ISLAMABAD: Federal Board of Revenue (FBR) has updated withholding tax rate on the amount paid for electricity bills by commercial, industrial and domestic consumers.

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

    Under Section 235 of Income Tax Ordinance, 2001 person preparing electricity bill shall collect withholding tax from commercial and Industrial consumers of electricity along with payment of electricity consumption charges.

    The withholding tax rates for gross amount of Electricity Bill of Commercial and Industrial consumer:

    Does not exceed Rs. 400: Rs. 0

    Exceeds Rs. 400 but does not exceed Rs. 600: Rs. 80

    Exceeds Rs. 600 but does not exceed Rs. 800: Rs. 100

    Exceeds Rs. 800 but does not exceed Rs. 1000: Rs. 160

    Exceeds Rs. 1000 but does not exceed Rs. 1500: Rs. 300

    Exceeds Rs. 1500 but does not exceed Rs. 3000: Rs. 350

    Exceeds Rs. 3000 but does not exceed Rs. 4,500: Rs. 450

    Exceeds Rs. 4500 but does not exceed Rs. 6000: Rs. 500

    Exceeds Rs. 6000 but does not exceed Rs. 10000: Rs. 650

    Exceeds Rs. 10000 but does not exceed Rs. 15000: Rs. 1000

    Exceeds Rs. 15000 but does not exceed Rs. 20000: Rs. 1500

    Exceeds Rs. 20000: (i) at the rate of 12 percent for commercial consumers; and (ii) at the rate of 5 percent for industrial consumers

    (i) Adjustable In case of company.

    (ii) In case of other than company tax collected on Rs, 360000 amount of annual bill will be minimum tax.

    (iii) in case other than company tax collected on amount over and above Rs 30000/- of monthly bill will be adjustable

    (i) Minimum tax for CNG Stations (Ref S.234A) (3).

    Under Section 235A of the Ordinance, person preparing electricity bill shall collect withholding tax from domestic consumers along with payment of electricity consumption charges.

    Withholding tax rate on domestic consumers:

    (i) if the amount of monthly bill is Rs,75,000/- or more: 7.5 percent

    (ii) if the amount of monthly bill is less than Rs, 75,000: 0 percent

    The tax deducted from billed amount for domestic consumers shall be adjustable.

  • FBR explains amendments to federal excise law

    FBR explains amendments to federal excise law

    ISLAMABAD: Federal Board of Revenue (FBR) has issued explanation to amendment made to Federal Excise Act, 2005 through Finance Act, 2020.

    The FBR through Circular No. 01 of 2020 dated August 06, 2020 explained the following amendments:

    01. ENLARGING THE SCOPE OF SEIZURE AND CONFISCATION OF THE NONDUTY PAID ITEMS SUBJECT TO FED

    In view of increasing trend of non-duty paid products and illicit manufacturing of excisable items and products, all products subject to Federal Excise Duty have now been made liable to seizure in case FED is not paid. Previously, the scope of such seizure was limited to cigarette and beverages sectors only.

    Now, if any product which is subject to FED is seized on account of non-duty payment, that will also be subject to confiscation. Necessary amendments in sections 26 and 27 of 2005 Act have been made accordingly.

    02. BOARD TO KEEP THE PARAMETERS OF AUDIT SELECTION CONFIDENTIAL

    The provisions relating to confidentiality of parameters of audit selection were inserted in the income tax and sales tax statutes in earlier Finance Acts, but the same were missing in the 2005 Act. As a part of the Board’s drive for harmonization of various tax statutes, section 42B has been inserted in the 2005 Act.

    03. OMISSION OF THE CONDITION OF AUDIT TO BE CONDUCTED ONCE IN THREE YEARS

    The provisions relating to condition that audit cannot be conducted more than once in three years were omitted in other statutes, hence for the purpose of harmonization the same has also been omitted from the 2005 Act.

    04. INCREASE IN THE RATE OF FED ON IMPORTED CIGARETTES AND OTHER SIMILAR PRODUCTS AND ELECTRONIC CIGARETTES

    (i) FED on imported cigarettes, cheroots, cigarillos, cigars of tobacco and tobacco substitutes were fixed at 65% of the retail price.

    However, there was no clear distinction between the locally produced cigarettes and the imported ones. To resolve the matter Sr. No. 8 has been substituted and imported cigarettes have been separated from the rest of the categories like Cigars, cheroots, Cigrillos of tobacco or tobacco substitutes. The duty on imported cigarettes has been substituted as 65% of the retail price or the rate of duty as prescribed at Sr. No. 9, of the First Schedule, whichever is higher.

    (ii) At the same time, a separate Sr. No. 8b has been inserted for the rest of the categories like Cigars, cheroots, cigarillos and cigarettes, of tobacco and tobacco substitutes with duty defined as 65% of the retail price or ten thousand rupees per kg whichever is higher.

    (iii) However, there was no duty prescribed for the E-liquids for which the rate has now been notified at Rs.10 per ml. A new Sr. No. 8a has been inserted for this purpose. Thus by charging FED on these liquids, the e-cigarettes or machines have been subjected to FED.

    05. REDUCTION IN THE RATE OF DUTY ON CEMENT

    The rate of FED on Cement has been reduced from Rs. 2 per kg to Rs 1.50 per kg. It is applicable on both import and local supply.

    06. LEVY OF FED IN THE CASE OF 4×4 DOUBLE CABIN PICK UP

    FED structure is already in place for both local and imported motor cars and SUVs excluding auto rickshaw falling under the PCI heading 87.03 i.e primarily passenger transport. However, double cabin pick up vehicles were still outside the ambit of FED despite being primarily used as passenger transport in the country. Keeping in view its usage as a passenger transport vehicle in Pakistan, it has now been brought in the ambit of FED @ 7.5% ad valorem in case of locally manufactured vehicles and @25% in the case of imported ones. However, the locally manufactured vehicles which have been booked on or before the 30th June 2020 will not be subject to FED, subject to the conditions as specified by the Board separately.

    07. INCREASE IN THE RATE OF FED ON FILTER RODS

    Filter rod is basic input material for cigarette manufacturing. Previously, rate of FED on filter rods was Rs 0.75 per filter rod. To enhance the effect of monitoring and discourage tobacco consumption, duty on filter rods has been enhanced to Re. 1 per filter rod.

  • Withholding tax rates for brokerage, commission updated

    Withholding tax rates for brokerage, commission updated

    ISLAMABAD: Federal Board of Revenue (FBR) has updated withholding tax rates for brokerage and commission income for tax year 2021.

    The FBR issued withholding tax card 2020-2021 incorporating amendment to Income Tax Ordinance, 2001 made through Finance Act, 2020.

    Under Section 233 of Income Tax Ordinance, 2001 federal government, provincial government, local authority, company, association of persons (AOP) are required to collect/deduct withholding tax at the time the brokerage or commission is actually paid.

    The deducted amount shall be minimum tax.

    The withholding tax rates for brokerage and commission shall be:

    In case of:

    (i) advertising agents shall pay 10 percent and persons not on the Active Taxpayers List (ATL) shall be 20 percent.

    (ii) life insurance agents where commission received is less than Rs0.5 million per annum the tax rate shall be 8 percent and for persons not appearing on the ATL the tax shall be 16 percent.

    (iii) the persons not covered in 1 & 2 the tax rate shall be 12 percent and for persons not appearing on the ATL the tax shall be 24 percent.

    Under Section 233AA of the ordinance the members stock exchange (margin financier & lenders) trading finance shall pay withholding tax.

    The National Clearing Company of Pakistan Limited (NCCPL) will collect withholding tax at 10 percent of the mark-up or interest from the members stock exchange (margin financier & lenders) trading finance at the time of mark-up / interest is paid.

    The tax is adjustable against total tax liability.

  • FBR asks taxpayers to update profile to avoid penalty

    FBR asks taxpayers to update profile to avoid penalty

    ISLAMABAD: Federal Board of Revenue (FBR) has asked taxpayers to update their profile with necessary information by December 31, 2020 in order to avoid fine and penalty.

    The FBR in a statement on Thursday said that complexity of return forms was 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,” it added.

    Instead of endeavoring to obtain all the relevant information in the income tax return, a new section has been introduced under which taxpayers profile may be prescribed in order to capture data relevant to the taxpayer.

    Persons who are already registered before September 30, 2020 and are deriving business income or incomes subject to final taxation, trusts, welfare institutions, non-profit organizations and such other persons prescribed by the board are required to submit updated profit by December 31, 2020.

    Persons who obtain their registration after September 30, 2020 will require 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 etc.

    Moreover, if a person fails to submit updated profile within the due date or time period as extended by the FBR under Section 214A of Income Tax Ordinance, 2001, 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 will be Rs20,000 in the case of a company, Rs10,000 in the case of Association of Persons (AOP) and Rs1,000 in the case of an individual.

    Further, a penalty for non-filing or not updating the profile is also proposed at the rate of Rs2500 for each day of default subject to a minimum penalty of Rs10,000.

  • Duty drawback payment to be made on FIFO basis

    Duty drawback payment to be made on FIFO basis

    ISLAMABAD: Federal Board of Revenue (FBR) has said that payment of duty drawback will be paid on First-in First-out (FIFO) basis taking into account the date of filing of claim.

    The FBR on Thursday issued SRO 714(I)/2020 to issue rules for processing duty drawback claims.

    The FBR said that comprehensive audit of duty drawback payments would be carried out by the Directorate General of Post Clearance Audit 9pcA) of the FBR.

    Any recovery detected by the PCA may be deducted from the next duty drawback claim of the exporter besides initiating recovery proceedings under the recovery rules.

    According to the rules a consolidated discrepancy report would be sent by the Collectorate to State Bank of Pakistan (SBP) on monthly basis. “The SBP shall also send a scroll of all the duty drawback payments made to the exporters,” the FBR added.

    For calculation amount of customs duties paid at the time of import, past six months import data may be used taking the average quantity or value of each class or description of the materials, including packing materials, from which a particular class or description of goods is ordinarily produced or manufactured. Average exchange rates of the same period may be taken into consideration.

    The average amount of customs duties paid on imported materials used in the manufacture of components, intermediate of semi-finished products which are exported as such or further used for manufacture of goods shall be taken into account for the purpose of calculation of duty drawback.

    The average amount of customs duties paid at the effective rate on the imported input materials shall be calculated for the last six months import data.

    The average freight on board (FOB) value of each class or description of the goods exported during the last six months may be taken into consideration for the class or description of goods for which export drawback rates are being determined.

    The FBR said that the duty drawback as may be admissible shall be part of the process of assessment of cargo for export and the amount so admissible to the exporter shall be computed and processed by Customs Computerized System on sale proceeds amount repatriated into the country and Form-E settlement from the commercial bank.