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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.

  • Member IR Operations receives complaints himself to eradicate corruption

    Member IR Operations receives complaints himself to eradicate corruption

    ISLAMABAD: Member Inland Revenue (Operations) will directly receive complaints against corruption in order to provide secure channel of lodging complaints and in this regard SOP has been devised for handling of complaints.

    The Circular No. 10 of 2021 – Operations issued on Monday, stated that in order to allay the fears of business community and citizen taxpayers, a convenient, and protected mechanism of filing complaints against corruption is being devised whereby all complaints would be received by Member IR Operation himself on an especially dedicated cell phone +92-0345-5555507; the cell phone would be in his own possession, exclusively.

    “The complaints would be opened, acknowledged, and treated as per law in a highly confidential manner.”

    The identity of the complainants would be immediately masked and encoded to safeguard them against any undue consequences.

    The standard operating procedure (SOP) for lodging and handling of complaints against field functionaries is as under:

    i. Complaints would be lodged through text message at cell No.. +92-345-5555507 – on Whatsapp, preferably.

    ii. In Whatsapp text option, the complainant would identify himself by writing his name, address, CNIC the case particular and his cell phone number.

    iii. The complainant would write the name(s) of the official(s) against whom the complaint is directed along with his/their designation, place of posting, and any other particulars, if available.

    iv. The complaint must be supported by some evidence such as audio or video recording, text message exchange with the FBR functionary or any other documents, which could be attached with the text message, or subsequently sent by hard mail. If no such evidence is readily available, and affidavit on a legal paper, clearly spelling out the allegation and the person against whom the allegations are leveled would suffice.

    v. Upon receipt of the complaint, a code number would be allotted to each complainant and his back-end identity data would be hidden beyond the access of field officers. This code number would help a complainant track progress on his complaint and the outcomes on it.

    vi. Depending on the nature of the complaint and the evidence provided, the matter would be taken to logical consequence in the shortest possible time.

    vii. Non-specific, unsupported or generalized complaints may not be processed.

    The FBR said that taxpayers could not lodge complaints of corruption, rent-seeking and unethical conduct against any FBR functionary without any fear of reaction or revenge. However, in order to maintain the integrity of the system and achieve its intended objectives, the complainants would not level generalized allegations, and instead, file solid complaints, duly supported by evidence, and affidavits against the delinquent functionaries so that the malaise of corruption could be eliminated from the revenue functions of the state.

  • Eurobonds, Sukuks granted income tax exemption

    Eurobonds, Sukuks granted income tax exemption

    ISLAMABAD: Federal Board of Revenue (FBR) on Monday granted income tax exemption on profits derived by foreign nationals on yield of Eurobonds and International Sukuk issued by the government of Pakistan.

    In this regard the FBR issued two notifications to make changes in Income Tax Ordinance, 2001.

    The FBR issued SRO 268(I)/2021 and SRO 269 (I)/2021.

    The FBR granted the exemption while exercising powers available under the Second Schedule of the Ordinance. Under the Schedule the government has authority to grant tax exemption of the income derived by foreign nationals of companies.

    According to the notifications, the government granted the exemption to the profit on debt income of an agency of a foreign government, a foreign national company, firm or association of a person or any other non-resident person, on Eurobonds and International Sukuks issued under the government’s medium term note program.

  • FBR issues 2.1 million notices for non-filing, misdeclaring assets

    FBR issues 2.1 million notices for non-filing, misdeclaring assets

    ISLAMABAD: The tax authorities have issued 2.1 million notices to individuals and companies for non-compliance in annual return filing and to those who misdeclared assets in their annual returns of income, a statement issued by Federal Board of Revenue (FBR) said on Sunday.

    These notices were sent to defaulters by February 28, 2021. The FBR issued notices around 1.4 million by January 31, 2021. It means during the month of February 2021 the revenue body issued another 700,000 notices to defaulters.

    FBR is taking such action to broaden the tax base in the country. Early signs suggest such efforts are bearing fruits. As on February 28, 2021, the number of income tax returns filed was 2.63 million for tax year 2020 as compared with 2.43 million last year, showing an increase of 8 percent.

    The FBR said that the tax return with return, however, increased by 60 percent to Rs49.6 billion up to February 28, 2021 as compared with Rs31 billion by the same date of the last year.

    The FBR said that the income tax return for tax year 2020 had been increased despite the last date was not extended beyond December 08, 2020. Meanwhile the last date for filing income tax returns for tax year 2019 was extended up to February 25, 2020.

    The exercise is eliciting encouraging response. However, those who are not complying would be pursued diligently until compliance is achieved.

    Watch the story at the PkRevenue YouTube channel:

  • FBR receives 2.63 million income tax returns for tax year 2020

    FBR receives 2.63 million income tax returns for tax year 2020

    ISLAMABAD: Federal Board of Revenue (FBR) has received 2.63 million income tax returns for tax year 2020 by February 28, 2021, just one day ahead of issuing new Active Taxpayers List (ATL).

    According to a statement issued on Sunday the FBR said that it had received 2.63 million income tax returns for tax year 2020 by February 28, 2021, which is 8 percent higher when compared with 2.43 million returns for tax year 2019 on the same date a year ago.

    The FBR said that the tax return with return, however, increased by 60 percent to Rs49.6 billion up to February 28, 2021 as compared with Rs31 billion by the same date of the last year.

    The FBR said that the income tax return for tax year 2020 had been increased despite the last date was not extended beyond December 08, 2020. Meanwhile the last date for filing income tax returns for tax year 2019 was extended up to February 25, 2020.

    The FBR is scheduled to announce Active Taxpayers List (ATL) for tax year 2020 on March 01, 2021 which will carry the name of those taxpayers who filed their returns by due date or extended by commissioner inland revenue.

    However, those late return filer will get also their names on the list who paid surcharge.

  • FBR requires to collect Rs2,047 billion in last four months to achieve annual target

    FBR requires to collect Rs2,047 billion in last four months to achieve annual target

    ISLAMABAD: Federal Board of Revenue (FBR) needs to collect Rs2,047 billion in last four months of the current fiscal year to achieve the revenue annual collection target of Rs4,963 billion, according to estimates of PkRevenue.com made after eight months collection issued on Sunday.

    The FBR will need to grow the revenue at 64 percent during the last four months as it collected Rs1247 billion in the last four months of the fiscal year 2019/2020.

    The FBR was assigned the annual collection target of Rs4,963 billion for fiscal year 2020/2021 as compared with total collection of Rs3,997 billion in the last fiscal year, which was 24.2 percent higher.

    A spokesman of the FBR in a tweet said that the FBR provisionally collected Rs2,916 billion during first eight months (July – February) of 2020/2021 as against the collection of Rs2,750 billion in the corresponding months of the last fiscal year, showing a growth of 6 percent.

    However, the collection for the period of first eight months of the current fiscal year is higher than the target of Rs2,898 billion assigned for the period, the spokesman said.

    The revenue collection for the month of February also crossed the target of Rs325 billon to reach at Rs343 billion. However, the monthly collection is five percent higher when compared with Rs326 billion collected in the same month of the last year.

    The gross collection of the FBR posted 9 percent growth to Rs3,068 billion during the first eight months of the current fiscal year as compared with Rs2,823 billion in the corresponding months of the last fiscal year.

    The FBR said that considering the liquidity problems of the trade and industry due to coronavirus pandemic the issuance of refunds registered 97 percent increase. The FBR issued Rs152 billion as refunds during the first eight months of the current fiscal year as compared with Rs79 billion issued in the same period of the last fiscal year.

  • ‘Salary’ explained for determination of income tax

    ‘Salary’ explained for determination of income tax

    Income Tax Ordinance, 2001 has defined the meaning of salary for the purpose of determining income of a paid employee.

    The Income Tax Ordinance, 2001 updated up to June 30, 2020 issued by the Federal Board of Revenue (FBR) defined the salary as :

    (1) Any salary received by an employee in a tax year, other than salary that is exempt from tax under this Ordinance, shall be chargeable to tax in that year under the head “Salary”.

    (2) Salary means any amount received by an employee from any employment, whether of a revenue or capital nature, including —

    (a) any pay, wages or other remuneration provided to an employee, including leave pay, payment in lieu of leave, overtime payment, bonus, commission, fees, gratuity or work condition supplements (such as for unpleasant or dangerous working conditions);

    (b) any perquisite, whether convertible to money or not;

    (c) the amount of any allowance provided by an employer to an employee including a cost of living, subsistence, rent, utilities, education, entertainment or travel allowance, but shall not include any allowance solely expended in the performance of the employee’s duties of employment;

    (d) the amount of any expenditure incurred by an employee that is paid or reimbursed by the employer, other than expenditure incurred on behalf of the employer in the performance of the employee’s duties of employment;

    (e) the amount of any profits in lieu of, or in addition to, salary or wages, including any amount received —

    (i) as consideration for a person’s agreement to enter into an employment relationship;

    (ii) as consideration for an employee’s agreement to any conditions of employment or any changes to the employee’s conditions of employment;

    (iii) on termination of employment, whether paid voluntarily or under an agreement, including any compensation for redundancy or loss of employment and golden handshake payments;

    (iv) from a provident or other fund, to the extent to which the amount is not a repayment of contributions made by the employee to the fund in respect of which the employee was not entitled to a deduction; and

    (v) as consideration for an employee’s agreement to a restrictive covenant in respect of any past, present or prospective employment;

    (f) any pension or annuity, or any supplement to a pension or annuity; and

    (g) any amount chargeable to tax as “Salary” under section 14.

    (3) Where an employer agrees to pay the tax chargeable on an employee’s salary, the amount of the employee’s income chargeable under the head “Salary” shall be grossed up by the amount of tax payable by the employer.

    (4) No deduction shall be allowed for any expenditure incurred by an employee in deriving amounts chargeable to tax under the head “Salary”.

    (5) For the purposes of this Ordinance, an amount or perquisite shall be treated as received by an employee from any employment regardless of whether the amount or perquisite is paid or provided —

    (a) by the employee’s employer, an associate of the employer, or by a third party under an arrangement with the employer or an associate of the employer;

    (b) by a past employer or a prospective employer; or

    (c) to the employee or to an associate of the employee or to a third party under an agreement with the employee or an associate of the employee.

    (6) An employee who has received an amount referred to in sub-clause (iii) of clause (e) of sub-section (2) in a tax year may, by notice in writing to the Commissioner, elect for the amount to be taxed at the rate computed in accordance with the following formula, namely: —

    A/B%

    where —

    A is the total tax paid or payable by the employee on the employee’s total taxable income for the three preceding tax years; and

    B is the employee’s total taxable income for the three preceding tax years.

    (7) Where —

    (a) any amount chargeable under the head “Salary” is paid to an employee in arrears; and

    (b) as a result the employee is chargeable at higher rates of tax than would have been applicable if the amount had been paid to the employee in the tax year in which the services were rendered,

    the employee may, by notice in writing to the Commissioner, elect for the amount to be taxed at the rates of tax that would have been applicable if the salary had been paid to the employee in the tax year in which the services were rendered.

    (8) An election under sub-section (6) or (7) shall be made by the due date for furnishing the employee’s return of income or employer certificate, as the case may be, for the tax year in which the amount was received or by such later date as the Commissioner may allow.

  • What is royalty under Income Tax Ordinance?

    What is royalty under Income Tax Ordinance?

    Income Tax Ordinance, 2001 has defined the meaning of royalty paid by companies for use of rights.

    The Income Tax Ordinance, 2001 up dated up to June 30, 2020 issued by the Federal Board of Revenue (FBR), defined the meaning of ‘royalty’ as any amount paid or payable, however described or computed, whether periodical or a lump sum, as consideration for —

    (a) the use of, or right to use any patent, invention, design or model, secret formula or process, trademark or other like property or right;

    (b) the use of, or right to use any copyright of a literary, artistic or scientific work, including films or video tapes for use in connection with television or tapes in connection with radio broadcasting, but shall not include consideration for the sale, distribution or exhibition of cinematograph films;

    (c) the receipt of, or right to receive, any visual images or sounds, or both, transmitted by satellite, cable, optic fibre or similar technology in connection with television, radio or internet broadcasting;

    (d) the supply of any technical, industrial, commercial or scientific knowledge, experience or skill;

    (e) the use of or right to use any industrial, commercial or scientific equipment;

    (f) the supply of any assistance that is ancillary and subsidiary to, and is furnished as a means of enabling the application or enjoyment of, any such property or right as mentioned in sub-clauses (a) through (e); and

    (g) the disposal of any property or right referred to in sub-clauses (a) through (e).

  • ITO explains principal officer of company

    ITO explains principal officer of company

    Income Tax Ordinance (ITO), 2001 has explained principal officer of a company for the purpose or apply law and rules for the purpose of income tax payment.

    The Income Tax Ordinance, 2001 updated up to June 30, 2001 issued by the Federal Board of Revenue (FBR) defined ‘principal officer’ with reference to a company or association of persons includes –

    (a) a director, a manager, secretary, agent, accountant or any similar officer; and

    (b) any person connected with the management or administration of the company or association of persons upon whom the Commissioner has served a notice of treating him as the principal officer thereof.

  • Liaison office defined by Income Tax Ordinance

    Liaison office defined by Income Tax Ordinance

    Income Tax Ordinance, 2001 has defined the meaning of liaison office of a company for the purpose of imposition and calculation of income tax.

    The Income Tax Ordinance, 2001 updated up to June 30, 2020 issued by the Federal Board of Revenue (FBR) defined ‘liaison office’ as a place of business acting for the principal, head office or any entity of which it is a part, and

    (a) its activities do not result in deriving income in Pakistan; and

    (b) maintains itself out of any amount remitted from outside Pakistan received through normal banking channels.

    Explanation,— It is clarified that—

    (i) a place of business shall not be treated as liaison office if it engages in –

    (a) commercial activities;

    (b) trading or industrial activities; or

    (c) the negotiation and conclusion of contracts;

    (ii) the activities shall be treated to be commercial activities, if these include—

    (a) providing after sales services for goods or services; or

    (b) marketing or promoting pharmaceutical and medical products or services;

    (iii) subject to clause (i), a place of business shall be treated as a liaison office, if it undertakes activities of—

    (a) an exploratory or preparatory nature, to investigate the possibilities of trading with, or in, Pakistan;

    (b) exploring the possibility of joint collaboration and export promotion;

    (c) promoting products where such products are yet to be supplied to, or sold in, Pakistan;

    (d) promoting technical and financial collaborations between its principal and taxpayers in Pakistan; or

    (e) provision of technical advice and assistance.

  • FBR proposes penalty for late payment by Authorized Economic Operators

    FBR proposes penalty for late payment by Authorized Economic Operators

    KARACHI: Federal Board of Revenue (FBR) has proposed penalty for defaulting in payment for customs clearance by Authorized Economic Operators (AEOs).

    The FBR issued SRO 263(I)/2021 dated February 23, 2021 and proposed amendment to Customs Rules, 2002 related to authorized economic operators.

    According to the law, the authorized economic operator (AEO) is a certified entity which fulfils the security criteria and other laid down obligations and derives benefits as prescribed in the rules and may include manufacturers, importers, exporters, customs house agents, brokers, shipping lines, carriers, consolidators, intermediaries, port operators, airport operators, terminal operators, integrate operators, warehouse, distributors, freight forwarders and logistic service providers.

    According to the proposed amendment the facility of deferred payment of duty and taxes will be provided in such manner that all duty and taxes payment in a month shall be paid within that month by the last day of the month in which the clearance was made, otherwise AEO holder shall pay surcharge at the rate of three percent plus KIBOR from date of clearance of goods, and shall be liable for action deemed appropriate by the regulatory collector under the applicable law, which may include the suspension or revocation of the AEO status.