ISLAMABAD: Federal Board of Revenue (FBR) on Thursday said that a new mechanism of settlement of cases has been introduced to facilitate taxpayers. The FBR said that before Finance Act, 2020, a taxpayer aggrieved with an assessment order could file an appeal before the appellate authority and the same time could also avail alternate dispute resolution mechanism.
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Withholding tax rates on registration, transfer of motor vehicles updated
ISLAMABAD: Federal Board of Revenue (FBR) has updated withholding tax rates on registration and transfer of motor vehicles for tax year 2021.
The FBR updated the withholding tax card 2020-2021 (up to June 30, 2020) incorporating amendments made to Income Tax Ordinance, 2001 through Finance Act, 2020.
The withholding tax rate under Section 231B on private motor vehicles
Under this section motor vehicle registration authority shall collection withholding tax from persons getting new locally manufactured motor at the time of vehicle transferred in their name at the time of registration of new motor vehicle.
The withheld tax shall be adjustable against liability.
The tax rate shall be increased by 100 percent for persons not appearing on the Active Taxpayers List (ATL).
The withholding tax rates under this section shall be:
Engine Capacity For ATL For Non-ATL Up to 850CC Rs7,500 Rs15,000 851CC to 1000CC Rs15,000 Rs30,000 1001CC to 1300CC Rs25,000 Rs50,000 1301CC to 1600CC Rs50,000 Rs100,000 1601CC to 1800CC Rs75,000 Rs150,000 1801CC to 2000CC Rs100,000 Rs200,000 2001CC to 2500CC Rs150,000 Rs300,000 2501CC to 3000CC Rs200,000 Rs400,000 Above 3000CC Rs250,000 Rs500,000 Withholding tax under Section 231B(1A)
Every leasing company, scheduled bank, investment bank development finance institution, non-banking finance institution, MODARBA (Sharia compliant or under conventional mode) shall collect withholding tax from lessee at the time of lease.
The withheld tax shall be adjustable.
The tax rate shall be 4 percent of the value of motor vehicle on leasing of motor vehicle to persons not appearing in the Active Payers’ List.
The withholding tax rates under Section 231B (2)
Motor Vehicle Registration Authority shall collect withholding tax from person transferring the ownership / registration at the time of transfer.
The withheld tax shall be adjustable against the liability.
The rate of tax under sub-section (2) of section 231B shall be as follows-
Engine Capacity For ATL For Non-ATL Up to 850CC Rs0 Rs0 851CC to 1000CC Rs5,000 Rs10,000 1001CC to 1300CC Rs7,500 Rs15,000 1301CC to 1600CC Rs12,500 Rs25,000 1601CC to 1800CC Rs18,750 Rs37,500 1801CC to 2000CC Rs25,000 Rs50,000 2001CC to 2500CC Rs37,500 Rs75,000 2501CC to 3000CC Rs50,000 Rs100,000 Above 3000CC Rs62,500 Rs125,000 The withholding tax rates under Section 231B (3)
Manufacturer of motor vehicle shall collect withholding tax from purchaser at the time of sale of vehicle.
The withheld tax shall be adjustable against tax liability.
The withholding tax rates under Division VII, Part IV of First Schedule of the Income Tax Ordinance, 2001 are as follow:
Engine Capacity For ATL For Non-ATL Up to 850CC Rs7,500 Rs15,000 851CC to 1000CC Rs15,000 Rs30,000 1001CC to 1300CC Rs25,000 Rs50,000 1301CC to 1600CC Rs50,000 Rs100,000 1601CC to 1800CC Rs75,000 Rs150,000 1801CC to 2000CC Rs100,000 Rs200,000 2001CC to 2500CC Rs150,000 Rs300,000 2501CC to 3000CC Rs200,000 Rs400,000 Above 3000CC Rs250,000 Rs500,000 -
FBR issues SOPs for over-ruling objections on refund claims
ISLAMABAD: Federal Board of Revenue (FBR) on Wednesday issued procedure for over-ruling objections raised by Fully Automated Sales Tax e-Refund (FASTER) in order to facilitate taxpayers in obtaining their stuck up amount.
The FBR issued Sales Tax Circular No. 01 of 2020 / IR-Operations to unveil the Standard Procedure for Over-Ruling the STARR objections on Sales Tax Refund claims.
The FBR said that in order to bring uniformity into the system, and avoid discretion and delays in the processing of refund there is need to issue rules for the purpose at the national level.
Accordingly, in suppression of all previous instructions, SOPs and guidelines on the matter, the new procedure has been laid down. Under the procedure an officer not below the rank of additional commissioner-IR shall over-rule the objections raised by the electronic system after completion of all legal formalities and scrutiny of record of objections.
The FBR issued details of objections usually pointed out by the electronic system on which the tax officer may over rule.
The FBR, however, said that the refund claimant shall furnish soft copies of all the scanned documents which are under dispute requiring over-ruling.
The revenue body further said that where, result of automated processing of refund claims through FASTER or ERS, the claimants are not satisfied with the outcome of automated processing including calculation of refund or carry forward amounts or amounts deferred, the claimant may apply to the FBR through concerned chief commissioner for processing of the refund claim or revision of Annexure – H mentioning the reason.
After scrutiny of the written request of the claimant, the Chief (Projects & Refunds) may allow reprocessing of the claim or revision of Annexure-H for necessary corrections.
The FBR said that the procedure for over-ruling has become applicable with effect from August 01, 2020.
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Withholding sales tax regime streamlined
ISLAMABAD: Federal Board of Revenue (FBR) has streamlined sales tax withholding regime for compelling sales tax return filing and realizing full revenue on sale/purchase.
The FBR issued Circular No. 01 dated August 06, 2020 to explain changes made to Sales Tax Act, 1990 through Finance Act, 2020.
The FBR said that Eleventh Schedule provides for withholding agents to deduct tax at the time of purchase from both registered and unregistered persons.
The categories of withholding agents include Federal and Provincial Government departments, companies, public sector organizations and autonomous bodies.
However, it has been noticed that most of the registered suppliers whose tax has been withheld do not usually file their sales tax returns and resultantly, fail to pay their remaining amount of 4/5th tax in case 1/5th of the tax involved is withheld by the purchaser as aforementioned.
To enforce returns by the such suppliers and payment of remaining tax involved, the whole concept of withholding has now been linked to the supplier (withholdee) being on the ATL list of the FBR or otherwise.
The persons other than Active Taxpayers shall be given the same treatment as was previously accorded to unregistered persons i.e. government and public sector enterprises shall deduct whole of the tax involved in case of supplies made by persons other than those on ATL and the companies shall deduct 5 percent of gross value of supplies on supplies by such persons. This aims at promoting return filing and documentation culture in the country.
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FBR admits Rs232 billion payable as income, sales tax refunds
ISLAMABAD: Federal Board of Revenue (FBR) on Monday admitted to pay an amount around Rs232 billion as sales tax and income tax refunds to taxpayers.
The FBR disclosed the amount of payable refunds at a meeting that was chaired by Dr. Abdul Hafeez Shaikh, Adviser to the Prime Minister on Finance and Revenue.
Muhammad Hammad Azhar, Federal Minister of Industries and Production, Muhammad Azam Khan Swati, Minister of Parliamentary Affairs, Abdul Razak Dawood, Adviser for Commerce, Textile and Investment, Naveed Kamran Baloch, Faizullah Kamoka, Secretary Finance and Chairman FBR Muhammad Javed Ghani were also present in the meeting.
Dr. Muhammad Ashfaq Ahmed, Member (IR-Operaions), FBR made a presentation on the issue of refunds.
“The meeting was informed that a total of Rs142 billion of Sales Tax refunds were pending and Rs90 billion of Income Tax refunds were due for payment.”
The Member also informed the Ministers that export sector had been prioritized and an unprecedented amount of Rs.106 billion had been released to them. It was also explained that during 2020, fresh inflows and refund claims had matched the outflows and a total amount of refund released under the head Sales Tax was Rs.154 billion.
In order to further facilitate the business community and to resolve their day to day issues on priority, it was advised that a technical committee having representatives of the business community be formed to examine and resolve faster refund related issues. It was also decided that there will be facilitation committees at field office level so that businessmen are able to have their issues resolved at local level.
It was also decided that a complaint cell be constituted where businessmen lodge their complaints and the complaint cell may pursue the complaints for resolution.
FBR was also advised to increase its public outreach and hold frequent meetings / media conferences and video conferences with trade associations to hear their viewpoint and issues relating to tax matters.
It was noted that withholding tax regime increased the cost of doing business and FBR was advised to examine reducing the regime in the coming budget.
Similarly the legal provisions relating to capping input tax adjustment at 90percent of payable tax in terms of section 8B of the Sales Tax Act were also proposed to be examined in the forthcoming budget exercise.
Discussing the tax refunds, FBR was advised to focus on pending refunds of both export and non-export sector to give a business stimulus and easy cash flows in the post Covid scenario.
Further enhancing the stimulus package, FBR was advised to pay Income Tax refunds up to Rs50 million each within one week for which FBR will be provided funds by the Finance Division.
In order to ensure steady disbursement of refunds, it was also proposed that FBR may examine creating a refund fund from where Income Tax refunds relating to previous years may be paid in routine without hurting collection till the time all the pending refunds are liquidated.
In juxtaposition to speedy regular disbursal of refunds with faster running in automated mode the importance of post refund audit to counter menace of flying invoices was proposed.
FBR’s efforts on zero tolerance against corruption were appreciated and FBR was advised to highlight its good initiates including fight against corruption on media as well as on its websites.
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FBR gets PM’s nod for action against senior officers
ISLAMABAD: Federal Board of Revenue (FBR) on Monday said that it has initiated action against two senior officers for involvement in irregularity and corruption after taking approval from the Prime Minister.
In a statement the tax authority said that it had decided to take action against irregularity, corruption and inefficient elements present in the organization.
Since July, so far 26 officers and 19 officials have been suspended whereas three employees have been dismissed from service.
“Besides, permission has also been sought from the Prime Minister to initiate action against two senior officers.”
Those suspended included employees of Model Customs Collectorate Quetta, Peshawar, Hyderabad, Gwadar, Karachi, Directorate of Transit Trade Peshawar and Directorate of Intelligence and Investigation IR Hyderabad whereas the dismissed employees were posted in Regional Tax Office, Faisalabad.
FBR is determined to rid the organization of corrupt and inefficient elements. Prompt action will be taken against the officers and officials found involved in irregularity and inefficiency. The image of the organization will be raised and the perception of the taxpayers and people about the organization will be improved so that the taxpayers’ can pay their due taxes in time without any hesitation and suspicion thinking that their paid taxed would be utilized on the progress of the country and welfare of the people.
An Integrity and Performance Management Unit (IPMU) has been established in FBR to address the complaints of the taxpayers against any employee.
The complainant can send his complaint through telephone, e-mail and letter which will be scrutinized and investigated by senior officers.
FBR will continue to put its efforts to raise revenue for the Government and will strive to achieve the objectives of the organization at all costs.
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IRS bureaucracy shaken
ISLAMABAD: Federal Board of Revenue (FBR) has shaken the Inland Revenue bureaucracy and around 97 senior officials were transferred, sources said on Monday.
According to the sources around 83 officers of BS-20 out of the total 97 were part of this major reshuffle.
The sources said that BS-20 is the key post and usually this official grade had portfolio of Commissioner Inland Revenue.
The FBR so far issued four notifications i.e. one on August 08, 2020 and three more on August 10, 2020 to make changes in the IR bureaucracy.
The sources said that usually when a new chairman assume the charge the posting transfers were normal.
It is important to note that Ms. Nausheen Javaid Amjad, a BS-22 officer of IRS was removed from the post of FBR Chairperson on July 04, 2020 after severing only four months on this key post.
Muhamamad Javed Ghani, BS-22 officer of Pakistan Customs Service (PCS) has been given additional charge of FBR chairman for a period of three months on July 07, 2020.
It is surprising to see a large number of posting and transfers in Inland Revenue Service (IRS) especially for the key posts of BS-20 when the FBR has not full-time chairman.
Following are the postings and transfers orders issued by the FBR.
01. 1406-IR-I/2020 dated August 08, 2020
02. 1408-IR-I/2020 dated August 10, 2020
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Non-ATL to pay 0.6pc withholding tax on cash withdrawal
ISLAMABAD: Federal Board of Revenue (FBR) has said that 0.6 percent withholding tax shall be collected on cash withdrawal of Rs50,000 each day by persons not on the Active Taxpayers List (ATL).
The FBR updated withholding tax card 2020-2021 after incorporating amendments to Income Tax Ordinance, 2001 made through Finance Act, 2020. The FBR issued the withholding tax card updated up to June 30, 2020.
The withholding tax rates on cash withdrawal from banking companies shall remain same for tax year 2021 (2020-2021).
According to the withholding tax card every banking company shall collect/deduct withholding tax from account holders withdrawing cash. The tax shall be deducted at the time the cash is withdrawn.
The withholding tax on cash withdrawal was introduced in year 2005 by inserting Section 231A to the Income Tax Ordinance, 2001.
Under this section the banks are required to collect 0.6 percent of cash withdrawn above Rs50,000 per day.
It has been clarified by the FBR that the said Rs50,000 shall be aggregate withdrawals from all the bank accounts in a single day.
There were two different tax rates for filers and non-filers of income tax returns were applicable on the cash withdrawn from banking system.
However, in order to ease burden on the compliant tax payers through Finance Act, 2019 the amendments were made and the tax rate is now only those persons who are not on the ATL.
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CNIC condition on sales up to Rs100,000 relaxed to facilitate retailers: FBR
ISLAMABAD: Federal Board of Revenue (FBR) has said that the retailers are not required to maintain information of Computerized National Identity Card (CNIC) of a consumer on sales not exceeding above Rs100,000.
The FBR issued Sales Tax Circular No. 01 dated August 06, 2020 to explain changes brought to main statute through Finance Act, 2020.
The revenue body said that through the Finance Act 2019, Section 23 of Sales Tax Act, 1990 was amended by inserting the condition of mentioning of CNIC of the unregistered purchaser on the invoice.
The measure was introduced to broaden the income as well as sales tax base.
However, in case of supplies by a retailer to end consumers, the requirement was applicable if the transaction value exceeded Rs50,000.
“Many representations were received stating that the retailers are facing hardship in obtaining CNIC of the buyers/ customers,” the FBR said.
Hence, amendment in section 23 has been made for enhancing the threshold from Rs50,000 to Rs100,000.
“Now, it would not be compulsory for the retailers to mention NIC of buyer if transaction value does not exceed Rs100,000 where supply is made to an ordinary consumer,” the FBR added.
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Withholding tax rates on prizes, winnings updated
ISLAMABAD: Federal Board of Revenue (FBR) has updated withholding tax rate on prizes and winnings for tax year 2021.
The FBR issued withholding tax card 2020-2021 updated up to (June 30, 2020) after incorporating amendments made to Income Tax Ordinance, 2001 through Finance Act, 2020.
Under Section 156 of Income Tax Ordinance, 2001 every person making payment shall deduct / collect withholding tax from recipient of prize or winnings at the time the prize or winnings are actually paid.
The withholding tax rate is 15 percent of the gross amount on payment made for prize on quiz, bond and cross word. The tax rate shall be increased by 100 percent in case recipients of prize money is not on the Active Taxpayers List (ATL).
The tax rate shall be 20 percent of the gross amount on payment on winning from a raffle, lottery, prize on winning a quiz, prize, offered by companies for promotion of sales crossword or puzzles. The tax rate shall be increased by 100 percent in case the recipient of amount is not on the ATL.
The tax deducted/collected under this under shall be treated as final tax.
Under Section 156A, every person selling petroleum products to petrol pump operator shall collect withholding tax from petrol pump operators at the time the commission is actually paid.
The rate of withholding tax shall be 12 percent of the gross amount on payment to petrol pump operator on account of sale of petroleum products. The rate shall be increased by 100 percent in case person is not on the ATL.
The tax shall be treated as final tax under this head.