Pkrevenue.com

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 for income from property

    FBR updates withholding tax rates for income from property

    ISLAMABAD: Federal Board of Revenue (FBR) has updated withholding tax on rental income from immovable properties for tax year 2021.

    The FBR updated the withholding tax card 2020-2021 after incorporating amendments to Income Tax Ordinance, 2001 made through Finance Act, 2020.

    The FBR said that every prescribed persons as per Section 155 of Income Tax Ordinance, 2001 shall collect / deduct withholding tax from recipient of rent of immovable property at the time the rent is actually paid.

    Section 155: Income from Property

    Any payment made on account of rent of immovable property

    (A) In case of individual or AOP

    1. Where the gross amount of rent does not exceed Rs, 200,000: the tax rate shall be zero

    2. Where the gross amount of rent exceeds Rs, 200,000 but does not exceed Rs, 600,000: 5 percent of the gross amount exceeding Rs, 200,000

    3. Where the gross amount of rent exceeds Rs, 600,000 but does not exceed Rs, 1,000,000: Rs, 20,000+10 percent of the gross amount exceeding Rs, 600,000

    4. Where the gross amount of rent exceeds Rs, 1,000,000 but does not exceed Rs, 2,000,000: Rs,60,000+15 percent of the gross amount exceeding Rs, 1,000,000

    5. Where the gross amount of rent exceeds Rs, 2,000,000 but does not exceed Rs. 4,000,000: Rs, 210,000+20 percent of the gross amount exceeding Rs, 2,000,000

    6. Where the gross amount of rent exceeds Rs.4,000,000 but does not exceeds Rs. 6,000,000: Rs.610,000 plus 25 per cent of the gross amount exceeding Rs.4,000,000

    7. Where the gross amount of rent exceeds Rs.6,000,000 but does not exceeds Rs. 8,000,000: Rs.1,110,000 plus 30 per cent of the gross amount exceeding Rs.6,000,000

    8. Where the gross amount of rent exceeds Rs.8,000,000: Rs.1,710,000 plus 35 percent of the gross amount exceeding Rs.8,000,000

    B) in case of company: 15 percent

    The tax shall be adjustable against total tax liability.

  • Withholding income tax rates for exporters updated

    Withholding income tax rates for exporters updated

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

    The FBR updated withholding tax card for 2020/2021 after incorporating amendments made to Income Tax Ordinance, 2001 brought through Finance Act, 2020.

    Under Section 154 of Income Tax Ordinance, 2001 every authorized dealer in foreign exchange required to collect / deduct withholding tax from exporters at the time of realization of the export proceeds.

    The withholding tax rate under Section 154(1) shall be one percent of the gross value.

    The tax shall be final.

    Under Section 154(2) every authorized dealer in foreign exchange is required to collect/deduct withholding tax from non-export indenting agent, export indenting agent/export buying house at the time of realization of foreign exchange proceeds or indenting commission.

    The tax rate under this section shall be on realization of proceeds on account of commission to;

    I. Non-export indenting agent: 5 percent of gross value

    II. Export indenting agent / export buying house: 5 percent of gross value

    The tax shall be final tax liability.

    Under Section 154 (3), every banking company is required to collect/deduct tax from exporters at the time of realization of proceeds on account of sale of goods to an exporter.

    The tax rate shall be one percent on realization of proceeds on account of sale of goods to an exporter under inland back to back LC or any other arrangement as may be prescribed by FBR.

    The tax shall be final tax liability.

    Under Section 154 (3A), Export Processing Zone (EPZ) authority is required to collect / deduct withholding tax from industrial undertaking located in the export processing zone at the time of export of goods.

    The tax rate shall be one percent and this is final tax liability.

    Under Section 154(3B), direct exporters/export house registered under DTRE Rules 2001 required to collect/deduct withholding tax from indirect exporters (defined under sub-chapter 7 of the chapter XII of the Customs Rules, 2001) at the time of payment against a firm contract.

    The tax rate is one percent of the gross value and it is final tax liability.

    Under Section 154(3C), the collector of customs is required to collect withholding tax at one percent from exporter of goods at the time of export of goods. This tax shall be final tax liability.

  • FBR to get information of banking deposits, payments, profit on debt

    FBR to get information of banking deposits, payments, profit on debt

    ISLAMABAD: Federal Board of Revenue (FBR) to obtain information of deposits, payments and profit on debt of account holders from banking companies.

    According to news rules proposed through SRO 686(I)/2020 issued a day earlier, to be inserted into Income Tax Rules, 2020, the banks shall be required to furnish information in the manner as specified in account holders’ deposits statement, credit card payments statements, cash withdrawal statement and profit on debt statement.

    The new draft rules the FBR notified four different forms to obtain information of deposits, withdrawals, payment through credit cards and persons receiving profit on debt.

    The rules would help in obtaining information from banks under Section 165A of Income Tax Ordinance, 2001

    As per the amendment the banks shall provide information included: a list of persons containing particular of cash withdrawal aggregating to Rs one million or more during a month; list of persons depositing Rs10 million or more in a month; persons making payment through credit/debit card above Rs250,000 in a month.

    Under the new rules, the banks shall provide details of persons making deposits, withdrawal included: CNIC/NTN, name, address, account opening date, IBAN, resident/non-resident status etc.

    Under the new rules the banks shall be required to provide such information of deposits, withdrawal and payment through credit/debit cards on a monthly basis.

    However, the information of recipients of profit on debts shall be furnished within three months from the end of the financial year.

  • Authorities made duty bound to allow real-time access: FBR

    Authorities made duty bound to allow real-time access: FBR

    ISLAMABAD: Federal Board of Revenue (FBR) has said that after amendments made to sales tax and federal excise laws various authorities and organizations have been made duty bound to allow real-time access to tax authorities for preventing tax evasion.

    (more…)
  • CNIC made mandatory for recipient of services

    CNIC made mandatory for recipient of services

    ISLAMABAD: Federal Board of Revenue (FBR) has said that buyer’s CNIC (Computerized National Identity Card) detail is now mandatory on the invoice issued by seller for providing service in order avail credit.

    The FBR in its explanation of Sales Tax and Federal Excise through Circular No. 01 of 2020, stated the word “services” has been added along with goods to enlarge the scope of disallowance of input tax on account of non-mentioning of CNIC of the buyer by the seller on the invoice as required under section 23 of the 1990 Act.

    Resultantly, input tax claimed against goods as well as services shall be disallowed on pro rata basis if supplies have been made to persons without obtaining their CNIC/ NTN subject to the conditions mentioned in the law.

    The measure is expected to optimally broaden the sales tax base.

    The FBR explained that Following two changes have been made in subsection (7) of Section 3: The expression “by the buyers” has been omitted and after the word “persons” the expression “being purchaser of goods or services” has been added”.

    The first change is only clarificatory/consequential, however, the second change enlarges the scope of sales tax withholding by including purchase of services in the ambit of sales tax withholding regime.

  • FBR updates withholding tax rate on payment for goods, services

    FBR updates withholding tax rate on payment for goods, services

    ISLAMABAD: Federal Board of Revenue (FBR) has updated withholding tax rates on payments for goods and services during tax year 2021.

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

    Under Section 153 of Income Tax Ordinance, 2001 every prescribed person shall collect withholding tax from resident person; Resident Person; and Permanent Establishment in Pakistan of a Non-Resident at the time the amount is actually paid for goods & services

    Under Section 153(1)(a) the tax rate for sale of rice, cotton seed oil and edible oil shall be 1.5 percent of the gross amount and the tax rate shall be increased by 100 percent in case persons are not on the Active Taxpayers List (ATL).

    The tax rate for supply made by distributors of fast moving consumer goods:

    In case of company 2 percent of gross amount

    Other than company the tax rate shall be 2.5 percent of gross amount

    The tax rate shall be increased by 100 percent in case persons are not on the ATL.

    Tax rate for supply made to Utility Stores Corporation of Pakistan:

    Persons (other than company) 1.5 percent of gross amount and the tax rate shall be increased by 100 percent in case persons are not on the ATL.

    Provided that the payment shall be made only in respect of supply of tea, spices, salt, dry milk, sugar, pulses wheat flour and ghee for the period commencing from the 7th day of April, 2020 and ending on 30th day of September, 2020

    Provided that this clause shall not be applicable to supply of tea, spices, salt and dry milk which are sold under a brand name.

    Provided further that this clause shall not be applicable where rate of tax under clause (a) of sub-section (1) of section 153 is less than 1.5% of the gross amount of payment under any provisions of the ordinance

    For sale of any other goods:

    In case of a company the tax rate shall be 4 percent of the gross amount.

    Other than company the tax rate shall be 4.5 percent of the gross amount

    The tax rate shall be increased by 100 percent in case persons are not on the ATL.

    The FBR said that in case of goods:

    No deduction of tax where payment is less than Rs. 75,000/- in aggregate during a financial year [S.153(1)(a)]

    The tax shall be minimum tax for all except in the following cases where it shall not be minimum tax on sale or supply of goods, by:

    (i) a company being manufacturers of such goods or

    (ii) Public company listed on registered Stock Exchange in Pakistan.

    Under Section 153(1)(b)

    Ever prescribed person shall collect withholding tax from resident person; Resident Person; and Permanent Establishment in Pakistan of a Non-Resident at the time the amount is actually paid

    i. Transport services, freight forwarding services, air cargo services, courier services, man power outsourcing services, hotel services, security guard services, software development services, IT Services and IT enabled services as defined in clause (133) of Part I of the Second Schedule, tracking services, advertising services (other than by print or electronic media), share registrar services, engineering services, car rental services, building maintenance services, services rendered by Pakistan Stock Exchange Ltd. & Pakistan Mercantile Exchange Ltd. , inspection, certification, testing & training services.;

    The tax rate shall be 3 percent of the gross amount and the rate shall be 6 percent in case persons not on the ATL.

    ii. In case of rendering or providing of services other than as mentioned at (i) above;

    a) In case of company 8 percent of the gross amount

    b) In any other case 10 percent of the gross amount

    c) In respect of persons making payment to electronic & print media for advertising services 1.5 percent of the gross amount

    The tax rate shall be increased by 100 percent in case persons are not on the ATL.

    The FBR said that in case of services:

    No deduction of tax where payment is less than Rs. 30,000/- in aggregate during a financial year [S.153(1)(b)]

    The tax shall be minimum tax.

    Under Section 153(1)(c)

    Every prescribed person shall collect / deduct withholding tax from resident person; Resident Person; and Permanent Establishment in Pakistan of a Non-Resident at the time the amount is actually paid.

    Execution of Contracts

    i) In case of sportsperson 10 percent

    ii) In the case of companies : 7 percent

    iii) In the case of persons other than companies 7.5 percent

    The tax rate shall be increased by 100 percent in case persons not on the ATL.

    Minimum Tax for all whereas it will remain adjustable where payments are received on account of execution of contracts by Public Company listed on registered Stock Exchange in Pakistan

    Under Section 153(2)

    Every exporter/export house shall collect/deduct withholding tax from resident person; Resident Person; and Permanent Establishment in Pakistan of a Non-Resident at the time of making the payment.

    Every Exporter or Export House shall deduct Tax on payments in respect of services of stitching, dying, printing etc. received/provided.

    1 percent of the gross amount and the rate shall be increased by 100 percent in case persons not on the ATL.

    The tax shall be minimum tax.

    Under Section 153B

    Every person paying an amount of royalty, in full or in part including by way of advance shall collect/deduct withholding tax from resident person at the time of making gross payment of royalty, in full or in part including by way of advance (including Federal Excise Duty and provincial sales tax, if any)

    Tax to be deducted on payment of royalty to resident person at 15 percent of the gross amount payable (including FED & Provincial Sales Tax, if any).

    The tax rate shall be increased by 100 percent in case persons not on the ATL.

    The tax withheld shall be adjustable.

  • Indemnity bond to be made mandatory for international transshipment facility

    Indemnity bond to be made mandatory for international transshipment facility

    ISLAMABAD: Federal Board of Revenue (FBR) on Wednesday issued draft rules to make indemnity bond mandatory for shipping lines intending to use facility of international transshipment cargo within Pakistani sea ports.

    The FBR issued draft rules through SRO 685(I)/2020 to amend Customs Rules, 2001.

    According to the draft rules, shipping lines intending to use the facility of international transshipment would require to furnish an indemnity bond for an amount equal to the approximate value of goods expected to be imported in thirty days as security to ensure exit of goods outside the country within 30 days from the berthing of inward vessel.

    The FBR said that the indemnity bond would be forfeited apart from other consequential penal action under the Customs laws, if the shipping line misuses the facilitation of international transshipment.

    If goods still remain on the port after the expiry date including extended time allowed under the law, the shipping line would be responsible to remove the goods immediately unless the delay was attributed to the port authorities, the FBR added.

    According the draft rules the shipping lines would also liable to submit complete details of Import General Manifest (IGM).

    The shipping lines would require providing details, such as: port of loading; name of transshipment port of Pakistan; port of destination (final port of discharge at foreign destination); bill of lading number; name of foreign exporter; name of foreign importer; weight; seal number; and container number.

  • FBR updates withholding tax rates on payment to non-residents

    FBR updates withholding tax rates on payment to non-residents

    ISLAMABAD: Federal Board of Revenue (FBR) has updated withholding tax rates on payment made to non-residents for tax year 2021 under Section 152 of Income Tax Ordinance, 2001.

    The FBR updated withholding tax card 2020-2021 (up to June 30, 2020) after incorporating amendments made through Finance Act, 2020.

    According to the withholding tax rates:

    Under Section 152(1), every person shall deduct tax while making payments for royalties and fee for technical payments to non-resident.

    The withholding tax rate shall be 15 percent of the gross amount and it shall be increased by 100 percent in case the person is not on the Active Taxpayers List (ATL).

    Every person paying royalty or fee for technical services to a non-resident shall withholding tax on payment to non-resident person at the time the royalty or fee for technical services is actually paid

    The tax shall be minimum tax as per section 6 read with section 8.

    Under section 152(1A), the tax will be deducted from a non-resident person on the execution of;

    a) Contract or sub-contract under a construction, assembly or installation project in Pakistan including a contract for the supply of supervisory activities relating to such project.

    b) Any other contract for construction or services rendered relating there to.

    c) Contract for advertisement services rendered by TV Satellite Channels.

    The tax rate shall be 7 percent of the gross amount

    The tax shall be collected by every person from non-resident person at the time the amount is actually paid.

    The tax shall be minimum tax on the income of non-resident person arising from a contract.

    Under Section 152(1AA), the tax will be deducted from non-resident on any payment of insurance premium or re-insurance to a non-resident person.

    The tax shall be 5 percent of gross amount and 10 percent for persons not appearing in ATL.

    The tax shall be collected by every person making the payments to non-resident person at the time the amount is actually paid.

    The tax shall be minimum tax.

    Under Section 152 (1AAA) tax will be deducted on payments for advertisement services from non-resident person relaying from outside Pakistan.

    The tax rate shall be 10 percent of the gross amount.

    The tax shall be collected by every person making payment to non-resident at the time the amount is actually paid.

    The tax shall be minimum tax.

    Under Section 152(1C), the tax shall be deducted on remittance outside Pakistan, of fee for off-shore digital services, chargeable to tax u/s 6, to a non-resident person on behalf of any resident or a permanent establishment of a non-resident in Pakistan.

    The tax rate shall be 5 percent of the gross amount.

    The tax shall be collected by banking company or financial institution from non- resident at the time the amount is actually paid.

    Under Section 152(2) tax deduction on payment to non-resident, not otherwise specified.

    The tax rate shall be 20 percent of the gross amount and the rate shall be 40 percent for persons not appearing on the ATL.

    The tax shall be collected by every person making payments to non-resident person at the time the amount is actually paid.

    The withholding tax shall be adjustable.

    Under Section 152(2), as per clause 5AA of Part-II of the Second Schedule, the rate of tax to be deducted under sub-section (2) of section 152, in respect of payments to an individual, on account of profit on debt earned from a debt instrument, whether conventional or shariah compliant, issue by the Federal Government under the Public Debt Act, 1944 and purchased exclusively through a bank account maintained abroad, a non-resident Rupee account repatriable (NRAR) or a foreign currency account maintained with a banking company in Pakistan.

    The tax rate shall be 10 percent  of the gross amount and the tax rate shall be increased by 100 percent in case person is not on the ATL.

    The tax shall be collected by every person responsible for making payment to a non-resident person at the time of payment.

    The tax shall be final.

    Under Section 152(2A), every prescribed person making payment to a Permanent Establishment of Non- Resident.

    For:

    (a) Sale of goods

    (i) In case of a company the tax rate shall be 4 percent of the gross amount.

    (ii) Other than company cases the tax rate shall be 4.5 percent of the gross amount.

    (b) (i) In the cases of transport services, freight forwarding services, air cargo services, courier services, man power outsourcing services, hotel services, security guard services, software development services, IT Services and IT enabled services as defined in clause (133) of Part I of the Second Schedule, tracking services, advertising services (other than by print or electronic media), share registrar services, engineering services, car rental services, building maintenance services, services rendered by Pakistan Stock Exchange Ltd. & Pakistan Mercantile Exchange Ltd., inspection and certification, testing & training services.

    The tax rate shall be 3 percent and the tax rate shall be increased by 100 percent in case persons are not on the ATL.

    (ii) in case of a company the tax rate shall be 8 percent and it shall be 16 percent for persons not on the ATL.

    (iii) Other than company cases the tax rate shall be 10 percent and the rate shall be increased by 100 percent in case persons are not on the ATL.

    (c) Execution of a contract other than a contract for sale of goods or providing/ rendering of services.

    (i) In case of sports persons the tax rate shall be 10 percent and it shall be 20 percent for persons not on the ATL.

    (ii) Other than sports persons the tax rate shall be 7 percent and it shall be 14 percent in case persons are not on the ATL.

    The tax shall be collected by every prescribed person from non-resident at the time amount is paid.

    The tax shall be minimum tax for S.152(2A)(b) and the provisions of sub clauses (i), (ii) and (iii) of clause (b) of sub section (3) and sub-section (4A) of section 153 shall mutatis mutandis apply 152(2B)

    Provided that tax deductible under clause (a) of sub-section (2A) shall not be minimum tax where payments are received for sale of goods by a company being a manufacturer of such goods.

    Section 152A: Payment for Foreign Produced Commercials

    Tax to be deducted from non-resident while making payments for foreign produced commercial for advertisement on any television channel or any other media.

    The tax rate shall be 20 percent of the gross amount and it shall be 40 percent if persons are not on the ATL.

    The tax shall be collected by every person responsible for making payment to a non-resident person at the time of payment. The tax shall be final.

  • Rates of withholding tax on profit on debt updated for tax year 2021

    Rates of withholding tax on profit on debt updated for tax year 2021

    ISLAMABAD: Federal Board of Revenue (FBR) has updated withholding tax rates on profit on debt to be prevailed during Tax Year 2021. The FBR issued withholding tax card 2020/2021 after incorporating changes made through Finance Act, 2020.

    The rates of withholding tax on profit on debt under Section 151 of Income Tax Ordinance, 2001 to be collected by person making payment of profit/yield from recipients of (profit on debt) at the time the yield (profit on debt) is credited to the account of the recipient or is actually paid, whichever is earlier.

    According to the tax card:

    Section 151(1)(a) Yield or profit (profit on debt) on account, deposits or a certificate under the National Saving Schemes or Post Office Saving Account

    Up to Rs500,000 the tax rate shall be 10 percent of the gross yield/profit paid

    Exceeding Rs500,000 the tax rate shall be 15 percent of the gross yield/profit paid and 30 percent if the person is not on the Active Taxpayers list (ATL).

    The FBR said that it shall be minimum tax on the profits on debt arising to a taxpayer, except where-(a) Taxpayer is a company; or (b) Profit on debt is taxable u/s 7B.

    Under Section 151(1)(b) banking company or financial institution shall collect the withholding tax from recipient of profit on debt at the time the profit on debt is credited to the account of the recipient or is actually paid, whichever is earlier.

    The tax rate shall be 10 percent of the gross yield / profit on debt on payment of up to Rs500,000.

    On amount exceeding Rs500,000 the tax rate shall be 15 percent of the gross yield / profit on debt and it shall be increased by 100 percent in case person is not on the ATL.

    The FBR said that the tax shall be minimum tax on the profits on debt arising to a taxpayer, except where- (a) taxpayer is a company; or (b) profit on debt is taxable u/s 7B.

    Under Section 151(1)(c) the federal/provincial government/local authorities shall collect tax on profit on securities, other than those mentioned in Section 151(1)(a), issued by federal/provincial government or a local government from recipient of (profit on debt) at the time the profit on debt is credited to the account of the recipient or is actually paid, whichever is earlier.

    The tax rate shall be 10 percent of the gross yield/profit paid on amount up to Rs500,000.

    On amount exceeding Rs500,000 the tax rate shall be 15 percent of the gross yield/profit paid, the tax rate shall be increased by 100 percent in case person is not on the ATL.

    The FBR said that the tax shall be minimum tax on the profits on debt arising to a taxpayer, except where-(a) taxpayer is a company; or (b) profit on debt is taxable u/s 7B.

    Under Section 151(1)(d) banking company, a financial institution, a company or finance society shall collect withholding tax on profit on bonds , certificates, debentures, securities or instruments of any kind (other than loan agreements between borrowers and banking companies or development financial institutions) from recipient of profit on debt at the time the profit on debt is credited to the account of the recipient or is actually paid, whichever is earlier.

    The tax rate shall be 10 percent of the gross yield/profit paid on amount up to Rs500,000.

    On amount exceeding Rs500,000 the tax rate shall be 15 percent of the gross yield/profit paid, the tax rate shall be increased by 100 percent in case person is not on the ATL.

    The FBR said that the tax shall be minimum tax on the profits on debt arising to a taxpayer, except where-(a) taxpayer is a company; or (b) profit on debt is taxable u/s 7B.

  • FBR directs BS-19, BS-20 officers to submit performance reports

    FBR directs BS-19, BS-20 officers to submit performance reports

    ISLAMABAD: Federal Board of Revenue (FBR) has directed officers of BS-19 and BS-20 to complete their performance evaluation reports (PERs) for the consideration of promotion to next grade in the upcoming central selection board (CSB).

    The FBR in a circular issued on Monday said that the Establishment Division had informed that a meeting of CSB for consideration of promotion of officers from BS-20 to BS-21 and BS-19 to BS-20 post, was scheduled to be held shortly.

    It has been observed that PERs of the officers of IRS/PCS as per list given, who are in promotion zone, have not yet been received despite reminders.

    “All officers as per above list are requested to get complete their PERs urgently without further delay,” the FBR said.

    The FBR issued list of 13 IRS officers of BS-20 and 34 IRS officers of BS-19 who failed to submit their PERs.

    Further, the FBR said that 13 PCS officers of BS-20 and 22 PCS officers of BS-19 had failed to provide their PERs.

    It is pertinent to mention that the incomplete PERs of government officials may put them under forced retirement as envisaged in Government Servants (Directory Retirement from Service) Rules, 2020.