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.

Non-filers may face concealment of income charges

ISLAMABAD: Federal Board of Revenue (FBR) may invoke provisions of Tenth Schedule of Income Tax Ordinance, 2001 under which non-filers of income tax returns for tax year 2020 may face charges of concealment of income.

Rule 3 of the Tenth Schedule of Income Tax Ordinance, 2001, explained:

(1) Where for a tax year person’s tax has been collected or deducted in accordance with rule 1 and the person fails to file return of income for that tax year within the due date provided in section 118 or as extended by the Board, the Commissioner shall notwithstanding anything contained in sub-sections (3) and (4) of section 114, within sixty days of the due date provided in section 118 or as extended by the Federal Board of Revenue (FBR) make a provisional assessment of the taxable income of the person and issue a provisional assessment order specifying the taxable income assessed and tax due thereon.

(2) In making the provisional assessment under sub-rule (1), the Commissioner shall impute taxable income on the amount of tax deducted or collected under rule 1 by treating the imputed income as concealed income for the purposes of clause (d) of sub-section (1) of section 111:

Provided that the provision of section 111 shall be applicable on unexplained income, asset or expenditure in excess of imputed income treated as concealed income under this rule.

Explanation.- For the removal of doubt it is clarified that the imputable income so calculated or concealed income so determined shall not absolve the person so assessed, from requirement of filing of wealth statement under sub-section (1) of section 116, the nature and source of amounts subject to deduction or collection of tax under section 111, section of audit under section 177 or 214C or subsequent amendment of assessment as provided in rule 8 and all the provisions of the Ordinance shall apply.

The last date for filing income tax return for tax year 2020 was expired on December 08, 2020 and a large number of taxpayers have failed to comply with the mandatory requirement of filing annual return.

At present the applicable ATL is of tax year 2019 and will remain applicable till February 28, 2021. The ATL for tax year 2020 will be issued on March 01, 2021 and will applicable till February 28, 2022.

The FBR has received record 3 million returns for tax year 2019 and making all efforts to further increase the number for the tax year 2020.

According to rule 01 of the Tenth Schedule the tax rate of withholding is 100 percent higher for persons having taxable income but not on the ATL.

December 25, 2020
FBR starts processing income tax refunds of tax year 2020

ISLAMABAD: Federal Board of Revenue (FBR) has started processing income tax refunds for the tax year 2020 and issued instructions in this regard.

The FBR issued a notification to all the chief commissioners of tax offices stating that payment of refunds or adjustment of refund have identical financial impact for the exchequer and therefore, both warrant equal focus and application of mind so that no undue and undetermined refund is either paid out or adjusted to/by the taxpayers.

The FBR said that in this connection, the data of income tax refund applications had been obtained from field formations/PRAL for tax year 2020, and examined.

“The data transpire that out of the total refund claims of Rs74.313 billion in the tax year 2020, 6,073 applications covering an amount of Rs4.254 billion have been lodged,” the FBR said.

The FBR told the chief commissioners that current year’s refund liability should be paid out of the current year’s revenue stream and that no due refund should be withheld.

It would also help us ward off unnecessary complaints against us for delayed processing of refund applications and/or non-payment of refund to the taxpayers.

Therefore, the tax offices are advised to dispose of all applications lodged under section 170 of the Income Tax Ordinance, 2001 by January 31, 2021.

December 25, 2020
IR offices to observe extended working hours on December 31

The Federal Board of Revenue (FBR) announced on Thursday that the offices of Inland Revenue will extend their working hours on December 31, 2020, until midnight.
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December 24, 2020
FBR approves concession on electricity, gas supply to manufacturers

The Federal Board of Revenue (FBR) has given its approval for a concessionary regime on the supply of electricity and gas to manufacturing units. The decision, announced in a notification issued on Wednesday, is set to benefit manufacturers and exporters who have been availing the zero-rating of sales tax under the rescinded SRO 1125(I)/2011 dated December 31, 2011.
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December 24, 2020
Benami assets worth Rs7.4 billion detected; 78 percent contributed by Karachi Zone

ISLAMABAD: The Anti-Benami Zones established by the Federal Board of Revenue (FBR) have successfully detected benami assets totaling Rs7.4 billion, following thorough investigations in Karachi, Islamabad, and Lahore.
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December 23, 2020
FBR develops e-module for settlement of assessment cases

ISLAMABAD: The IT Wing of Federal Board of Revenue (FBR) has developed e-module for settlement of assessment cases under Section 122D of Income Tax Ordinance, 2001.

In an office memo issued to chief commissioners Inland Revenue (CCIR) of Large Tax Offices (LTOs), Medium Tax Office (MTO), Corporate Tax Offices (CTOs) and Regional Tax Offices (RTOs), the FBR said that e-module of agreed assessment under Section 122D of Income Tax Ordinance, 2001 is available in IRIS.

The FBR said that the option to avail the opportunity of agreed assessment is visible to taxpayers, who have been issued show cause notices under Section 122(9) of the Ordinance.

The FBR directed the CCIRs to sensitize unit officers about the e-module and also aware legal fraternity and taxpayers about this addition in IRIS.

The FBR further directed the CCIRs to provide information in respect of taxpayers, who opted for agreed assessment by 5^th of every month along with details of number of cases applied, number of cases finalized and demand created in settlement cases.

The CCIRs have also been directed to form assessment oversight committees at their tax offices and send details to the FBR by January 05, 2021.

The Section 122D of the Ordinance has been introduced through Finance Act, 2020. Prior to the Finance Act, 2020 there was no mechanism under the Ordinance for negotiated settlement of tax disputes before finalization of an assessment/amended assessment.

In order to facilitate taxpayers, reduce burden on the formal appeal system and effecting speedy recoveries, a new section 122D enabling agreed assessment has been inserted through the Finance Act, 2020.

If a taxpayer intends to settle his case on or after receipt of a notice for amendment of assessment under section 122(9) of the Ordinance, he shall have the option of filing an offer of settlement in the prescribed form before the Assessment Oversight Committee for resolution of his dispute.

In addition, the taxpayer shall also be obliged to file a reply in response to notice for amendment of assessment under section 122(9) of the Ordinance before the concerned Commissioner.

The Assessment Oversight Committee shall comprise the Chief Commissioner Inland Revenue, the Commissioner Inland Revenue and the Additional Commissioner Inland Revenue having jurisdiction over the taxpayer.

The Committee shall examine the offer of settlement and may also call for the record of the case. Moreover, the Committee shall have the mandate to accept or modify the offer of settlement of the taxpayer through consensus after affording the taxpayer an opportunity of being heard.

In case, the Committee’s decision is acceptable to the taxpayer, the taxpayer shall be obliged to deposit the amount of tax payable, including penalty and default surcharge, in accordance with the decision of the committee pursuant to which the Commissioner shall amend the assessment in accordance with the decision of the committee.

Moreover, in such instances, the taxpayer shall forego his right to file appeal against such amended assessment.

In case, the Committee is unable to arrive at a consensus in respect of the offer of settlement or the taxpayer is not satisfied with the decision of the Committee, the concerned commissioner shall decide the case on the basis of reply filed by the taxpayer in response to notice of amendment issued under section 122(9) of the Ordinance.

Cases involving concealment of income or interpretation of question(s) of law having effect on other cases have been ousted from the purview of the agreed assessments under section 1220 of the Ordinance.

December 23, 2020
FBR withdraws regulatory duty on cotton import

The Federal Board of Revenue (FBR) has taken a significant step to boost the textile industry by withdrawing the five percent regulatory duty on the import of cotton yarn.
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December 23, 2020
Tax rate at 15 percent applicable on profit on debt: FBR

ISLAMABAD: Federal Board of Revenue (FBR) on Wednesday said that the general rate of tax is 15 percent on yield on investments. However, it is reduced at 10 percent where annual profit is below Rs500,000.

The FBR issued Income Tax Circular No. 07 of 2020 to clarify tax rate under Section 151 of the Income Tax Ordinance, 2001.

The FBR said: “General rate of tax deduction on profit on dent under Section 151 of the Income Tax Ordinance, 2001 is 15 percent of the profit.

“However, provision to the Division IA of the Part III of the First Schedule to the Income Tax Ordinance, 2001, provides that tax rate shall be 10 percent in case where the taxpayer furnishes a certificate to the payer of the profit on debt that during the tax year, total yield or profit payable in this case shall remain at Rs500,000 or less.”

The FBR said that queries had been received regarding the nature or format of the certificate.

“The required certificate is to be furnished by the recipient of the profit on debt to the payer of such profit to the effect that total profit on debt received/receivable during the tax year from all investments in his case shall not exceed Rs500,000,” the FBR said, adding that the requisite certificate can be submitted on plain paper.

According to the withholding tax card for tax year 2021 issued by the FBR, the profit on debt may be on account of deposit, account or a certificate under the National Saving Schemes or Post office savings account.

Besides, the same rates shall be applicable on profit on debt paid by a banking company or financial institution on account or deposit maintained.

Furthermore, the tax rates are also applicable 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.

The tax rate of 15 percent shall be increased by 100 percent to 30 percent for persons not appearing on Active Taxpayers List (ATL).

December 23, 2020
FBR directs conducting audit to cross match turnover

ISLAMABAD: Federal Board of Revenue (FBR) has directed field offices to conduct desk audit of returns filed for tax year 2020 to cross match turnover for avoiding misuse/mis-declaration.

The FBR on Tuesday said that it had clarified on December 03, 2020 on ‘technical issue in filing of tax return 2020 dated December 03, 2020’ on a communication sent by Lahore Chamber of Commerce and Industry (LCCI).

The LCCI had requested for clarification regarding the treatment of closing stock at the time of change of taxation regime from final to minimum tax.

The FBR said that the chamber had pointed out in case of importers, the tax collected at import stage during tax year 2019 had come final tax at the time of collection, therefore, the turnover or income arising from the disposal of such closing stock should not be included in taxable income for tax year 2020 as this would result in double taxation.

The FBR said that it had examined the matter. “The turnover resulting from disposal of closing stock already declared under Final Tax Regime (FTR) in previous tax year should not make part of next year’s turnover as it would be tantamount to double taxation. Therefore, such turnover should not be declared in the column of ‘subject to NTR [Normal Tax Rate] for tax year 2020.”

The FBR further said: “In order to void misuse/mis-declaration, field formation, are required to conduct desk audit/audit of all such cases for tax year 2020 and cross match turnover with relevant sales tax declarations.”

December 22, 2020
Dr. Faiz Illahi Memon posted as Executive Director of State Life Insurance

ISLAMABAD: Dr. Faiz Illahi Memon, a senior officer of Inland Revenue Service (IRS) has been posted as Executive Director of State Life Insurance Corporation of Pakistan on deputation basis for three years.

A notification issued on Tuesday, the Federal Board of Revenue (FBR) said that Dr. Faiz Illahi Memon, BS-21 officer of IRS presently posted as Member (FATE) FBR, Islamabad has been placed at the disposal of State Life Insurance Corporation of Pakistan for posting as Executive Director, State Life Insurance Corporation of Pakistan, on deputation basis for a period of three years or till the date of his superannuation, whichever is earlier, on standard terms and conditions of deputation.

Grant of performance allowance of the officer has been discontinued during his deputation period, the FBR added.

According to another notification, Dr. Faiz Illahi Memon has relinquished the charge of the post of Member (FATE) FBR Islamabad with effect from December 22, 2020.

December 22, 2020