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 procures video surveillance system for sugar mills

ISLAMABAD: Federal Board of Revenue (FBR) has decided to procure Video Analytic Surveillance (VAS) system from a single vendor to install the equipment at all the sugar mills across the country, sources said on Thursday.

Earlier, it was decided that the cost of installation has to be borne by sugar mills but ongoing lackluster response and delaying tactics compelled the authorities to purchase the equipment for early solution of transparent monitoring of sugar production and supply.

On February 08, 2021, the FBR presented a summary regarding procurement of VAS for proper monitoring of the production and sale of sugar in compliance with the directive of the prime minister. The Economic Coordination Committee (ECC) of the Cabinet approved an allocation of Rs350 million as a Technical Supplementary Grant for installation of the most optimal VAS solution at the sugar mills’ premises during the current crushing season as requested by the FBR.

In order to properly monitor the production and sale of sugar and the attendant sales tax and income tax thereon, Federal Board of Revenue (FBR) issued SRO 889(I)/2020, dated 21.09.2020 warranting all sugar mills to install VAS System expecting that the process would be completed before official onset of the crushing season on 10.11.2020.

FBR ran a rigorous process of procurement as enshrined under the VAS Rules, 2020, and pre-qualified/approved seven vendors for supply and installation of the System on sugar factories.

The FBR said that the VAS System, however, has so far been installed only by a few sugar mills and those too are sub-optimal solutions. “Ostensibly, the cost, which under the prevailing rules is to be borne by the sugar mills, has been the key factor towards non-implementation of the VAS System.”

Sugar mill-owners, in an apparent effort to cut cost, went around getting demonstrations and quotations from all seven vendors consuming unending time in the process.

Those that went ahead with installation eventually opted for the cheapest and sub-standard solutions.

A relatively small contract size/volume (80 mills only) to be distributed over seven vendors, also did not prove enough an incentive for the vendors to aggressively invest in procurement of the systems and install in a timely fashion.

The last deadline, i.e., January 31, 2021 has already expired and it seems unlikely that the system would be installed in a satisfactory manner across the board by all the mills.

The FBR said that the situation warrants a change in approach.

Accordingly, FBR has been tasked to select and contract one vendor to install the video-analytics solution across all manufacturers of sugar in Pakistan and in the shortest possible time.

The cost is to be borne by the government and the vendor will submit its invoices to FBR for payment.

February 11, 2021
Board approves establishment of Tax Policy Unit

ISLAMABAD: The Federal Board of Revenue (FBR) Policy Board on Thursday approved establishment of Tax Policy Unit under the administrative control of the Finance Division.

Federal Minister for Finance and Revenue, Dr. Abdul Hafeez Shaikh, chaired the 5th meeting of the FBR Policy Board at FBR HQs today.

Federal Minister for Privatization Mohammad Mian Soomro, Adviser to the PM on Commerce Abdul Razak Dawood, Adviser to the PM on Institutional Reforms & Austerity Dr. Ishrat Hussain, SAPM on Revenue Dr. Waqar Masood, Chairman FBR, senior members of FBR and representatives of private sector participated in the meeting.

The FBR made a presentation regarding establishment of Tax Policy Unit in accordance with the decision of the Cabinet dated 29 November, 2018.

Members of the Policy Board gave a valuable input highlighting the advantages of keeping tax policy function independent of administrative function.

After due deliberation, the Chair accorded approval for the establishment of ‘Tax Policy Unit’ under the administrative control of the Finance Division.

A new setup would be created that will include members from FBR and also engage fiscal and economic experts from academia, think tanks and private sector to present holistic proposals for mobilising revenue generation with greater autonomy.

Tax Policy Unit would work out policy recommendations for domestic tax collection on the lines of the National Tariff Commission which operates under the Ministry of Commerce.

FBR’s Technical Committee apprised the Policy Board about the measures taken to identify anomalies and simplify the taxation system for better understanding of the business community.

FBR requested to include senior representatives from the Ministry of Commerce and Ministry of Industries & Production for better coordination and effective policy making in this regard.

Chairman, Complaint Oversight Committee (COC) briefed the Policy Board about the working of a newly developed complaint portal which is currently running on trial basis.

The complaint resolution system is designed to facilitate businessmen, traders, Small and Medium Enterprises (SMEs) and large tax payers.

All complaints can be filed at one place. SOPs for complaint resolution and oversight by COC are being finalized and system would be formally launched soon.

The Chair directed to disseminate relevant information about the working of complaint registration mechanism and ensure the contact details are readily available for public consumption.

The Finance Minister further directed FBR to expedite the process of Income Tax refunds of less than Rs.50 million to uphold commitment of the government to facilitate tax payers.

February 11, 2021
FBR issues rules for direct transfer of income tax refund payments

ISLAMABAD: Federal Board of Revenue (FBR) on Wednesday introduced rules for making payment of income tax refunds directly to taxpayers’ bank account.

The FBR issued SRO 175(I)/2021 dated February 10, 2021 to notify draft amendments to Income Tax Rules, 2002.

According to the draft rules, a Centralized Income Tax Refund Office (CITRO) would be established for centralized payment of refunds.

After completing all codal formalities the Commissioner Inland Revenue shall pass an order under Section 170(4) and transmit the order to CITRO. The same shall be reflected in CITRO in real time.

The CITRO shall generate an electronic advice of approve amount for onwards submission to the State Bank of Pakistan (SBP) through dedicated VPN tunnel established between FBR and SBP. The SBP shall credit amount directly to the account of taxpayer.

The SBP shall confirm the transfer of amount to the taxpayers account or vice versa electronically to CITRO.

The CITRO shall reconcile the payments issued as per instructions during the month with the electronic scrolls received from the SBP and record the outcome of such reconciliation in the system.

Where any payment instruction is returned back by the SBP due to any reason, the CITRO shall transmit the same to concerned commissioner for correction in payment instructions.

The FBR shall ensure that complete data of refunds issued is made available to the concerned commissioner electronically.

February 10, 2021
Sales tax law explains ‘time of supply’

Sales Tax Act, 1990 has explained ‘time of supply’ for collection of sales tax.

The Sales Tax Act, 1990 [updated up to June 30, 2020 issued by the Federal Board of Revenue (FBR)] explained the term as:

“Time of supply”, in relation to,–

(a) a supply of goods, other than under hire purchase agreement, means the time at which the goods are delivered or made available to the recipient of the supply” “or the time when any payment is received by the supplier in respect of that supply, whichever is earlier;

(b) a supply of goods under a hire purchase agreement, means the time at which the agreement is entered into; and

(c) services, means the time at which the services are rendered or provided;

Provided that in respect of sub clause ( a) ,(b) or (c), where any part payment is received, –

(i) for the supply in a tax period, it shall be accounted for in the return for that tax period; and

(ii) in respect of exempt supply, it shall be accounted for in the return for the tax period during which the exemption is withdrawn from such supply .

February 10, 2021
Who are Tier-1 retailers under Sales Tax Act?

The term ‘Tier-1 retailer’ was introduced through Finance Act, 2017 by inserting relevant clause into Sales Tax Act, 1990.

All Tier-1 retailers are required to integrate all their Point of Sales (POSs) with computerized system of the Federal Board of Revenue (FBR).

The Sales Tax Act, 1990 (updated up to June 30, 2020 issued by the FBR), defined Tier-1 retailer as:

“Tier-1 retailer” means a retailer falling in any one or more of the following categories, namely:-

(a) a retailer operating as a unit of a national or international chain of stores;

(b) a retailer operating in an air-conditioned shopping mall, plaza or centre, excluding kiosks;

(c) a retailer whose cumulative electricity bill during the immediately preceding twelve consecutive months exceeds Rupees twelve hundred thousand;

(d) a wholesaler-cum-retailer, engaged in bulk import and supply of consumer goods on wholesale basis to the retailers as well as on retail basis to the general body of the consumers”;

(e) a retailer, whose shop measures one thousand square feet in area or more; and

(f) any other person or class of persons as prescribed by the Board.”

February 10, 2021
FBR warns against issuing manual tax notices

KARACHI: Federal Board of Revenue (FBR) has warned tax officials of initiating disciplinary proceedings for issuing manual tax notices, including audit and assessment.

The FBR in an official communication sent to Large Taxpayers Offices (LTOs), Regional Tax Offices (RTOs), Corporate Tax Offices (CTOs) and Medium Taxpayers Office (MTO) that instances had been reported to the revenue board that field officers tend to issue manual notices and assessment orders.

These manual notices have created problems for the taxpayers as they preferred to file appeal and were also adversely affecting the efficiency of the field formations.

The FBR issued following instructions to the tax offices:

i. All statutory notices available in IRIS shall be issued electronically without any exception; manual issuance of notices, available in IRIS, is not allowed.

ii. All orders shall be issued electronically through IRIS; issuance of manual orders is not allowed.

iii. All Commissioners are requested to conduct periodic inspection to ensure that notices/orders are issued electronically.

Any divergence from instructions shall be viewed as inefficiency and shall entail disciplinary proceedings, the FBR said.

February 10, 2021
What is tax fraud?

Sales Tax Act, 1990 has defined ‘tax fraud’ as doing of any act knowingly without lawful excuse.

The Sales Tax Act, 1990 [updated up to June 30, 2020 issued by the Federal Board of Revenue (FBR)] explained ‘tax fraud’ as:

“Tax fraud” means knowingly, dishonestly or fraudulently and without any lawful excuse (burden of proof of which excuse shall be upon the accused) –

(i) doing of any act or causing to do any act; or

(ii) omitting to take any action or causing the omission to take any action, including the making of taxable supplies without getting registration under this Act; or

(iii) falsifying or causing falsification the sales tax invoices,

in contravention of duties or obligations imposed under this Act or rules or instructions issued thereunder with the intention of understating the tax liability or underpaying the tax liability for two consecutive tax periods or overstating the entitlement to tax credit or tax refund to cause loss of tax.

February 9, 2021
Sales Tax Act defines ‘supply’

Sales Tax Act, 1990 has explained the word ‘supply’ for the purpose of imposition and collection of tax.

The Sales Tax Act, 1990 [updated up to June 30, 2020 issued by the Federal Board of Revenue (FBR)] has defined the word ‘supply’ as:

“Supply” means a sale or other transfer of the right to dispose of goods as owner, including such sale or transfer under a hire purchase agreement, and also includes –

(a) putting to private, business or non-business use of goods produced or manufactured in the course of taxable activity for purposes other than those of making a taxable supply;

(b) auction or disposal of goods to satisfy a debt owed by a person;

(c) possession of taxable goods held immediately before a person ceases to be a registered person; and

(d) in case of manufacture of goods belonging to another person, the transfer or delivery of such goods to the owner or to a person nominated by him:

Provided that the Board, with the approval of the Federal Minister-in-charge, may, by notification in the official Gazette, specify such other transactions which shall or shall not constitute supply;

The law also explained “supply chain” as the series of transactions between buyers and sellers from the stage of first purchase or import to the stage of final supply.

February 9, 2021
What is sales tax?

Sales Tax Act, 1990 has explained the meaning of sales tax imposed on supply of goods.

The Sales Tax Act, 1990 [updated up to June 30, 2020 issued by the Federal Board of Revenue (FBR)] has explained the following:

“sales tax” means – –

(a) the tax, additional tax, or default surcharge levied under this Act;

(b) a fine, penalty or fee imposed or charged under this Act; and

(c) any other sum payable under the provisions of this Act or the rules made thereunder;

“sales tax account” means an account representing the double entry recording of sales tax transactions in the books of account.

February 9, 2021
Sugar mills monitoring: ECC approves Rs350 million for VAS purchase

ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet on Monday approved Rs350 million for procurement of Video Analytics System (VAS) to monitor production of sugar mills.

Federal Minister for Finance and Revenue, Dr. Abdul Hafeez Shaikh, chaired the meeting of the ECC.

The Federal Board of Revenue (FBR) presented a summary regarding procurement of VAS for proper monitoring of the production and sale of sugar in compliance with the directive of the prime minister.

“The ECC approved an allocation of Rs350 million as a Technical Supplementary Grant for installation of the most optimal VAS solution at the sugar mills’ premises during the current crushing season as requested by the FBR,” a statement said.

Federal Minister for Planning, Development and Special Initiatives Asad Umar, Federal Minister for Energy Omar Ayub Khan, Adviser to the PM on Institutional Reforms and Austerity Dr. Ishrat Hussain, SAPM on Revenue Dr. Waqar Masood, SAPM on Power Tabish Gauhar, Governor State Bank Reza Baqir, Chairman FBR and Chairman Board of Investment participated in the meeting.

Secretary, Ministry of Energy briefed the ECC about the detailed report by the Implementation Committee regarding conversion of MOUs into Agreements with IPPs to devise a payment mechanism for clearing outstanding payables.

The Implementation Committee has agreed the payment mechanism with the 46 IPPs to clear the outstanding dues as on 30th November, 2020.

The ECC commended the efforts made by the Implementation Committee and acknowledged the input of all concerned including Federal Minister for Energy, Federal Minister for Planning, SAPM on Power, Finance Division, Chairman Federal Land Commission, SAPM on Revenue, Governor SBP etc in working out a viable payment mechanism with the IPPs which will eventually save approximately Rs836 billion for the government over the average life of the projects.

The ECC approved the report of the Implementation Committee with a direction to present the same before Cabinet for final approval.

February 8, 2021