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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.

  • FBR starts payment of income tax refunds

    FBR starts payment of income tax refunds

    ISLAMABAD: Federal Board of Revenue (FBR) on Friday started payment of income tax refunds directly to the bank accounts of those taxpayers who have provided their IBAN.

    FBR sources said that the FBR had received Rs10 billion from the finance division for the payment of income tax refunds. The FBR issued cumulative up to Rs5 million to a taxpayer.

    The FBR explained term cumulative as the total amount of refund in respect of a taxpayer (for the tax year 2014 to 2019) duly processed and sanctioned under the law.

    The release of income tax refunds is under Prime Minister’s relief package in order to reduce impact of the coronavirus on businesses.

    Under the prime minister package an amount of Rs100 billion has been allocated for the payment of claims under sales tax, income tax and duty drawback.

    FBR sources said that so far around Rs58 billion, including income tax refunds, had been disbursed to the claimants.

    The business community was not happy with the decision to put restriction on disbursement of income tax refunds.

    It is most unfortunate and disappointing to know that FBR has put ceiling of Rs. 5 million (cumulative of 5 years).

    This has closed the access to even those business entities which have cumulated tax refunds of even one rupee more than Rs. 5 million in 5 years from 2014-15 to 2018-19income tax refunds.

    Nisar said that the said ceiling instructions issued by FBR is discriminatory and strongly asked Finance Ministry to instruct for releasing of at least Rs. 5 million income tax refunds to all businessmen regardless of level of their income tax refunds accumulation in the last 5 years.

    He said that the apex body is of the view that Ministry of Finance should also consider to release half of the accumulated income tax refunds to help in economic revival exercise under taken by the government.

  • FBR officials treat taxpayers as criminal using search powers

    FBR officials treat taxpayers as criminal using search powers

    KARACHI: Business community has resented the use of powers related to search by Inland Revenue officers and treating registered taxpayers as criminal.

    Karachi Chamber of Commerce and Industry (KCCI) in its proposals for budget 2020/2021 demanded amending such provisions to avoid such misuse of powers.

    The KCCI while highlighting provision Section 40 of Sales Tax Act, 1990, said that the officers of Inland Revenue at their discretion and opinion may obtain a warrant from the magistrate and conduct searches of the premises of registered persons at any time.

    The search made under sub-section (1) shall be carried out in accordance with the relevant provisions of the Code of Criminal Procedure, 1898 (V of 1898).

    The chamber said that the officials are treating registered persons as criminals.

    Powers to enter and search any place gives immense powers to officers of Inland Revenue. Such powers can be misused for harassment and extortion of tax payers.

    The law also does not define the “place” which can be search, therefore it may include homes and personal residences of tax payers.

    The chamber proposed that the provisions should be amended to prevent misuse.

    “No searches should be made without prior notice in writing to the registered person. No searches may be conducted outside the working hours and holidays or immediately prior to holidays.”

    The proposed amendment shall alleviate fears of the business persons and it will also encourage new tax-payers and curtail discretionary powers.

  • Proposed powers for reopening past 10 years tax cases rejected

    Proposed powers for reopening past 10 years tax cases rejected

    KARACHI: Karachi Chamber of Commerce and Industry (KCCI) on Wednesday said it will oppose any move to grant powers to tax officials regarding opening cases of past 10 years.

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  • FBR recommended to reduce record retention period to three years

    FBR recommended to reduce record retention period to three years

    KARACHI: Federal Board of Revenue (FBR) has been recommended to reduce the time limit to past three years for retention of sales tax record.

    Karachi Chamber of Commerce and Industry (KCCI) in its proposals for budget 2020/2021 submitted to the FBR, highlighted the issue of Section 24 of Sales Tax Act, 1990, which required retention of record and document for six years.

    The KCCI said that the long time period only allows the officers of Inland Revenue to blackmail and harass the tax payers by issuing demands from closed accounts as far back as 6 years.

    The negative impact of such provision is that the revenue officials spend more time in fishing for discrepancies in old records instead of focusing their efforts on broadening of tax base.

    The KCCI proposed that the period retention of record and documents be reduced to 3 years, which is an established practice worldwide for all financial transactions.

    Regional Tax Offices (RTOs) and officers will have to work more on identifying new tax-payers instead of fishing in old records and create demand.

    The period of 6 years is counter-productive for revenue generation and renders the RTOs inefficient.

    In this era of computerization where all the transactions of the registered persons are cross verified instantaneously by the FBR, and the audits are conducted without any delay, the period of maintenance of records and documents should be reduced from 6 to 3 years.

  • Notice can be sent to any person requiring declaration of assets of spouse, minor children

    Notice can be sent to any person requiring declaration of assets of spouse, minor children

    A Commissioner Inland Revenue of the Federal Board of Revenue (FBR) has been vested with substantial powers under the Income Tax Ordinance, 2001, to scrutinize the asset details of individuals, including those pertaining to their families, by issuing notice.

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  • FBR allows repayment of customs duty on import of plastic raw material

    FBR allows repayment of customs duty on import of plastic raw material

    ISLAMABAD: Federal Board of Revenue (FBR) has allowed repayment of customs duty at Rs5.42 per kilogram on import of raw material for manufacturing of plastic goods meant for export.

    The FBR on Tuesday issued SRO 461(I)/2020 to amend SRO 212(I)/2009 to allow repayment of export duty on import of raw material.

    Through the instant SRO the FBR allowed duty drawback on import of 10 different raw material for the manufacturing of plastic goods at the rate of Rs5.42 per kilogram.

    The FBR allowed duty drawback on export of manufactured products from May 20, 2020. The FBR said that repayment of custom duty shall be paid on manufacturing of 100 percent goods including packaging materials used in the goods meant for export such as bottles, jars, vials, containers, droppers and the like.

    The conditions for the facility prescribed in the actual SRO is that:

    — the manufactured goods are exported out of Pakistan and an application for repayment of customs–duties is presented to the proper officer of Customs within two hundred and ten days of such exportation or within one hundred and eighty days from the date of realization of foreign exchange as shown on Bank Credit Advice issued in accordance with the current directive of the State Bank of

    Pakistan; and

    — the exporter makes a declaration on the goods declaration filed under section 131 of the Customs Act, 1969 (IV of 1969) and on other export documents for his claim for repayment of the customs–duties paid on the imported raw materials used in the production or manufacture of the goods being exported.

  • Above 120,000 income tax returns added to ATL during lockdown

    Above 120,000 income tax returns added to ATL during lockdown

    ISLAMABAD: The tax authorities have received above 120,000 income tax returns since launch of new Active Taxpayers List (ATL) on March 01, 2020 and during ongoing lockdown to prevent spread of coronavirus, according to updated list issued June 01, 2020.

    The updated ATL for tax, around 120,000 taxpayers filed their annual returns for tax year 2019 since March 01, 2020.

    The number of active taxpayers increased to over 2.65 million as of May 31, 2020 from 2.53 million returns as shown in new ATL for tax year 2019.

    The FBR updates ATL every week and on an average the revenue body receives around 20,000 returns per week. However, due to lockdown in the country after the outbreak of coronavirus the number of financial transactions had fallen drastically.

    It is worth mentioning that additional 120,000 income tax returns have been filed after the due date. The due date for filing income tax returns for tax year 2019 was February 28, 2020.

    As per law it was mandatory for individuals, Association of Persons (AOPs) and corporate entities to file annual return in order to avail reduced rates of withholding tax on certain transactions.

    Filing return after due date a person is required to pay surcharge in order to appear on ATL besides paying late filing penalty.

    The sources said changes in law through Finance Act, 2019 were also compelling to file their returns. Through Finance Act, 2019, Tenth Schedule was inserted to Income Tax Ordinance, 2001 under which a person not appearing on the ATL would be liable to pay 100 percent additional withholding tax while making certain transactions.

    Prior to this change the persons not filing income tax returns were liable to pay enhanced rate of withholding tax.

    Previously, the law provides for the concept of a non-filer and stipulates higher withholding rates for the same which were adjustable at the time of filing of income tax return.

    A senior FBR official said that such tax regime had created a misconception that a non-filer can go scot free by choosing not to file income tax return.

    The measure are meant to increase the number of filers, however over time the focus shifted to raising additional revenue only.

    The measure had not achieved the desired results as the regime did not provide for any legal framework to ensure filing of return by such non-filers, the official said.

    In order to remove the aforesaid misconception, the concept and the term of ‘non-filer’ was abolished from the statute, the official added.

  • FBR starts digital scrutiny of taxpayers’ information

    FBR starts digital scrutiny of taxpayers’ information

    ISLAMABAD: The Federal Board of Revenue (FBR) has established Tax Information Processing Unit (TIPU) for utilization of information available at multiple databases of the tax authorities.

    According to an office order issued on Monday, the FBR had embarked an ambitious plan for enhancing revenues, through efficient utilization power of IT for overall system improvement.

    “There is an emerging need for transforming existing raw data, available in multiple databases of the FBR, into meaningful insights, through which actionable steps may be suggested to field formation with regard to untapped revenue potential and potential leakages,” the FBR said.

    To realize the true potential of IT system, developed over years, it is imperative to engage a cross-functional team of professionals, available in FBR, who may perform following tasks, before generating meaningful insights from the datasets available in its IT systems: data mining; statistical analysis; data analytics; and MIS Reporting.

    The insights gained through data analysis may potentially generate actionable data which IR Operations Wing may convey to field offices, so that untapped revenue potential may be realized and potential leakages may be checked.

    The FBR said that in view of foregoing a cross functional TIPU had been established in IR Operations Wing, FBR manned by FBR’s regular workforce and temporary hiring of IT-experts, on need basis.

    The following officers are designated as domain team of the TIPU, under the supervision of Member IR Operatoins:

    a. Tariq Hussain Shaikh, Chief (IR&I)-Coordinator

    b. Ms. Rezwana Siddiqui, Chief (IR-Analysis)

    c. Zulfiqar Ali Gopang (S.S. IT)

    d. Naveed Afgan (Dy. Dir/Secy MIS)

    e. Syed Asif Jamil (AD/S.S

    f. Imran Ullah (AD-Audit)

    The FBR said that the TIPU would be operated IT experts, who would be hired on market-based salaries. The IT experts would design and develop IT modules, for data analytics.

  • Bilingual one-page income tax return form advised

    Bilingual one-page income tax return form advised

    KARACHI: Federal Board of Revenue (FBR) has been advised to make one-page simple income tax return form and that should be available in Urdu and English to facilitate taxpayers.

    In its proposals for budget 2020/2021, the Karachi Chamber of Commerce and Industry (KCCI) said that every year changes are made in income tax form and ironically, it becomes more confusing and difficult for the tax-payers to fill.

    It is particularly cumbersome for the Small and Medium Enterprises (SMEs) including individuals and Association of Persons (AOPs).

    The KCCI said that taxpayers have to seek assistance from consultants and pay large amount of fee only to comply with the requirements of tax return.

    Due to the changes every year, tax-payers have to wait for the new form to be issued by the FBR which takes a month or two after the new budget is approved.

    “The complicated form only helps the business of consultants and tax practitioners at the expense of compliant taxpayers,” the KCCI said.

    It is one of the reasons that many individuals prefer to stay out of tax regime and a deterrent to broadening of tax base.

    The Karachi Chamber proposed that separate income tax return forms for companies, AOPs, individuals and salaried class should be created.

    Forms for SMEs and individuals and retailers should be a simple one page form both in English and Urdu.

    Manual completion and filing should be allowed for individuals and SMEs in order to encourage documentation.

    Extreme penalties and charges should be avoided in case of late filing.

    Errors/short payment should be notified to registered person within two months of filing and correction of errors should be allowed to tax-filer for up to 3 months of filing without requirement of commissioner’s approval.

    The chamber said that incorporation of proposal will help in simplification of filing procedures and documentation. Besides it will also help in broadening of tax base and increase in number of filers.

    Further, it will save unnecessary expenses on fees of consultants and tax practitioners. It will eliminate corruption and harassment.

  • All income tax audit selections should bring under one provision

    All income tax audit selections should bring under one provision

    KARACHI: Federal Board of Revenue (FBR) has been urged to eliminate audit selection under various provisions of Income Tax Ordinance, 2001 for the confidence building of taxpayers.

    Karachi Chamber of Commerce and Industry (KCCI) in its proposals for budget 2020/2021 submitted to the FBR, said that presently audit proceedings can be started u/s 177 as well as through balloting u/s 214C and like-wise enquiries can also be made by the Commissioner u/s 122(5A).

    There is a concept of a special audit panel u/s 177(11) as well.

    Sub-Section 7 is ambiguous and provides the Commissioner and his sub ordinates with a tool to harass, extort and victimize any taxpayer at will.

    The Commissioner can reopen the audit of any person or firm at will on unsubstantiated grounds.

    Under sub-Section 4 of Section 177, any person employed by a firm to conduct audit function may be authorized by the Commissioner to exercise powers under sections 175 and section 176.

    The chamber said that the revenue collection through such recovery proceedings is hardly Rs.92 billion whereas the costs due to litigation, involvement of entire tax collection machinery and declining number of tax filers, is far more than the collection.

    Multiple Audits under various provisions have eroded the trust of tax-payers in the FBR. RTOs and LTUs. Audit functions under various provisions have created confusion and complexity in tax regime.

    Such provisions are also prone to misuse and a source of harassment.

    The KCCI proposed that all Audit functions should be brought under one provision of Income Tax Ordinance rather than various over-lapping provisions with clear and well defined parameters.

    Audit Parameters should be transparent and open to taxpayers.

    Further, Sub-Section 7 may be deleted.

    Powers of the Commissioner and sub-ordinate officials should be curtailed to restore the trust of taxpayers and encourage broadening of tax-base.

    Such Audits should be restricted to specific queries or objections and call for relevant document only rather than opening and re-opening a comprehensive audit every time.

    The chamber said that it will bring transparency and clarity to Audit functions and rules governing the same.

    Prevent harassment to tax payers and abuse of powers by Inland Revenue officials. Broaden tax base by restoring confidence in the system.