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.

Reduced rates of electricity, gas: ECC approves procedure for registration

ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet on Monday approved the procedure of registration for availing reduced rate of electricity, RLNG and gas by manufacturers and industries.

Adviser to the Prime Minister on Finance Dr. Abdul Hafeez Shaikh chaired the meeting of ECC at the Cabinet Division.

The ECC approved in principle, the procedure for registration under the concessionary regime of electricity, RLNG and gas under the export oriented sectors (erstwhile zero-rated sectors) with instructions to ensure better targeting of the recipients of this subsidy.

The ECC decided that the previous list of manufacturers or exporters declared zero-rated by FBR (under condition (xii) of the SRO 1125) may be adopted in export oriented sectors. FBR may register new manufacturers or exporters of five export oriented sectors (erstwhile five zero rated sectors), in accordance with past precedents of STGO-117, under Commerce Division’s O.M No.1 (18)/2019 in manner specified by the FBR.

The FBR, Petroleum Division and Power Division may formulate periodic rechecking/monitoring/withdrawal strategy for previous and newly registered units along with procedure to penalize in case of misrepresentation and misuse.

The ECC discussed in detail on the Minimum Support Price (MSP) of Wheat in today’s session. The Ministry of National Food Security and Research briefed the ECC on different estimates gathered from Punjab, KP, Balcohistan and the Federal Capital.

During the discussion, it also came to the fore that there was a need to increase the MSP to support the farmer and to grow enough quantities in the next sowing season.

The forum also discussed the need to rationalize the prices of inputs for making them more affordable to the farmers, to support the rural economy through various measures and to increase the supply of wheat in the market so that the flour prices are brought down. It was also discussed to have a better system for gathering data regarding the agriculture sector.

ECC decided to form a committee with Syed Fakhar Imam, Dr. Hafeez Shaikh, Dr. Ishrat Hussain.Dr. Waqar Masood, Nadeem Baber, Abdul Razzaq Dawood, Asad Umar and Khusroo Bakhtiar as members, to thoroughly evaluate the proposal for the increase in the Minimum Support Price of wheat for the 20-21 crops.

The committee shall also prepare a proposal on subsidy on fertilizers mainly DAP which may be offered as a part of the package for the farmers so that their input cost is reasonable/ reduced.

It was also decided that the provinces should increase the wheat releases to stabilize/reduce the price of flour in the market. It was decided that the local governments will also be directed to specially monitor the prices of wheat and flour in the markets so that its prices may not be allowed to escalate for the common man. The committee shall present its proposal in the next meeting of ECC.

October 19, 2020

Import of mobile phones allowed Rs23.15 billion as tax concession

ISLAMABAD: Federal Board of Revenue (FBR) issued details of sales tax concessions to the tune of Rs23.15 billion granted on import mobile phones.

The FBR issued the cost of allowing reduced rate of sales tax on the import of cellular phones during fiscal year 2020.

FBR sources said that the beneficiaries of sales tax concessions were importer and general public.

Following table explains head wise cost of sales tax concession on import different type of mobile phones;

S. No.	Value of mobile phones	Sales tax concession
1	Cellular mobile phones (not exceeding US$ 30)	Rs2,424 million
2	Cellular mobile phones (exceeding US$ 30 but not exceeding US$ 100)	Rs 10,032 million
3	Cellular mobile phones (exceeding US$ 100 but not exceeding US$ 200)	Rs5,764 million
4	Cellular mobile phones (exceeding US$ 200 but not exceeding US$ 350)	Rs 1,239 million
5	Cellular mobile phones (exceeding US$ 350 but not exceeding US$ 500)	Rs 56 million
6	Cellular mobile phones (Exceeding US$ 500)	Rs 731 million
7	Cellular mobile phones (PTA – DIRBS)	Rs2,908 million

October 19, 2020

FBR grants tax relief of Rs24.14 billion on sugar sales

ISLAMABAD: Federal Board of Revenue (FBR) has granted concession of Rs24.14 billion as sale tax on domestic supply of sugar.

According to official documents, the FBR granted concession of Rs24.41 billion on supply of domestic sales of sugar to end consumers during tax year 2020.

The concession was granted as reduced rate of eight percent on sales of the commodity made by sugar mills under 8^th schedule of Sales Tax Act, 1990.

The FBR said that the beneficiary of this concessional rate was general public.

Under the reduce rate of sales tax under 8^th Schedule, the FBR granted tax relief of Rs35.45 billion on consumer items mainly food items.

The details of the tax relief revealed that an amount of Rs6.77 billion was granted as sales tax concession to soya bean meal as industrial input.

Further an amount of Rs2.58 billion has been granted as tax concession on ingredients of poultry feed, cattle feed, except soya bean meal of PCT heading 2304.0000 and oilcake of cotton-seed falling under PCT heading 2306.1000.

October 18, 2020
FBR to get land ownership data

ISLAMABAD: Federal Board of Revenue (FBR) has signed agreement with Punjab province to get land ownership data for broadening the tax base.

In line with the vision of the Prime Minister to improve transparency in the tax collection system, FBR has achieved another milestone by signing an MoU with the Board of Revenue, Punjab.

Under the MoU, Board of Revenue, Punjab will share the data with Federal Board of Revenue which includes E-Stamps on a number of transactions and land ownership data.

FBR has been making consistent efforts to acquire third party data by linking its IT Systems with such parties to broaden tax base and to improve the transparency in the collection system.

October 18, 2020

TAX YEAR 2021: minimum tax rates

ISLAMABAD: Federal Board of Revenue (FBR) has updated rates of minimum tax to be applicable during tax year 2021 (July 01, 2020 – June 30, 2021).

The FBR issued Income Tax Ordinance, 2001 (updated up to June 30, 2020) after incorporating amendment brought through Finance Act, 2020. The FBR updated following rates of minimum tax under Section 113 of the Ordinance:

S.No	Person(s)	Minimum Tax as percentage of the person’s turnover for the year
(1)	(2)	(3)
1.	(a) Oil marketing companies, Oil refineries, Sui Southern Gas Company Limited and Sui Northern Gas Pipelines Limited (for the cases where annual turnover exceeds rupees one billion.) (b) Pakistani Airlines; and (c) Poultry industry including poultry breeding, broiler production, egg production and poultry feed production. (d) Dealers or distributors of fertilizer ; and (e) person running an online marketplace as defined in clause (38B) of section 2.	0.75%
2.	(a) Distributors of pharmaceutical products, fast moving consumer goods and cigarettes; (b) Petroleum agents and distributors who are registered under the Sales Tax Act, 1990; (c) Rice mills and dealers; and (d) Flour mills.	0.25%
3.	Motorcycle dealers registered under the Sales Tax Act, 1990.	0.3%
4.	In all other cases.	1.5%

Section 113: Minimum tax on the income of certain persons.

(1) This section shall apply to a resident company, permanent establishment of a non-resident company, an individual (having turnover of ten million rupees or above in the tax year 2017 or in any subsequent tax year) and an association of persons (having turnover of ten million rupees or above in the tax year 2017 or in any subsequent tax year) where, for any reason whatsoever allowed under this Ordinance, including any other law for the time being in force—

(a) loss for the year;

(b) the setting off of a loss of an earlier year;

(d) the application of credits or rebates; or

(e) the claiming of allowances or deductions (including depreciation and amortization deductions) no tax is payable or paid by the person for a tax year or the tax payable or paid by the person for a tax year is less than the percentage as specified in column (3) of the Table in Division IX of Part-I of the First Schedule of the amount representing the person’s turnover from all sources for that year:

Explanation.-For the purpose of this sub-section, the expression “tax payable or paid” does not include-

(a) tax already paid or payable in respect of deemed income which is assessed as final discharge of the tax liability under section 169 or under any other provision of this Ordinance; and

(b) tax payable or paid under section 4B.”

(3) Where this section applies:

(a) the aggregate of the person’s turnover as defined in sub-section (3) for the tax year shall be treated as the income of the person for the year chargeable to tax;

(b) the person shall pay as income tax for the tax year (instead of the actual tax payable under this Ordinance), minimum tax computed on the basis of rates as specified in Division IX of Part I of First Schedule;

(c) where tax paid under sub-section (1) exceeds the actual tax payable under Part I, clause (1) of Division I, or Division II of the First Schedule, the excess amount of tax paid shall be carried forward for adjustment against tax liability under the aforesaid Part of the subsequent tax year:

Provided that the amount under this clause shall be carried forward and adjusted against tax liability for five tax years immediately succeeding the tax year for which the amount was paid.

(4) “turnover” means,-

(a) the gross sales or gross receipts, exclusive of Sales Tax and Federal Excise duty or any trade discounts shown on invoices,

or bills, derived from the sale of goods, and also excluding any amount taken as deemed income and is assessed as final discharge of the tax liability for which tax is already paid or payable;

(b) the gross fees for the rendering of services for giving benefits including commissions; except covered by final discharge of tax liability for which tax is separately paid or payable;

(c) the gross receipts from the execution of contracts; except covered by final discharge of tax liability for which tax is separately paid or payable; and

(d) the company’s share of the amounts stated above of any association of persons of which the company is a member.

October 18, 2020

TAX YEAR 2021: rate of CGT on immovable property

ISLAMABAD: Federal Board of Revenue (FBR) has updated rates of tax on capital gain on disposal of immovable properties that are applicable during tax year 2021 (July 01, 2020 – June 30, 2021).

The FBR issued Income Tax Ordinance, 2001 (updated June 30, 2020) after incorporating amendments brought through Finance Act, 2020. The FBR updated the following rate of tax on Capital Gains on disposal of Immovable Property.

The rate of tax to be paid under sub-section (1A) of section 37 shall be as follows:—

S.No.	Amount of Gain	Rate of tax
(1)	(2)	(3)
1.	Where the gain does not exceed Rs. 5 million	2.5%
2.	Where the gain exceeds Rs. 5 million but does not exceed Rs. 10 million	5%
3.	Where the gain exceeds Rs. 10 million but does not exceed Rs. 15 million	7.5%
4.	Where the gain exceeds Rs. 15 million	10%

October 18, 2020

TAX YEAR 2021: tax rates on income from property

ISLAMABAD: Federal Board of Revenue (FBR) has updated rates of tax on income from property to be applicable during tax year 2021 (July 01, 2020 to June 30, 2021).

The FBR issued Income Tax Ordinance, 2001 (updated till June 30, 2020) incorporating amendments brought through Finance Act, 2020. Through the ordinance, the FBR updated the rate of tax to be paid under section 15, in the case of individual and association of persons, shall be as follows:-

S.No.	Gross amount of rent	Rate of tax
(1)	(2)	(3)
1.	Where the gross amount of rent does not exceed Rs.200,000.	Nil
2.	Where the gross amount of rent exceeds Rs.200,000 but does not exceed Rs.600,000.	5 per cent 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 plus 10 per cent 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 plus 15 per cent of the gross amount exceeding Rs1,000,000.
5.	Where the gross amount of rent exceeds Rs.2,000,000 but does not exceed Rs. 4,000,000.	Rs.210,000 plus 20 per cent of the gross amount exceeding Rs.2,000,000
6.	Where the gross amount of rent exceeds Rs. 4,000,000 but does not exceed 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. 6000,000 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

October 17, 2020

Video surveillance solution to monitoring without human intervention: FBR

KARACHI: Dr. Muhammad Ashfaq, Member Inland Revneue (Operations), Federal Board of Revenue (FBR) on Saturday said video surveillance is solution for monitoring of production without human intervention.

He was addressing the members of Karachi Chamber of Commerce and Industry (KCCI). He said that although the chamber had criticized the implementation of video surveillance. But there is no other solution for monitoring, he added.

He said that industries had shown intention for video analytics. He said that the sugar industry had serious production issues. He further said that the world had adopted technology. The FBR is also adopting advanced technology and the industry should accept it, he added.

The Member said that FBR was the only implementing agency and the laws were made in the Parliament.

Dr. Ashfaq said that the FBR had released refunds to the tune of Rs250 billion during the past six months.

He said that the country needs better public finance. Therefore, the FBR was focusing on increasing the tax net. The broadening of the tax base would also reduce burden on the existing taxpayers, he added.

On the occasion, Siraj Kassem Teli, Chairman, Businessmen Group (BMG) said that an amount of around Rs1830 billion was stuck up in litigation. He suggested that these cases should be resolved on priority basis.

He said that many cases were framed against taxpayers only to meet tax collection targets.

He offered business community support in broadening the tax base.

KCCI President Shariq Vohra said that the FBR should focus on revenue collection instead harassing the taxpayers.

He said that the FBR was taking help from SROs to generate additional revenue. The notifications and SROs are creating difficulties for the business community as well as for tax machinery.

October 17, 2020

TAX YEAR 2021: tax rate for profit on debt

KARACHI: Federal Board of Revenue (FBR) has updated tax rate for profit on debt to be applicable during tax year 2021 (July 01, 2020 – June 30, 2021).

The FBR issued Income Tax Ordinance, 2001 (updated June 30, 2020) after incorporating amendments brought through Finance Act, 2020. The FBR updated following rate of tax on profit on debt.

The rate of tax for profit on debt imposed under section 7B shall be—

S.NO	Profit on Debt	Rate of tax
(1)	(2)	(3)
1.	Where profit on debt does not exceed Rs.5,000,000	15%
2.	Where profit on debt exceeds Rs.5,000,000 but does not exceed Rs.25,000,000	17.5%
3.	Where profit on debt exceeds Rs.25,000,000 but does not exceed Rs. 36,000,000	20%

The tax rate is deducted under Section 7B of Income Tax Ordinance, 2001, under which:

Section 7B. Tax on profit on debt.—(1) Subject to this Ordinance, a tax shall be imposed, at the rate specified in Division IIIA of Part I of the First Schedule, on every person, other than a company, who receives a profit on debt from any person mentioned in clauses (a) to (d) of sub-section (1)of section 151.

(2) The tax imposed under sub-section (1) on a person, other than a company, who receives a profit on debt shall be computed by applying the relevant rate of tax to the gross amount of the profit on debt.

(3) This section shall not apply to a profit on debt that –

(a) is exempt from tax under this Ordinance; or

(b) exceeds thirty six million Rupees.

October 16, 2020

TAX YEAR 2021: rate of dividend tax

ISLAMABAD: Federal Board of Revenue (FBR) has updated income tax rate on dividend received from a company during tax year 2021 (July 01, 2020 – June 30, 2021).

The FBR issued Income Tax Ordinance, 2001 (updated up to June 30, 2020) incorporating amendments brought through Finance Act, 2020. The FBR updated following rate of dividend tax:

The rate of tax imposed under section 5 on dividend received from a company shall be-

(a) 7.5 percent in the case of dividends paid by Independent Power Producers where such dividend is a pass through item under an Implementation Agreement or Power Purchase Agreement or Energy Purchase Agreement and is required to be re-imbursed by Central Power Purchasing (CPPA-G) or its predecessor or successor entity.

(b) 15 percent in mutual funds and cases other than those mentioned in clauses (a) and (c).

(c) 25 percent in case of a person receiving dividend from a company where no tax payable by such company, due to exemption of income or carry forward of business losses under Part VIII of Chapter III or claim of tax credits under Part X of Chapter III.

Section 5 of Income Tax Ordinance, 2001 explains tax on dividends as:

Section 5. Tax on dividends.— (1) Subject to this Ordinance, a tax shall be imposed, at the rate specified in Division III of Part I of the First Schedule, on every person who receives a dividend from a company or treated as dividend under clause (19) of section 2.

(2) The tax imposed under sub-section (1) on a person who receives a dividend shall be computed by applying the relevant rate of tax to the gross amount of the dividend.

(3) This section shall not apply to a dividend that is exempt from tax under this Ordinance.

October 16, 2020