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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.

  • Salient features of amnesty scheme for housing, construction sector

    Salient features of amnesty scheme for housing, construction sector

    KARACHI: The government has announced an amnesty scheme for investors in order to boost housing/construction activities in the country at a faster pace.

    Under this package sources of investment made to a housing project may not be asked if the investment made through a valid bank account by December 31, 2020 and projected identified for the investment is completed by September 2022.

    According to official documents made available to PkRevenue.com following are the salient features of the scheme allowed under Section 100D of the Income Tax Ordinance, 2001:

    Fixed Tax Regime for builders and developers

    • Tax liability computed on the basis of square feet/yard, to be paid in quarterly installments
    • New projects as well as existing incomplete project can opt for the scheme up to December 12, 2020
    • Projects to be registered with Federal Board of Revenue (FBR) online through IRS portal
    • Existing incomplete projects have to self declare the percentage of completion of project on the relevant date
    • Projects must be completed by September 30, 2022.

    Exemptions/Benefits:

    • Exemption from requirement of withholding tax on purchase of building material except cement and steel
    • Exemption from requirement of withholding tax on acquisition of services relating to construction except those from companies
    • Permission to incorporate ten times of fixed tax paid as income in the books of accounts
    • 90 percent reduction in fixed tax liability for low cost housing
    • Dividend paid by builder or developer companies shall not be liable to tax and there shall be no withholding on the payment of these dividends

    Exemption from Section 111 of the Income Tax Ordinance, 2001 for individuals:

    • Money is deposited in a new bank account up to December 31, 2020; or
    • Having ownership/title of the land invested as on April 17, 2020.

    Exemption from Section 111 of the Income Tax Ordinance, 2001 for Company / Association of Persons (AOP):

    • By company/AOP if:
    • A single purpose company or AOP is registered between April 17, 2020 and December 31, 2020.
    • Money is invested through a crossed banking instrument up to December 31, 2020; or
    • Land owned by the partner/shareholder is transferred to the company / AOP up to December 12, 2020.
    • Money or land invested is utilized in the project
    • Project is completed by September 30, 2022
    • In case of builder, grey structure is completed (top roof as per plan is laid)
    • In case of a developer:
    • Landscape is completed and all roads are laid up to sub-grade level
    • At least 50 percent plots have been sold and at least 40 percent sale receipts have been received.

    Exemption from Section 111 on purchase of:

    • Plot, if:
    • Plot is purchased before December 31, 2020 (complete payment is made through banking channel before December 31, 2020)
    • Construction on such plot is started before December 31, 2020 and completed before September 30, 2022
    • Building, if:
    • Purchase is from a registered project and buyer is the first purchaser of the building
    • Purchase is made before September 30, 2022 (complete payment is made through banking channel)

    Exemption from Section 111 is not available for:

    • Public office holders
    • Public companies, REITs and companies whose income is exempt
    • Proceeds of crime.
  • Tax on taxable income explained

    Tax on taxable income explained

    ISLAMABAD: Federal Board of Revenue (FBR) has explained taxable income for collection of tax from persons or corporate entities. The FBR issued Income Tax Ordinance, 2001 updated June 30, 2020 incorporating amendments brought through Finance Act, 2020.

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  • FBR projects 12 percent tax to GDP ratio in three years

    FBR projects 12 percent tax to GDP ratio in three years

    ISLAMABAD: The Federal Board of Revenue (FBR) is projecting tax-to-GDP ratio at 12 percent in three years after slippage of the ratio to a single digit in 2019/2020, a report said.

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  • FBR grants tax exemption of Rs1.1 billion on gratuity payments

    FBR grants tax exemption of Rs1.1 billion on gratuity payments

    Islamabad – The Federal Board of Revenue (FBR) has granted a substantial exemption of Rs1.11 billion on gratuity payments during the tax year 2020.

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  • Airlines’ pilots get Rs430 million tax concession on allowances

    Airlines’ pilots get Rs430 million tax concession on allowances

    Pilots of Pakistani airlines collectively availed tax concessions amounting to Rs430 million during the tax year 2020 on allowances received from their respective employers, according to official data made available to PkRevenue.com.

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  • Tax exemption to LNG Terminals costs Rs732 million

    Tax exemption to LNG Terminals costs Rs732 million

    ISLAMABAD: Federal Board of Revenue (FBR) has granted exemption of Rs732 million to LNG Terminal Operators and Terminal Owners during tax year 2020.

    According to official documents made available to PkRevenue.com, the FBR allowed the exemption to two taxpayers engaged in LNG Terminal Operators and Terminal Owners.

    The exemption is available from total income under Clause 141 of Part 1 of Second Schedule, Income Tax Ordinance, 2001.

    The FBR said that profit and gains derived by LNG Terminal Operators and Terminal Owners are exempt under the income tax laws.

  • FBR not to ask source of money invested for housing projects by December 31: MTO Chief

    FBR not to ask source of money invested for housing projects by December 31: MTO Chief

    KARACHI: Federal Board of Revenue (FBR) will not ask source of money to be invested till December 31, 2020 in a new housing projects, Abdul Hameed Memon, Chief Commissioner, Inland Revenue, Medium Taxpayers Office (MTO) said on Wednesday.

    “This is a unique program announced by the Prime Minister of Pakistan. The tax rates have also been reduced under this package,” he said while addressing an event organized by Association of Builders and Developers (ABAD).

    However, he said that those who availed the scheme will require to complete the project by September 2022.

    He urged the ABAD members to avail the opportunity as growth in the construction sector would generate employment.

    He said that the government through amendment in tax laws had announced the package for the construction sector. “The package has two types of benefits: immunity from questioning the source of investment; and reduced rate of income tax in the shape of a fixed tax regime for builders and developers.”

    The chief commissioner said that the package would help in enhancing activities in the construction sector and result in significant economic growth.

    Earlier, Abdul Hafeez, Commissioner Inland Revenue, MTO gave a detailed presentation to builders and developers on the immunity from Section 111 of Income Tax Ordinance, 2001. This section attracts penal action for persons who conceal assets from tax authorities.

    The commissioner said that the section 111 would not apply to an individual if the person deposited the money in a new bank account up to December 31, 2020 or having ownership / title of the land invested as on April 17, 2020.

    In case of a company or an Association of Persons (AOP), the section shall not apply if a single purpose company or AOP is registered between April 17, 2020 and December 31, 2020.

    The commissioner outlined other exemptions and benefits under the tax package as the investors would have exemption from the requirement of withholding tax on purchase of building material except cement and steel.

    They will also have exemption from the requirement of withholding tax on acquisition of services relating to construction except those from companies.

    The persons, who are engaged in low cost housing projects, will be granted 90 percent reduction in fixed tax liability, the commissioner said.

    Besides, dividends paid by builder or developer companies shall not be liable to tax and there shall be no withholding on the payment of these dividends, he added.

    Chairman Association of Builders and Developers of Pakistan (ABAD) Fayyaz Ilyas has demanded of the Federal Government to extend date of registration for Incentive Package of Naya Pakistan Housing Scheme upto 31st December 2021 and also extend time period for the completion of housing projects under this scheme.

  • Karachi Chamber resents FBR’s decision to install surveillance cameras

    Karachi Chamber resents FBR’s decision to install surveillance cameras

    The Karachi Chamber of Commerce and Industry (KCCI) has expressed strong discontent over the recent decision by Federal Board of Revenue (FBR) to monitor production activities through cameras directly connected to the main tax database.

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  • Teachers, researchers avail Rs2.42 billion income tax exemption

    Teachers, researchers avail Rs2.42 billion income tax exemption

    ISLAMABAD: Teachers and researchers have availed tax exemption to the tune of Rs2.42 billion on their income during Tax Year 2020, official sources said on Tuesday.

    Under Clause 1(2) of Part 3 of the Second Schedule of Income Tax Ordinance, 2001, full time teachers or researchers are entitled for reduction in tax liability since 2006 and there is no sunset clause attached to this concession.

    The FBR said that the tax payable by a full time teacher or a researcher, employed in a non profit education or research institution duly recognized by Higher Education Commission, a Board of Education or a University recognized by the Higher Education Commission, including government research institution, shall be reduced by an amount equal to 25 percent of tax payable on his income from salary.

    Data of teachers is taken from Pakistan Bureau of Statistics (PBS) website, for the following categories of teachers: Arts/Science colleges, professional colleges, universities, secondary vocational institutions. Teachers in secondary schools have not been considered, being relatively less paid.

    Latest available data is for year 2017. For 2018, an 8 percent multiplier on number of teachers is used keeping in view increase in number of teachers over past years.

    Average annual salaries for different categories of teachers have been taken as following:

    – Arts/Science College: Rs. 900,000

    – Professional College: Rs. 1,200,000

    – University: Rs. 2,400,000

    – Secondary vocational institutions: Rs. 1,800,000

    Separate data for researchers is not available, the FBR said.

    The FBR said that approximate 133,255 teachers and researchers had availed the tax concession.

  • FBR estimates Rs69.5 billion annual tax loss on agriculture income

    FBR estimates Rs69.5 billion annual tax loss on agriculture income

    ISLAMABAD: Federal Board of Revenue (FBR) has estimated an amount of Rs69.5 billion annual loss of tax on agriculture income, sources said on Tuesday.

    In a report the FBR said that agricultural income is exempt from income tax under section 41 of the Income Tax Ordinance, 2001.

    However, it falls under the provincial domain as per the Constitution of Pakistan, and the provinces have the mandate to levy tax on agricultural incomes.

    The provincial collection of income tax on agricultural income for FY 2018 is as under:

    Punjab: Rs 913 million
    Sindh: Rs559 million
    KP: Rs100 million
    Balochistan: Rs17 million
    Total: Rs1.589 billion

    The FBR carried out an estimate on the basis of agriculture census 2010 in order to measure the actual potential of revenue from agriculture.

    The key assumption in this estimation is that the average income per acre earned by farmer has been taken at Rs. 50,000, keeping in view current year’s average price levels of commodities.

    Farm sizes have been categorized as per column 2 of the table below. Farms smaller than 7.5 acres have not been consid¬ered, being of subsistence income level.

    Income for each farm size (column 5) is estimated by multiplying cultivated area (acres) for each category with average income per acre (Rs50,000). If statutory slab-wise tax rates are applied on average income per farm for the six categories of farm sizes, the estimated revenue forgone due to this exemption comes to Rs69.5 billion annually.