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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.

  • Chief Commissioners to appoint officials of BS-1 to BS-15 in field offices

    Chief Commissioners to appoint officials of BS-1 to BS-15 in field offices

    ISLAMABAD: Federal Board of Revenue (FBR) has authorized Chief Commissioners of Inland Revenue to appoint officials of BS-1 to BS-15 in field offices, sources said on Wednesday.

    According to the sources the FBR chairman has designated officers to exercise powers of appointing authority.

    The FBR chairman being the secretary, revenue division is authorized to appoint officials for the post in basic pay scales 17 to 19 or equivalent.

    Members FBR have been designated as appointing authority for the post of basic pay scales 16 or equivalent in FBR Headquarters and field offices.

    The sources said that the Chief Commissioners in BS-20/21, Director Generals BS20/21, chief collectors of Pakistan Customs BS-20/21 and Collectors of Pakistan Customs BS-20 have been authorized to appoint officials in BS-1 to 15 of field offices of the FBR.

    Further, Chief (HRM-IR) has been designated to appoint officials for the post in basic pay scales 8 to 15 or equivalent in FBR (HQ).

    Meanwhile, Chief (Admin & Finance) has been authorized to appoint officials for the post in basic pay scales 1 to 7 or equivalent in FBR (HQ).

    The sources said that the officers have been given the powers of authority under the Civil Servants (Efficiency & Discipline) Rules, 2020.

  • FBR to impose 100 percent penalty for not mentioning money in tax returns

    FBR to impose 100 percent penalty for not mentioning money in tax returns

    ISLAMABAD: Federal Board of Revenue (FBR) has started examination of income tax returns filed for tax year 2020 and directed tax offices to identify undisclosed income / amount for imposing 100 percent penalty.

    According to sources in the FBR the tax authorities had started examination of tax returns filed for the tax year 2020 and were cross matching with the information of database where details of transactions made by taxpayers had been stored.

    The sources said that those taxpayers, who had failed to provide details of those transactions already available to the FBR through third party information, would pay tax at normal rate along with payment of penalty equal to payable tax detected as undisclosed.

    The last date for filing the income tax return for tax year 2020 was December 08, 2020 and the FBR for the first time had not extended the date beyond the deadline. The number of return filers by due date was 1.768 million. However, enforcement measures through issuance of hundreds of thousands notices to non filers the number of return filers increased to 2.316 million January 04, 2021.

    The sources said that the tax offices were examining tax returns with all aspects of Income Tax Ordinance, 2001. However, undeclared income or assets in the returns will be treated as concealment of income/assets.

    Under Section 182 of the Income Tax Ordinance, 2001, where a person has concealed income or furnished inaccurate particulars of such income, including but not limited to the suppression of any income or amount chargeable to tax, the claiming of any deduction for any expenditure not actually incurred or any act referred to in sub-section (1) of section 111, in the course of any proceeding under this Ordinance before any Income Tax authority or the appellate tribunal.

    “Such person shall pay a penalty of one hundred thousand rupees or an amount equal to the tax which the person sought to evade whichever is higher. However, no penalty shall be payable on mere disallowance of a claim of exemption from tax of any income or amount declared by a person or mere disallowance of any expenditure declared by a person to be deductible, unless it is proved that the person made the claim knowing it to be wrong.”

  • FBR to issue ATL 2020 on March 01

    FBR to issue ATL 2020 on March 01

    ISLAMABAD: Federal Board of Revenue (FBR) will issued Active Taxpayers List (ATL) for tax year 2020 on March 01, 2021 which will contain names of those taxpayers who file their returns by due date or file return after due date with fine and penalty.

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  • Inland Revenue examines persons buying motor vehicles through customs auction

    Inland Revenue examines persons buying motor vehicles through customs auction

    KARACHI: The office of Inland Revenue (IR) of Federal Board of Revenue (FBR) has launched examination of persons who purchased large number of vehicles through customs auctions.

    Sources in IR said on Monday that the probe had been initiated on the directives of the Federal Tax Ombudsman (FTO) regarding some bidders were frequently indulged in participating in bidding and buying large number of vehicles.

    The FTO in a case of stuck up motor vehicles at ports, which were brought into Pakistan through personal baggage, transfer of residence or under gift schemes in violation of SRO 52(I)/2019 dated January 15, 2019 issued by the ministry of commerce.

    As per details till November 25, 2020 the number of stuck up vehicles were 587 at the MCC East and West. Around 167 vehicles were auctioned till the date under review.

    During the investigation of the case the FTO was told that a small number of so-call professional bidders purchased large number of vehicles regularly and then sell the same on huge profit in the open market.

    “One of the reasons of purchase of vehicles by these bidders is that many interested persons from the general public either do not possess NTN or they don’t want to bring their names on record due to various reasons including subsequent taxation, hence, they prefer to purchase goods or vehicles through these bidders,” the FTO was informed.

    The FTO was further informed that 62 bidders had purchased 167 vehicles auctioned during the period from July to November 2020, which 20 bidders purchased 117 vehicles.

    The sources said that the FTO was told that an e-auction was to be introduced by the FBR and in this regard SRO 1174(I)/2020 dated October 26, 2020 was already issued.

    However, date for implementation of e-auction rules would not be notified by the FBR later on as the e-auction module is still under development.

    Customs authorities assured the FTO stating that after implementation of e-auction, the goods ripe for auction would be disposed of without delay, besides, the mafia of professional bidders would be addressed, resulting in improvement in revenue realization.

    The findings of the FTO revealed: “During investigation, another aspect came to surface i.e. whether the bidders who participate in the auction proceedings declare their economic activities in their income tax returns.

    “It is most probable that these economic activities may not be monitored by the IRS Wing, which if monitored carefully with due diligence may enhance legitimate revenue of the government.

    “Thus, there is a need to share data/information with the concerned field formations of Inland Revenue so that this sector is brought into the tax net.”

    The FTO recommended that the Collector, MCC Appraisement and Facilitation East and West, Karachi to pass on information about the bidders who participated in auctions on regular basis to respective IRS field formations.

  • FBR directs issuing exemption certificates to gratuity, provident funds

    FBR directs issuing exemption certificates to gratuity, provident funds

    ISLAMABAD: Federal Board of Revenue (FBR) has issued directives for grant of income tax exemption to gratuity and provident funds.

    Through an office order, the FBR issued directives on complaints received from taxpayers that tax offices were refusing to grant income tax exemption against gratuity funds/ provident funds.

    The FBR expressed concern on the treatment being given by some field formations on the provident funds/ gratuity funds requests for exemption certificates under section 159/150/151 of the Income Tax Ordinance, 2001.

    The FBR said that the taxpayers had pointed out the exemption granted to the funds prior to tax year 2013, the tax offices were refusing the request for exemption certificates.

    The tax offices were asking the taxpayers to move fresh applications for recognition of the funds on the pretext that the fact of their approval is not available/evident in the FBR’s system IRIS.

    The FBR clarified the position by stating that the exemption requests of recognized provident/gratuity funds cannot be refused. Therefore, the revenue body directed the tax offices to process the exemption certificate requests of all the provident / gratuity funds who produce evidence of recognition under the relevant rules framed under the Income Tax Ordinance, 2001 or repealed law Income Tax Ordinance, 1979.

    “Further, asking for fresh applications for recognition merely on the pretext that such recognition is not available on the system is not a valid excuse,” the FBR directed.

    However, the FBR cautioned the tax offices: “Mere issuance of exemption certificate under section 159 of the Income Tax Ordinance, 2001 does not foreclose the possibility of reviewing/recalling such action in case it is later-on discovered that the taxpayer produced some incorrect/invalid or wrong evidence for obtaining the favor.”

  • Sales tax recovery: movable, immovable property may be sold without attachment

    Sales tax recovery: movable, immovable property may be sold without attachment

    ISLAMABAD: Sales tax laws have given immense powers to officers of Inland Revenue and they can recover due sales tax by selling movable or immovable property without attachment.

    Sources in Federal Board of Revenue (FBR) told PkRevenue.com that under Section 48 of the Sales Tax Act, 1990 a mechanism for recovery of arrears of tax has been defined.

    For the purpose of recovery of tax, penalty or any other demand raised under this Sales Tax Act, 1990, the officer of Inland Revenue shall have the same powers which under the Code of Civil Procedure 1908 (V of 1908), a Civil Court has for the purpose of recovery of an amount due under a decree.

    They said that Section 48(1)(b)(c) clearly mentioned that tax officials may attach and sell or sell without attachment any movable or immovable property of the registered person from whom tax is due.

    The tax officers are also empowered to recover the sales tax amount from a person whose amount is stuck up with other tax authorities.

    “[The tax officers may] deduct the amount from any money owing to person from whom such amount is recoverable and which may be at the disposal or in the control of such officer or any officer of Income Tax, Customs or Central Excise Department,” according to the law.

    The officers of Inland Revenue can order any person who holds money of a person in default, besides the officers can also:

    “Stop removal of any goods from the business premises of such person till such time the amount of tax is paid or recovered in full;

    “require by a notice in writing any person to stop clearance of imported goods or manufactured goods or attach bank accounts;

    “seal the business premises till such time the amount of tax is paid or recovered in full;

    “recover such amount by attachment and sale of any movable or immovable property of the guarantor, person, company, bank or financial institution, where a guarantor or any other person, company, bank or financial institutions fail to make payment under such guarantee, bond or instrument.”

    Provided that the Commissioner Inland Revenue or any officer of Inland Revenue shall not issue notice under this section or the rules made thereunder for recovery of any tax due from a taxpayer if the said taxpayer has filed an appeal under section 45B in respect of the order under which the tax sought to be recovered has become payable and the appeal has not been decided by the Commissioner (Appeals), subject to the condition that ten per cent of the amount of tax due has been paid by the taxpayer.

    “If any arrears of tax, default surcharge, penalty or any other amount which is adjudged or payable by any person and which cannot be recovered in the manner prescribed above, the Board or any officer authorized by the Board, may, write off the arrears in the manner as may be prescribed by the Board, the FBR said.

  • FBR launches e-appeals for tax disputes

    FBR launches e-appeals for tax disputes

    ISLAMABAD: Federal Board of Revenue (FBR) has launched electronic mode of filing appeals for resolving tax disputes.

    The e-filing of appeals has been implemented from January 01, 2021, said a statement issued on Saturday.

    Commissioner Inland Revenue (Appeals) is the first tier of appellate hierarchy provided in the Inland Revenue laws.

    Taxpayers aggrieved with the orders of Inland Revenue tax authorities file first appeal before the Commissioner (Appeals).

    Providing facility of filing of appeals electronically by the taxpayer is another step toward automaton of FBR.

    In compliance with the vision of the Prime Minister, FBR has collaborated with Pakistan Revenue Automation Limited for development of software for e-filing of appeals.

    In the process the input of major stakeholders such as ICAP, ICAMP and PTBA was also taken.

    The system will enable the taxpayers aggrieved by the orders of tax authorities to e-file appeals on the Iris Web Portal. Both the revenue and the taxpayers will reap the benefits of the automated system for e-filing of appeals.

  • FBR receives 2.3 million returns for tax year 2020

    FBR receives 2.3 million returns for tax year 2020

    ISLAMABAD: The Federal Board of Revenue (FBR) has received 2.3 million income tax returns for the tax year 2020 by December 31, 2020, according to an official statement released on Friday.

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  • FBR clarifies date extension to incentive package for construction industry

    FBR clarifies date extension to incentive package for construction industry

    The Federal Board of Revenue (FBR) issued a clarification on Thursday, shedding light on the extension of the Prime Minister’s incentive package for the construction industry.

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  • Amnesty date for developers, builders extended up to June 30

    Amnesty date for developers, builders extended up to June 30

    ISLAMABAD: The federal government has extended the last date for amnesty scheme to builders and developers up to June 30, 2021, sources said on Thursday.

    The date for availing immunity from declaration of investment by builders and developers is expiring today i.e. December 31, 2020.

    The sources said that the date has been extended for next six months.

    Similarly, project completion date has also been extended up to September 30, 2023 from September 30, 2022.

    Further, availing the fixed tax regime for builders and developers has also been extended up to December 31, 2021.

    The amendment to existing laws may be made through presidential ordinance, the sources added.

    Following is the existing law related to builders and developers:

    Section 100D: Special provisions relating to builders and developers. –

    (1) For tax year 2020 and onwards, the tax payable by a builder or a developer, as defined in sub-section (9), who opt to pay tax under this section shall be computed and paid in accordance with the rules in the Eleventh Schedule on a project by project basis on the income, profits and gains derived from the sale of buildings or sale of plots, as the case may be, from–

    (a) a new project to be completed by the 30th day of September, 2022; or

    (b) an incomplete existing project to be completed by the 30th day of September, 2022:

    Provided that any income, profits and gains of a builder or developer of an incomplete existing project earned up to tax year 2019 shall be subject to the provisions of this Ordinance as were in force prior to the commencement of the Tax Laws (Amendment) Ordinance, 2020 (Ordinance I of 2020):

    Provided further that any income of a builders or developer other than income, profits and gains subject to this section shall be subject to tax as per the provisions of this Ordinance.

    (2) Where sub-section (1) applies,-

    (a) the income shall not be chargeable to tax under any head of income in computing the taxable income of the person;

    (b) no deduction shall be allowed under this Ordinance for any expenditure incurred in deriving the income:

    (c) the amount of the income shall not be reduced by –

    (i) any deductible allowance under Part IX of Chapter III: or

    (ii) the set off of any loss;

    (d) no tax credit shall be allowed against the tax payable under sub-section (1) except credit for tax under section 236A or 236K collected from the builder or developer after the commencement of the Tax Law (Amendment) Ordinance, 2020 (1 of 2020) on purchase of immoveable property utilized in a project;

    (e) there shall be no refund of any tax collected or deducted under this Ordinance;

    (f) if the tax payable has not been paid or short paid, the said amount of tax may be recovered and all the provisions of this Ordinance shall apply accordingly; and

    (g) section 113 and 113C shall not apply on the turnover, income, profits and gains of a builder or developer from a project.

    (3) The provisions of section 111 shall not apply to capital investment made in a new project under clause (a) of sub-section (1) in the form of money or land, subject to the following conditions, namely:-

    (a) if the investment is made by a builder or developer being an individual-

    (i) in the form of money, such builder or developer shall open a new bank account and deposit such amount in it on or before the 31st day of December, 2020; or

    (ii) in the form of land, such builder or developer shall have the ownership title of the land at the time of commencement of the Tax Laws (Amendment) Ordinance, 2020 (I of 2020);

    (b) if the investment is made by a person in a project through a company or an association of persons,-

    (i) such company or association of person shall be a single object (builder or developer) company or association of persons registered under the Companies Act, 2017 (XIX of 2017), the Limited Liability Partnership Act, 2017 (XV of 2017) or the Partnership Act 1932 (IX of 1932), as the case may be, after the date of commencement of the Tax Laws (Amendment) Ordinance, 2020 (I of 2020) and on or before the 31st day of December, 2020; and

    (ii) the person shall be a member or shareholder of such association of persons or company, as the case may be; and if the capital investment is made,-

    (i) in the form of money, such amount shall be invested through a crossed banking instrument deposited in the bank account of such association of persons or company, as the case may be, no or before the 31st day of December, 2020; or

    (ii) in the form of land, such land shall be transferred to such association of persons or company, as the case may be, on or before the 31st day of December, 2020:

    Provided that the person shall have the ownership title of the land at the time of commencement of the Tax Laws (Amendment) Ordinance, 2020 (I of 2020)

    (c) a person making an investment under clause (a) or (b) shall submit a prescribed form on Iris web portal;

    (d) the money or land invested under clause (a) or (b) shall be wholly utilized in a project; and

    (e) completion of the project shall be certified in the following manner, namely:-

    (i) in case of a builder, the map approving authority or NESPAK shall certify that grey structure as per the approved map has been completed by the builder on or before the 30th day of September, 2022; and

    (ii) in case of a develop,-

    (A) the map approving authority or NESPAK shall certify that landscaping has been completed on or before the 30th day of September, 2022;

    (B) a firm of chartered accountants having an ICAP QCR rating of ‘satisfactory’, notified by the Board for this purpose, shall certify that at least 50 percent of the plots have been booked for sale and at least 40 percent of the sale proceeds have been received by the 30th day of September, 2022; and

    (C) at least 50 percent of the roads have been laid up to sub-grade level as certified by the approving authority of NESPAK.

    (4) The provisions of section 111 shall also not apply to.-

    (a) the first purchaser of a building or a unit of the building purchased from the builder in respect of purchase price of the building or unit of the building subject to the following conditions, namely:-

    (i) full payment is made through a crossed banking instrument to the builder during a period starting from the date of registration of the project with the Board under this section and ending on the 30th day of September, 2022, in case the purchase is from a new project; and

    (ii) full or balance amount of payment is made through a crossed banking instrument to the builder during a period starting from the date of registration of the project with the Board under this section and ending on the 30th day of September, 2022, in case the purchase is from an existing incomplete project; and

    (b) the purchaser of a plot who intends to construct a building thereon, if-

    (i) the purchase is made on a before the 31st day of December, 2020;

    (ii) the full payment is made on or before the 31st day of December, 2020 through a crossed banking instrument;

    (iii) construction on such plot is commenced on or before the 31st day of December, 2020;

    (iv) such construction is completed on or before the 30th day of September, 2022;and

    (v) the person registers himself with the Board on the online Iris web portal.

    (5) Where sub-section (3) or (4) apply, the value or price of land or building, as the case may be, shall be the higher of clause (a) or (b) below:-

    (a) 130 percent of the fair market value as determined by the Board under sub-section (4) of section 68; or

    (b) at the option of the person making investment, the lower of the values as determined by at least two independent valuers from the list of valuers approved by the State Bank of Pakistan.

    (6) Sub-sections (3) and (4) shall not apply to –

    (a) holder of any public office as defined in the Voluntary Declaration of Domestic Assets Act, 2018 or his benamidar as defined in the Benami Transactions (Prohibition) Act, 2017 (V of 2017) or his spouse or dependents;

    (b) a public listed company, a real estate investment trust or a company whose income is exempt under any provision of this Ordinance; or

    (c) any proceeds derived from the commission of a criminal offence including the crimes of money laundering extortion or terror financing but excluding the offences under this Ordinance.

    (7) Divided income paid to a person by a builder or developer being a company out of the profits and gains derived from a project shall be exempt from tax.

    (8) Notwithstanding anything contained in this section or the Eleventh Schedule, where a return or declaration has been made through misrepresentation or suppression of facts, such return or declaration shall be void and all the provisions of this Ordinance shall apply:

    Provided that no action under this sub-section shall be taken if such misrepresentation has been made on account of a bona fide mistake:

    Provided further that no action under this sub-section shall be taken without providing an opportunity of being heard and without prior approval of the Board.

    (9) In this section.-

    (a) “builder” means a person who is registered as a builder with the Board and is engaged in the construction and disposal of residential or commercial buildings;

    (b) “capital investment” means investment as equity resources and does not include borrowed funds;

    (c) “developer” means a person who is registered as a developer with the Board and is engaged in the development of land in the form of plots of any kind either for itself or otherwise;

    (d) “existing project” means a construction or development project, which-

    (i) has commenced before the date of commencement of the Tax Laws (Amendment) Ordinance, 2020;

    (ii) is incomplete;

    (iii) is completed on or before the 30th day of September, 2022;and

    (iv) a declaration is provided in the registration from under Eleventh Schedule to the effect of percentage of the project completed up to the last day of the accounting period pertaining to tax year 2019;

    (e) “first purchaser” means a person who purchases a building or a unit, as the case may be, directly from the builder and does not include a subsequent or a substituted purchaser;

    (f) “new project” means a construction or development project, which-

    (i) is commenced during the period starting from the date of commencement of the Tax Laws (Amendment) Ordinance, 2020 and ending on the 31st day of December, 2020; and

    (ii) is competed on or before the 30th day of September, 2022;

    (g) “project” means a project for construction of a building with the object of disposal, or a project for development of land into plots with the object of disposal or otherwise;

    (h) “registered with the Board” means registered after submission of form on project-by-project basis on the online Iris web portal;

    (10) The provisions of the Ordinance not specifically dealt with in this section or the rules made thereunder shall apply mutatis mutandis to builders and developers in so far as they are not inconsistent with this section or the rules made thereunder.