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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.

  • TAX YEAR 2021: rate of super tax

    TAX YEAR 2021: rate of super tax

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

    The FBR issued Income Tax Ordinance, 2001 after incorporating amendment brought through Finance Act, 2020. The FBR issued the following updated rate of super tax:

    Provided that in case of a banking company, super tax for tax year 2019 shall be payable, on estimate basis, by thirtieth day of June, 2018.

    Super tax was introduced through Finance Act, 2015 by inserting Section 4B to Income Tax Ordinance, 2001.

    The section 4B is read as:

    4B. Super tax for rehabilitation of temporarily displaced persons.― (1) A super tax shall be imposed for rehabilitation of temporarily displaced persons, for tax years 2015 and onwards, at the rates specified in Division IIA of Part I of the First Schedule, on income of every person specified in the said Division.

    (2) For the purposes of this section, “income” shall be the sum of the following:—

    (i) profit on debt, dividend, capital gains, brokerage and commission;

    (ii) taxable income (other than brought forward depreciation and brought forward business losses) under section (9) of this Ordinance, if not included in clause (i);

    (iii) imputable income as defined in clause (28A) of section 2 excluding amounts specified in clause (i); and

    (iv) income computed, other than brought forward depreciation, brought forward amortization and brought forward business lossess under Fourth, Fifth, Seventh and Eighth Schedules.

    (3) The super tax payable under sub-section (1) shall be paid, collected and deposited on the date and in the manner as specified in sub-section (1) of section 137 and all provisions of Chapter X of the Ordinance shall apply.

    (4) Where the super tax is not paid by a person liable to pay it, the Commissioner shall by an order in writing, determine the super tax payable, and shall serve upon the person, a notice of demand specifying the super tax payable and within the time specified under section 137 of the Ordinance.

    (5) Where the super tax is not paid by a person liable to pay it, the Commissioner shall recover the super tax payable under subsection (1) and the provisions of Part IV,X, XI and XII of Chapter X and Part I of Chapter XI of the Ordinance shall, so far as may be, apply to the collection of super tax as these apply to the collection of tax under the Ordinance.

    (6) The Board may, by notification in the official Gazette, make rules for carrying out the purposes of this section.

  • FBR signs agreement CFA Institute for regulator scholarships

    FBR signs agreement CFA Institute for regulator scholarships

    ISLAMABAD: Federal Board of Revenue (FBR) has signed an agreement with Chartered Financial Analyst (CFA) Institute for initially 10 ‘Regulator Scholarships’ for FBR’s officers and officials, said a notification issued on Thursday.

    The CFA Institute, an America-based Organization, is a global association of investment professionals. The organization offers Certifications for Chartered Financial Analyst (CFA), Investment Performance Measurement (CIPM) and Investment Foundations Certificate. Currently, CFA Institute offices are located in New York City, London, Hong Kong, Mumbai, Toronto, and Charlottesville, Virginia, USA.

    The CFA Program is a professional credential offered internationally by the CFA Institute to investment and financial professionals and is recognized as a ‘Gold Standard’ qualification in investment management. The program covers a broad range of topics relating to investment management, financial analysis, quantitative analysis, equities, fixed income and derivatives, and provides generalist knowledge of other areas of finance combined with real world skills and case studies. A candidate who successfully completes the program and meets other professional requirement is awarded the “CFA Charter” and becomes a CFA.

    Under the Scholarship, Program Enrollment Fee is waived off and exams registration fee is reduced to USD 350 compared to standard registration fee of USD 1,000.

    FBR’s workforce needs to equip itself with the modern skills and techniques involved in investment management, financial analysis and all other relevant areas to better understand the intricacies involved in financial management and income generated through various investment vehicles. Therefore, FBR’s officers/officials are encouraged to benefit from the scholarship programme to leverage the ongoing professional learning and industry network that CFA Institute and CFA Society Pakistan can provide.

    Interested candidates must apply and be awarded the scholarship before registering for an exam, so that scholarship discount will be applied at the time of payment. The process is:

    i) Candidates set up a CFA account and apply through the online system for a regulator scholarship.

    ii) Regulator approvers log in to the system and award, or decline the scholarship application.

    iii) If awarded, the candidate is notified by the CFA Institute. The scholarship is then applied to their CFA account, so that when they register for an exam the discount is applied at time of payment. All further activity is directly between the candidate and the CFA Institute.

    iv) If declined, the candidate is notified by the CFA Institute and may choose to apply for the exam as normal without the discount.

    The selection of eligible candidates would be done by International Taxes, FBR. After having gone through the selection exercise, the names of the selected candidates will be forwarded to the CFA Institute for the grant of scholarship.

  • TAX YEAR 2021: Rates of income tax for companies

    TAX YEAR 2021: Rates of income tax for companies

    ISLAMABAD: Federal Board of Revenue (FBR) has issued rates of income tax for companies to be applicable during tax year 2021.

    The FBR issued Income Tax Ordinance, 2001 (updated June 30, 2020) incorporating amendments brought through Finance Act, 2020.

    The FBR said that the rate of tax shall be 29 percent on the taxable income of a company for tax year 2021.

    As per the Income Tax Ordinance, 2001, the tax rate on corporate entities has been defined as:

    The rate of tax imposed on the taxable income of a company for the tax year 2007 and onward shall be 35 percent:

    Provided that the rate of tax imposed on the taxable income of a company other than a banking company, shall be 34 percent for the tax year 2014:

    Provided further that the rate of tax imposed on the taxable income of a company, other than a banking company, shall be 33 percent for the tax year 2015:

    Provided further that the rate of tax imposed on taxable income of a company, other than banking company shall be 32 percent for the tax year 2016, 31 percent for tax year 2017, 30 percent for tax year 2018 and 29 percent for tax year 2019 and onwards.

    Where the taxpayer is a small company as defined in section 2 of Income Tax Ordinance, 2001, tax shall be payable at the rate of 25 percent:

    Provided that for tax year 2019 and onwards tax rates shall be as set out in the following Table, namely:—

    Tax YearRate of Tax
    201924%
    202023%
    202122%
    202221%
    2023 and onwards20%
  • Tax Year 2021: income tax rates for business individuals, AOPs

    Tax Year 2021: income tax rates for business individuals, AOPs

    ISLAMABAD: Federal Board of Revenue (FBR) has issued tax rates to be applicable on business individuals and Association of Persons (AOPs) during tax year 2021.

    The FBR issued Income Tax Ordinance, 2001 (updated June 30, 2020) incorporating amendment brought through Finance Act, 2020.

    The FBR said that the rates of tax imposed on income of every individual and association of persons except a salaried individual shall be as set out in the following Table, namely:—

    S. No.Taxable incomeRate of tax
    (1)(2)(3)
    1.Where taxable income does not exceed Rs. 400,0000%
    2.Where the taxable income exceeds Rs. 400,000 but does not exceed Rs. 600,0005% of the amount exceeding Rs. 400,000
    3.Where taxable income exceeds Rs. 600,000 but does not exceed Rs. 1,200,000Rs. 10,000 plus 10% of the amount exceeding Rs. 600,000
    4.Where taxable income exceeds Rs.1,200,000 but does not exceed Rs. 2,400,000Rs. 70,000 plus 15% of the amount exceeding Rs. 1,200,000
    5.Where taxable income exceeds Rs. 2,400,000 but does not exceed Rs. 3,000,000Rs. 250,000 plus 20% of the amount exceeding Rs. 2,400,000
    6.Where taxable income exceeds Rs. 3,000,000 but does not exceed Rs. 4,000,000Rs. 370,000 plus 25% of the amount exceeding Rs. 3,000,000
    7.Where taxable income exceeds Rs. 4,000,000 but does not exceed Rs. 6,000,000Rs. 620,000 plus 30% of the amount exceeding Rs. 4,000,000
    8.Where taxable income exceeds Rs. 6,000,000Rs. 1,220,000 plus 35% of the amount exceeding Rs. 6,000,000
  • FBR abolishes regulatory duty, ACD on various imported goods

    FBR abolishes regulatory duty, ACD on various imported goods

    ISLAMABAD: Federal Board of Revenue (FBR) on Wednesday abolished regulatory duty and additional customs duty on various raw materials used by textile industry.

    The FBR issued SRO 1043(I)/2020 dated October 13, 2020 abolished regulatory duty of 8 percent on various chemicals used as raw material for textile industry.

    Besides, regulatory duty imposed at two percent on import of artificial yarn and staple fiber has also been abolished. Besides, the regulatory duty has been reduced from five percent to 2.5 percent on import of woven fabric of synthetic staple fiber.

    The FBR issued another SRO 1042(I)/2020 dated October 13, 2020 to withdraw additional customs duty (ACD) on over 100 tariff lines.

  • FTO directs to enforce certificate of origin to prevent under invoicing

    FTO directs to enforce certificate of origin to prevent under invoicing

    ISLAMABAD: Federal Tax Ombudsman (FTO) has directed tax authorities to enforce certificate of origin from respective country of manufacture.

    The FTO recommended that the commerce ministry to frame and enforce rules of origin in respect of goods suspected of circumvention and import from free ports, which are not covered under preferential trade agreement (PTA).

    The FTO made these recommendations in an order dated October 01, 2020 issued in the case of M/s Poplon Pakistan (Pvt) limited, which filed complaint against the Collector, Model Customs Collectorate (MCC) Appraisement & Facilitation – East and MCC Appraisement & Facilitation – West, Karachi for failing to detect import of inorganic chrome pigments against fake certificate of origin through circumvention of origin of goods and under invoicing by various importers in respect of goods imported and cleared through Karachi Port.

    The complainant is a manufacturer of inorganic chrome pigments for use in paint, plastic and leather industries in Pakistan. The complainant alleged that after suspension of trade with India, pigment of Indian origin goods were imported through trade proxies such as M/s. Galaxy International FZC, UAE by using fake documents.

    After hearing both the parties, the FTO issued the following recommendation, that the FBR:

    To seek information from the Director General, UAE Customs under mutual legal assistance agreements for verification of origin of goods;

    To direct the Directorate General of Post Clearance Audit (PCA) to carry out post-import transaction verification of all relevant GDs so as to satisfy the accuracy and authenticity of declared import values on the basis of export documents/information obtained through commercial counselors posted in South Korea and UAE;

    To direct the Director of Customs Valuation to check accuracy of values declared by the importers and determine custom value for assessment of inorganic chrome pigments in terms of Section 25A of the Act, and

    To direct the Chief Collector (Appraisement-South), to ensure finalization of investigation expeditiously and take appropriate action in cases where mis-declaration is established; and

    To recommend to the ministry of commerce to frame and enforce rules of origin in respect of goods suspected of circumvention and import from free ports which are not covered under PTA. Also make it mandatory to furnish certificate of origin from respective country of manufacture duly verified by the respective government.

  • FBR notifies draft rules for timely issuance of annual return forms

    FBR notifies draft rules for timely issuance of annual return forms

    ISLAMABAD: Federal Board of Revenue (FBR) on Tuesday issued SRO 1041(I)/2020 for timely issuance of annual income tax return forms in order to facilitate taxpayers and avoid unnecessary delays in return filing process.

    The FBR proposed amendment to Income Tax Rules, 2002 through the SRO. A new rule 34A has been proposed to insert in the Income Tax Rules, 2002.

    As per the rules the annual income tax return form shall be finalized and available by January 31 every year for the relevant tax year.

    The procedure to finalize the return forms revealed that the Inland Revenue Policy Wing would identify the legal amendments to be incorporated in income tax return forms by August 31 of the financial year following the Finance Act to which the return relates.

    By September 15, preparation of change request form (CRF) shall be finalized by Inland Revenue Policy Wing and Information Technology Wing, in consultation with PRAL.

    Analysis and scrutiny of change request form (CRF) by Chief Income Tax Policy and Chief Business Domain Team shall be conducted by September 16 of the financial year following the Finance Act to which the return relates and the same shall be submitted to member Inland Revenue Policy for approval on the same day.

    PRAL shall complete configuration and development of the approved CRF by October 31 of financial year following the Finance Act to which the return relates.

    User Acceptance Test (UAT) of the amended return forms on testing environment shall be finalized by Inland Revenue Policy Wing and Information Technology Wing, in consultation with PRAL, by November 15 of financial year following the Finance Act to which the return relates and the same shall be submitted to Member Inland Revenue Policy for approval on the same day.

    The return form shall remain available on the portal for suggestions till January 07 of financial year following the Finance Act to which the return relates.

    The final return form shall be notified on or before January 31 of financial year following the Finance Act to which the return relates by observing following timelines:

    Inland Revenue Policy Wing and Information Technology Wing shall review the suggestion received from stakeholders by December 12 of financial year following the Finance Act to which the return relates

    A new change request form (CRF), if required, shall be finalized by Inland Revenue Policy Wing and Information Technology Wing, in consultation with PRAL, by January 10 of the financial year following the Finance Act to which the return relates and the same shall be approved by Member Inland Revenue

    PRAL shall complete configuration and development of the approved CRF by January 15 of the financial year following the Finance Act to which the return relates

    User Acceptance Test (UAT) of the final return forms on testing environment shall be finalized by Inland Revenue Policy Wing and Information Technology Wing, in consultation with PRAL, by January 18 of the financial year following the Finance Act to which the return relates and the same shall be submitted to Member Inland Revenue Policy for approval.

    Finance income tax return forms shall be available on IRIS by January 31 of financial year following the Finance Act to which the return relates

    In case, any further amendment are introduced in Finance Act that have an impact on the finally notified income tax return forms referred to at clause (e), such amendments shall be incorporated by July 07 of the financial year next following; and

    Notwithstanding anything contained in this rule, the time so specified may, if requested by the Member Inland Revenue Policy, be extended by the FBR to such extent and subject to such conditions and limitations as it may deem proper.

  • FBR adopts policy to strengthen legal team for tax cases

    FBR adopts policy to strengthen legal team for tax cases

    ISLAMABAD: Federal Board of Revenue (FBR) has adopted new policy for placement of legal advisors and advocates on its panel to improve the representation before the courts.

    The FBR said that previously policy for appointment of advocates was regulated under guidelines issued on October 16, 2017.

    “However, to improve the representation before the courts in the light of directors of Supreme Court given in CMA No. 991/2015, the existing policy has been reviewed and the new policy guidelines are proposed for placing advocates on FBR panel and appointment as legal advisors on retainership,” the FBR added.

    According to eligibility criteria for appointment of legal advisors, advocates must have at least seven years practice as advocate High Court in relaxation or service matters shall be considered.

    For placement on FBR panel, the applicant must have at least three years practices/experience as advocate of High Court in taxation or services matters, having good reputation and professional competence.

    However, where the applicant is a retired officer of FBR and has served in IRS or Pakistan Customs for at least ten years, experience as an advocate High Court for one year may also be considered.

    The FBR said that advocate placed on panel of FBR while representing the FBR shall not give any conceding statement before any court unless specifically in this regard. “The advocate shall not enter into appearance in any case against FBR or its field formations,” the FBR added.

    The advocate shall be responsible to apply for the certified copy on the date of judgment is announced and provide the same to the department immediately.

    Advocate appointed by the FBR or its field formation shall not seek unnecessary adjournment. Further, the appointed advocate shall ensure the departmental case is not left unattended for want of prosecution.

  • TAX YEAR 2021: tax rates for salary income

    TAX YEAR 2021: tax rates for salary income

    The Federal Board of Revenue (FBR) has updated the income tax rates for salaried individuals for the tax year 2021. These rates, which have been incorporated into the Income Tax Ordinance, 2001, as amended by the Finance Act, 2020, will remain applicable from July 1, 2020, to June 30, 2021, unless further amendments are made.

    (more…)
  • Fixed tax scheme available only for registered builders, developers: FBR

    Fixed tax scheme available only for registered builders, developers: FBR

    ISLAMABAD: Federal Board of Revenue (FBR) has said that the fixed tax scheme is available to those builders and developers, who opt for the scheme by registering their projects with the FBR.

    Under the scheme, the term “builder” means a person who is registered as a builder with the FBR and is engaged in the construction and disposal of residential and commercial buildings.

    The term “developer” means a person who is registered as a developer with the FBR and is engaged in the development of land in the form of plots of any kind either for itself or otherwise.

    Builders and developers eligible for this fixed tax scheme include individuals, a company or an Association of Persons (AOP), the FBR said.

    The fixed tax scheme encompasses a new project as well as an incomplete existing project subject to completion of such projects by 30th September, 2022, the FBR added.

    A ‘new project’ means a construction or development project, which commences during the period starting from April 17, 2020 till December 31, 2020 and is completed on or before September 30, 2022.

    An ‘existing project’ means an incomplete construction or development project, which has commenced before April 17, 2020, is completed on or before September 30, 2022 and a declaration is provided in the registration form with regard to the percentage of completion of the project up to the last day of the accounting period pertaining to Tax Year 2019.

    The tax payable by builders and developers on their income, profits and gains emanating from the sale of buildings or plots shall be determined on a project by project basis on the basis of specified rates per square foot/per square yard for commercial and residential buildings and commercial, residential and industrial plots, the FBR said.

    In the case of buildings having dual usage i.e. both commercial and residential the respective rates specified for each category shall apply.

    Moreover, in case the development of plots and construction of buildings upon the same constitutes a single project, the respective rates for developers and builders shall both apply, the FBR added.

    Fixed tax shall be reduced by 90 percent in the case of low cost housing developed or approved by the Naya Pakistan Housing and Development Authority or under the Ehsaas Programme.

    Builders and developers opting for the proposed scheme are not required to withhold income tax on the purchase of building material except steel and cement. Moreover, they are not required to withhold tax on services of plumbing, electrification, shuttering and other similar services other than those provided by companies.