ISLAMABAD: Federal Board of Revenue (FBR) on Tuesday constituted market committees within the jurisdiction of 17 Regional Tax Offices (RTOs) to resolve the issues of small traders and retailers.
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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.
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No tax on cash withdrawal from banks on active taxpayers: FBR
ISLAMABAD: Federal Board of Revenue (FBR) on Tuesday said that there is no tax on cash withdrawal from banks for those whose names are on the Active Taxpayers List (ATL).
Otherwise, the withholding tax rate on cash withdrawal is 0.6 percent for persons not appearing on the ATL.
In order to ensure names on ATL, taxpayers are required to file their annual income tax returns. The FBR urged the taxpayers to avail the extended the last date for filing income tax returns for tax year 2019, which is December 31, 2019.
The FBR said that in case of enlistment in the ATL, the taxpayers shall have following benefits:
— Almost half of the withholding tax as compared with the inactive taxpayers
— 5.5 percent tax on imports (raw material)
— 6 percent tax on imports (commercial)
— 15 percent tax on dividends
— 10 percent tax on bank and savings scheme profit worth up to Rs0.5 million and 15 percent on above Rs0.5 million
— 4.5 percent tax on sale of goods by persons except companies
— 10 percent tax on provision of services by persons except companies
— 7.5 percent tax on contract executed by person except companies
— 15 percent tax on prize bonds money of prize bonds
— 12 percent tax on commission
— Annual token fee of vehicles from Rs800 to Rs10,000
— Withholding tax on vehicle registration from Rs7,500 to Rs250,000
— No tax on cash withdrawal of more than Rs50,000 from banks
— No tax on bank transactions (cross cheque, pay order, demand draft etc.)
— One percent tax on purchase of property
— 10 percent tax on sale by auction
— Tax on mobile phone import from Rs70 to Rs200
— 10 percent tax deduction for payment against advertisement to non-resident person
The FBR said that in case of no enlistment in the ATL, the following tax rates are applicable:
— Almost double tax rates
— 11 percent tax on imports (raw material)
— 12 percent tax on imports (commercial)
— 30 percent tax on dividends
— 20 percent tax on bank and savings scheme profit worth up to Rs0.5 million and 30 percent on above Rs0.5 million
— 9 percent tax on sale of goods by persons except companies
— 20 percent tax on provision of services by person except companies
— 15 percent tax on contract executed by person except companies
— 30 percent tax on prize money of prize bonds
— 24 percent tax on commission
— Annual token fee of vehicles from Rs1,600 to Rs20,000
— Withholding tax on vehicle registration from Rs15,000 to Rs500,000
— 0.6 percent tax on cash withdrawal of more than Rs50,000 from banks
— 0.6 percent tax on bank transactions (cross cheque, pay order, demand draft etc.)
— 2 percent tax on purchase of property
— 20 percent tax on sale by auction
— Tax on mobile phone import from Rs140 to Rs400
— 20 percent tax deduction for payment against advertisement to non-resident person
The FBR said that those persons failed to file their return then the tax authorities would assess the applicable tax without serving any notice. Further, legal action will be taken resulting into imprisonment of one to three years.
The FBR also said that late income tax return filers will pay fine.
The FBR said that the filing of income tax returns is mandatory for all persons with annual income of Rs400,000 or more.
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FBR needs to collect Rs2,198 billion in first half of current fiscal year
KARACHI: Federal Board of Revenue (FBR) is required to collect Rs2,198 billion during first half of the current fiscal year as per revised performance criteria of International Monetary Fund (IMF).
The revenue collecting agency has failed to achieve the first quarter performance criteria.
According to Country Report Pakistan released by IMF on Monday the actual performance criteria for revenue collection was Rs2,367 billion during first half (July – December) of current fiscal year, which has been revised downward by Rs169 billion to Rs2,198 billion.
This shows that the FBR will need to collect Rs590 billion in the month of December 2019 to achieve the revised performance criteria.
The FBR’s provisional collection during first five months (July – November) 2019/2020 was Rs1,608 billion.
As per IMF documents the FBR failed to achieve the first quarter (July – September) 2019/2020 target of Rs1,071 billion and its collection was at Rs964 billion.
The actual revenue collection target for current fiscal year was Rs5,550 billion. However, the indicative target as per IMF documents has also been revised downward to Rs5,238 billion.
The FBR has to raise revenue collection to Rs3,520 billion by March 2020 in order to ensure the desired target for current fiscal year.
As per IMF documents: “Tax revenue is now expected to be 0.5 percent of GDP lower than originally expected: while domestic collection is envisaged to remain strong, growing by over 25 percent y-o-y over FY 2020, growth in trade-related tax revenues is expected to remain subdued as declining imports continue to weigh on collections—more than 40 percent of total tax revenue in Pakistan is collected at the import stage.”
The FBR has been given revised Indicative Targets for end December 2019 including net tax collection to recognize the faster than expected external adjustment negatively impacting customs revenue, besides net accumulation of tax refund arrears to capture the authorities plan to reflect the end-June stock of tax refund arrears.
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Tax return filing hits new record at 2.73 million
KARACHI: The income tax return filing touches to a new record high of 2.73 million as people making compliance to avoid 100 percent additional tax on persons not appearing on Active Taxpayers List (ATL).
The income tax return filing increased to 2.73 million on the basis of returns filed till December 22, 2019 for tax year 2018.
Sources in Federal Board of Revenue (FBR) attributed the record increase in return filing to the amendment to Income Tax Ordinance, 2001 through Finance Act, 2019.
In the last budget 2019/2020 a new Tenth Schedule was inserted to Income Tax Ordinance, 2001 under which persons not appearing on ATL would liable to pay 100 percent more withholding tax on certain transactions.
The ATL for tax year 2018 issued on March 01, 2019 in which 1.59 million names were appeared of those taxpayer, who filed their returns by due date.
However, later the FBR granted extension in date for filing returns due to introduction of a tax amnesty scheme.
The extension for filing income tax returns for tax year 2018 was granted up to August 09, 2019.
The return filing up to August 09, 2019 for tax year 2018 jumped up to 2.5 million from 1.59 million returns, which were part of the first ATL issued March 01, 2019.
The insertion of Tenth Schedule to Income Tax Ordinance, 2001 speed up the return filing by taxpayers in order to avoid higher tax rate on certain transactions.
Previously, people filing their annual income tax returns after due date were not allowed to appear on the ATL. However, another provision was added to the main statute under which persons by paying penalty can include their name to ATL.
Therefore, since August 09, 2019 the FBR received around 230,000 tax returns for tax year 2018 till December 22, 2019.
The FBR will issue ATL for tax year 2019 on March 01, 2020 and till then the prevailing ATL will be applicable for the purpose of withholding tax rates on certain transactions.
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Benami properties with known sources not to attract penal action
KARACHI: A person having known source of income for a property and keeps in someone else name will not attract penal action under Benami Transaction laws, sources in Federal Board of Revenue (FBR) said.
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Final tax regime for certain amount under Income Tax Ordinance
KARACHI: Federal Board of Revenue (FBR) has defined final tax regime for certain income with certain conditions explained under Income Tax Ordinance, 2001.
Following are the income falling under Final Tax Regime under the Ordinance:
Section 5: Tax on dividends
Section 6: Tax on certain payments to non-residents.—
Section 7: Tax on shipping and air transport income of a non-resident person.
Section 5AA: Tax on return on investments in sukuks.
Section 7A: Tax on shipping of a resident person.
Section 7B: Tax on profit on debt.
The Section 8 of the Ordinance explained the scheme and terms and conditions
General provisions relating to taxes imposed under sections 5, 6 and 7
(1)-Subject to this Ordinance, the tax imposed under Sections 5, 5AA, 6, 7, 7A and 7B shall be a final tax on the amount in respect of which the tax is imposed and—(a) such amount shall not be chargeable to tax under any head of income in computing the taxable income of the person who derives it for any tax year;
(b) no deduction shall be allowable under this Ordinance for any expenditure incurred in deriving the amount;
(c) the amount shall not be reduced by —
(i) any deductible allowance; or
(ii) the set off of any loss;
(d) the tax payable by a person under section 5, 5A, 5AA, 6, 7, 7A and 7B shall not be reduced by any tax credits allowed under this Ordinance; and
(e) the liability of a person under section 5, 6 or 7 shall be discharged to the extent that —
(i) in the case of shipping and air transport income, the tax has been paid in accordance with section 143 or 144, as the case may be; or
(ii) in any other case, the tax payable has been deducted at source under Division III of Part V of Chapter X.
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IR barred from arresting women on tax default
KARACHI: The offices of Inland Revenue are prohibited for arresting women on charge of tax default. Besides, the offices also cannot arrest a minor.
According to Income Tax Rules, 2002 there is prohibition against arrest of woman or minor.
The commissioner of Inland Revenue shall not order the arrest or detention in the civil prison of: a woman; or any person who, in his opinion, is a minor or of unsound mind.
The rules also envisaged certain conditions on IR officers regarding entry into dwelling house for arresting tax defaulter.
For the purpose of making an arrest under these rules,-
(a) no dwelling house shall be entered after sunset and before sunrise;
(b) no outer door of a dwelling house shall be broken open unless such dwelling house or a portion thereof is in the occupancy of the defaulter and he or any other occupant of the house refuses or in any way prevents access thereto; but, when the person executing any such warrant has duly gained access to any dwelling house, he may break open the door or any room or apartment if he has reason to believe that the defaulter is likely to be found there; and
(c) no room, which is in the actual occupancy of a woman who, according to the custom of the country, does not appear in public shall be entered into unless the officer authorized to make the arrest has given notice to her that she is at liberty to withdraw and has given her reasonable time and facility for withdrawing.
In case of illness of a tax defaulter the commissioner can release by cancelling the warrant for the arrest.
Release on ground of illness.-
(1) At any time after a warrant for the arrest of a defaulter has been issued, the Commissioner may cancel it on ground of the serious illness of the defaulter.
(2) Where a defaulter has been arrested, the Commissioner may release him if, in the opinion of the Commissioner of Tax, he is not in a fit state of mind to be detained in the civil prison.
(3) Where a defaulter has been committed to the civil prison, he may be, released therefrom by the Commissioner on the ground of the existence of any infectious or contagious disease or on the ground of his suffering from any illness.
(4) A defaulter released under this rule may be re-arrested, but the period of his detention in the civil prison shall not in the aggregate exceed that authorized by rule 164.
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Valuation to be issued to plug loopholes in sales tax collection on imported consumer goods
KARACHI: Federal Board of Revenue (FBR) to issued sales tax valuation in order to plug revenue leakages on imported consumer items, sources said.
The sources said that the FBR had identified massive misdeclaration and under invoicing on imported consumer items falling under Third Schedule of Sales Tax Act, 1990.
In the latest budget 2019/2020, an amendment was introduced to Sales Tax Act, 1990 under which printing of retail price was made mandatory on imported consumer goods.
The measure was introduced to end the assumed prices in order to recover sales tax on fixed retail prices on imported items.
The law has been applicable since July 01, 2019 but due to difficulties faced by importers of such goods the FBR allowed relief in declaration without printing of retail prices subject to some conditions.
The FBR issued Sales Tax General Order (STGO) on August 07, 2019 that the retail price, if not printed at import stage, can be printed at the port of import.
According to the STGO: “If that is also not possible, the importer shall undertake to print the retail price after clearance of goods and shall pay sales tax on retail price which shall not be less than 130 percent of the customs value increased by assessed customs duties, excise duty and other applicable taxes and charges excluding sales tax.”
The sources said that tax offices in Karachi conducted survey and found the selling price of imported consumer items was much higher than the declared value at customs clearance stage.
They said that the finding of the survey had been sent to the FBR headquarters for taking further action.
The printing of retail prices is mandatory for importers on items such as tea, juices, perfumes, household electrical goods, including air conditioners, refrigerators, deep freezers, televisions, recorders and players, electric bulbs, tube-lights, electric fans, electric irons, washing machines and telephone sets. These items shall also include house hold gas appliance, including cooking range, ovens, geysers and gas heaters.
Besides items such as foam mattresses, paints, lubricating oils, storage batteries, tyers, motor cycles and auto rickshaws have also been included in the regime of printed retail prices.
The sources said that as per latest development the FBR had decided to issue valuation of such imported consumer goods in order to realize correct sales tax at import stage.
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Procedure to make application for income tax refund payment
KARACHI: A taxpayer is allowed to claim refund against excess payment of income tax against total liability during a tax year.
Federal Board of Revenue (FBR) has notified procedure to apply for income tax refunds.
The taxpayer should follow the procedure in order to file an application for availing income tax refund:
Prescribed application for refund of tax.- An application for refund of tax under section 170 shall be made in the following form, namely:-
The Commissioner,
______________ Zone,
______________ (City).
Dear Sir,
I _________________________________________________ of _________________________________ hereby declare:-
(a) that my total income computed in accordance with the provisions of Income Tax Ordinance, 2001 (XLIV of 2001), during the year ending on being the income year for the assessment for the year ending on the _______________ amounted to Rs._______________.
(b) that the total tax chargeable in respect of such total income is Rs._______________.
(c) that the total amount of tax paid is Rs._______________.
(d) that I have already filed evidence of payment of tax along with my return of income for the year or I enclose herewith evidence of tax already paid during the tax year for taking credit.
I, therefore, request that a refund of Rs._______________ may be allowed to me.
Yours faithfully_________________________
Signature ____________________________
NTN_________________________________
Address_______________________________
I hereby declare that I am resident/ non-resident and that what is in this application is correct.
Date ____________________ Signature________________
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FBR asks professionals to declare annual income, assets
ISLAMABAD: Federal Board of Revenue (FBR) has asked professional bodies of doctors, lawyers, engineers etc. to pursue their members for file mandatory declarations of income and assets.
In a tweet message the FBR said that members of all professional bodies are liable to declare their income and assets during a year through electronic return filing.
Sources in the FBR said that the authorities had decided to take harsh action against unreported income. They said that professionals of certain bodies were engaged in cash based transactions and avoid declaring true income or file declaration with nominal income.
The last date for filing income tax returns is December 31, 2019, which was already extended four times as the actual last date for filing income tax returns was September 30, 2019.
The sources said that the professionals were taking huge amount in term of fee from their clients / patients but mostly in cash bases.
The sources further said that the FBR would obtain third-party information of such unreported incomes besides assistance would be taken from withholding statements and returns filed by other taxpayers, who made payments.
They said that Income Tax Rules, 2002 prescribed record keeping by professional in order to verify their declarations.
The professionals (like medical practitioners, legal practitioners, accountants, auditors, architects, engineers etc.) are required to keep following records:-
(a) Serially numbered and dated patient-slip/ invoice/ receipt for each transaction of sale or receipt containing the following:-
(i) taxpayer’s name or the name of his business or profession, address national tax number or CNIC and sales tax registration number, if any;
(ii) the description, quantity and value of medicines supplied or details of treatment /case/ services rendered (confidential details are not required) and amount charged; and
(iii) the name and address of the patient/client:
Provided that the condition of recording address of the patient on the patient slip under this clause shall not apply to general medical practitioners;
(b) Daily appointment and engagement diary in respect of clients and patients:
Provided that this clause-shall not apply to general medical practitioners;
(c) Daily record of receipts, sales, payments, purchases and expenses; a single entry in respect of daily receipts, sales, purchases and different heads of expenses will suffice; and
(d) Vouchers of purchases and expenses.