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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.

  • FBR estimates 2.77 million returns for tax year 2019 by January 31

    FBR estimates 2.77 million returns for tax year 2019 by January 31

    ISLAMABAD: Federal Board of Revenue (FBR) has estimated around 2.77 million income tax returns for tax year 2019 to be filed by January 31, 2020, sources said on Wednesday.

    The FBR extended the date for filing income tax returns for tax year 2019 up to January 31, 2020 for all type of taxpayers.

    The FBR received around 2.17 million income tax returns for tax year 2019 by December 31, 2019.

    Syed Shabbar Zaidi, Chairman, FBR in his meeting with Finance Advisor Dr. Abdul Hafeez Shaikh disclosed that the FBR had received 2.17 million income tax returns for tax year 2019. While another 600,000 returns likely to be received by extended date i.e. January 31, 2020.

    The actual return filing date for tax year 2019 was September 30, 2019 for taxpayers including salaried persons, business individuals, persons falling in final tax regimes and companies having special tax year.

    While, for corporate taxpayers the last date for filing income tax returns was December 31, 2019.

    The FBR extended return filing date for other than corporate taxpayers around five times up to January 31, 2020. The FBR also extended the last date for corporate taxpayers up to January 31, 2020.

    The FBR is expecting around 3.5 million income tax returns for tax year 2019, which may be filed after due date but with payment of fine and penalties.

    Through Tenth Schedule of Income Tax Ordinance, 2001 the benefit of reduced withholding tax rates can only be availed by persons on the Active Taxpayers List (ATL).

    Those persons failed to file their income tax returns by due date and file their returns after due date without payment of fine will not be able to find their place on the ATL.

    The FBR will issue ATL for tax year 2019 on March 01, 2020.

    The number of income tax return has increased to 2.7 million for tax year 2018. The ATL for tax year 2018 will expire on February 29, 2020.

  • Voluntary tax system fails to generate revenue: FBR

    Voluntary tax system fails to generate revenue: FBR

    ISLAMABAD: Syed Shabbar Zaidi, Chairman, Federal Board of Revenue (FBR) has said that voluntary compliance failed to generate revenue.

    “The voluntary tax system has failed to deliver and such system cannot run on a sustained basis,” the chairman said on Tuesday while addressing All Pakistan Chambers Presidents Conclave.

    The chairman said that the existing taxation system as ‘extortionist’ and said the FBR was collecting 90 percent taxes in the shape of withholding taxes and deduction at source while only 5 – 10 percent was coming through voluntary compliance.

    He said that total wholesale and retail traders are contributing Rs 9 billion from all over the country. He further added that Sundar Industrial Estate, which is not exempted from registration of sales tax, is contributing ‘very negligible’ amount to the national kitty.

    Zaidi also pointed out that the FBR was collecting 45 percent on imports. He also added that the FBR cannot be fixed with sacking and transfers of officers but it will have to be automated to minimize human interaction as much as possible.

    The chairman said that the tax authority had so far collected Rs 2,085 billion in first half (July-December) of 2019-2020.

    He stated that the FBR is facing one major problem on customs side as there is still difference of $1.7 billion in bilateral trade figure, which shows that under-invoicing is still continuing that once stood in the range of $6 billion per annum.

    He said it is not possible for any human to check 8,000 containers daily so the solution is the installation of the latest scanners. “We need to place automation as there is no other solution,” he added.

    The chairman FBR said that there are four major sectors contributing to the country’s GDP growth and economy including manufacturing, agriculture, services and retail trade and wholesale.

    There should have been 25 percent burden on each of these four sectors but in Pakistan manufacturing sector is bearing this burden by contributing 70 percent to national kitty. This tax burden, he said, is resulting into de-industrialization.

    Ideally, he said the tax burden should have distributed equally on four major contributors of the GDP growth.

    He said that the government is the partner of 25 percent in the shape of collection of taxes from the private businesses.

  • Regulatory duty on cotton import withdrawn

    Regulatory duty on cotton import withdrawn

    ISLAMABAD: The government has withdrawn 3 percent regulatory duty on import of cotton, a notification said on Tuesday.

    Federal Board of Revenue (FBR) issued SRO 38(I)/2020 to withdraw 3 percent regulatory duty on import of cotton.

    Through SRO 949(I)/2019 the regulatory duty was imposed on import of cotton.

    The regulatory duty was imposed on August 22, 2019, after unfavorable weather conditions, particularly prolonged hot and dry weather conditions, coupled with massive attacks of whitefly, pink bollworm, and other pests/insects gave cotton crop heavy battering.

    Moreover, growers are increasingly losing interest in planting cotton because they are not getting any returns or profits as the production cost is rising and the market prices are falling.

    The latest withdrawal of regulatory duty was granted in pursuance to approval by Economic Coordination Committee (ECC) of Cabinet earlier this month.

    Last year on October 4, the Cotton Crop Assessment Committee projected that cotton production at the end of the year would be 10.20 million bales as against the target of 15 million bales for the fiscal year 2019-2020.

    In order to fill the gap, the commerce division had proposed duty-free import of cotton.

    But the ECC was informed that bulk of cotton would be lifted from local farmers by January 1 this year and the proposed exemption would not adversely affect the interests of local farmers.

    Both the commerce and national food divisions gave assurance that imported cotton would facilitate textile exports which are showing an upward trend.

  • FBR to issue ATL Tax Year 2019 on March 01

    FBR to issue ATL Tax Year 2019 on March 01

    KARACHI: Federal Board of Revenue (FBR) will issued Active Taxpayers List (ATL) for tax year 2019 on March 01, 2020 to enable persons filed income tax returns for the tax year availing reduced rates and other benefits.

    ATL is published every financial year on the March 01 and is valid up to the last day of February of the next financial year, the FBR said.

    For example, Active Taxpayer List for Tax year 2017 was published on March 01, 2018 and will be valid till February 28, 2019.

    Similarly, Active Taxpayer List for Tax year 2018 was published on 1st March 2019 and will be valid till February 29, 2020.

    The appearance of ATL has become more important following amendment introduced through Finance Act, 2019 under which 100 percent additional tax has been imposed on certain transactions by persons not appearing on the ATL.

    The FBR in an official memorandum said that previously the law provided for the concept of a non-filer and stipulates higher withholding rates for the same which were adjustable at the time of filing of income tax return.

    This tax regime had created a misconception that a non-filer can go scot free by choosing not to file income tax return.

    The measure was meant to increase the number of filers, however over time the focus shifted to raising additional revenue only.

    The measure had not achieved the desired results as the previous regime did not provide for any legal framework to ensure filing of return by such non filers.

    In order to remove the aforesaid misconception, the concept and the term of ‘non-filer’ is being abolished from the statute, wherever occurring.

    A separate Schedule has introduced to specifically provide a legal framework for punitive measures for persons not appearing on ATL and to ensure filing of return by such persons.

    The main attributes of this scheme are as under:-

    — Persons whose names are not appearing on the ATL will be subjected to hundred percent increased rate of tax.

    — The withholding agents will clearly specify the names, CNIC or any other identification of such persons in the withholding statement so that legal provisions to enforce return can come into effect.

    — Where a withholding agent is of the opinion that hundred percent increased tax is not required to be collected on the basis that the person was not required to file return, the withholding agent shall furnish an intimation to the Commissioner setting out the basis on which the person is not required to file return. The Commissioner shall accept or reject the contention on the basis of existing law. In case the Commissioner fails to respond within thirty days, permission shall be deemed to be granted to not deduct tax at hundred percent increased rate

    — Where the person’s tax has been deducted or collected at hundred percent increased rate and the person fails to file return of income for the year for which tax was deducted, the Commissioner shall make a provisional assessment within sixty days of the due date for filing of return by imputing income so that tax on imputed income is equal to the hundred percent increased tax deducted or collected from such person and the imputed income shall be treated as concealed income.

    — The provisional assessment shall be of no effect if the person files return within forty five days of completion of provisional assessment and the provisions of the Ordinance shall apply accordingly. Where return is not filed within forty five days of provisional assessment, it shall be treated as final assessment and the Commissioner shall initiate penalty proceedings for concealment of income.

  • Sales tax rates issued for retailers integrated with FBR

    Sales tax rates issued for retailers integrated with FBR

    ISLAMABAD: Federal Board of Revenue (FBR) has issued sales tax rate for different categories of retailers, who integrated their sales with online system of the FBR.

    The FBR said that the rate of sales tax for items sold by integrated retailers shall be the same as for all other suppliers as provided under the Sales Tax Act, 1990.

    Only exception is for locally manufactured textile and leather items, which if sold by integrated retailers are subject to concessionary rate of 14 percent, and if sold by any other supplier are subject to 17 percent standard sales tax.

    Category-wise rates for items sold by integrated retailers is as below:

    Items falling in Sixth Schedule to the Sales Tax Act, 1990, the sales tax shall be exempted on sale of milk, rice, wheat flour, pulses, fruits & vegetables (except canned and packaged), uncooked meat, poultry, eggs, stationary items, medicines, laptops and personal computers etc

    Items falling in Eighth Schedule to the Act, the reduced rate of sales tax rate shall be as provided in the Schedule. The sale of dairy items other than milk, fat-filled milk (tea-whitener), flours other than that of wheat, if sold in retail packing under a brand name, are subject to sales tax rate of 10 percent; and prepared products of meat or meat offal, if sold in retail packing under a brand name, are subject to sales tax rate of 8 percent;

    Precious jewellery at 1.5% of value of gold, plus 0.5% of value of diamond, used therein, plus 3% of making charges

    Finished fabric, and locally manufactured finished articles of textile and textile made-ups and leather and artificial leather (See S. No. 66 of Table 1 of Eighth Schedule) shall be subject to 14 percent of sales tax.
    This will include locally manufactured garments, shoes, bags, made-ups etc of textile, leather and artificial leather.

    Mobile phones and satellite phones: Under Ninth Schedule, sales tax is to be paid by the importer and manufacturers only. No sales tax to be charged on subsequent supplies. However, suppliers may pass on the burden of sales tax charged on their purchases in their selling price.

    Items not covered above shall be liable to standard sales tax rate at 17 percent on items in Third Schedule except fertilizers, imported textile and leather items, electronic items, watches, sugar, hardware, sanitary ware, kitchenware, toys, furniture, sports goods, surgical instruments, crockery, plastic products, imitation jewellery, etc.

  • FBR clarifies delay in track, trace system implementation

    FBR clarifies delay in track, trace system implementation

    ISLAMABAD: Federal Board of Revenue (FBR) has said that implementation of track and trace system has been stayed by a court. As soon the stay is vacated by the court the process will be implemented, said a statement issued on Monday.

    The FBR issued the clarification in response to news reports published on January 20, 2020 about delay in the implementation of FBR’s Track & Trace System to control illicit tobacco trade.

    FBR has clarified that a license has been issued to M/s NRTC on October 14, 2019 through a transparent and fair process of bidding which is strictly in accordance with the PPRA Rules, 2004 and Licensing Rules, 2019.

    However, the award of license to lowest bidder i.e. M/s NRTC was challenged by some unsuccessful bidders i.e. M/s SICPA Ink in Sindh High Court and M/s Reliance IT Solutions (Pvt) Ltd and M/s NIFT Consortium in Islamabad High Court.

    Since, the Honorable Court has granted status quo and the matter is sub-judice before the aforesaid courts, therefore, there is no delay on the part of FBR.

    The process of implementation of Track and Trace System will be resumed as and when the stay order is vacated by the Honorable Court.

  • Pension granted total income tax exemption

    Pension granted total income tax exemption

    ISLAMABAD: Pensioners are allowed total exemption from tax on income received as pension.

    Officials in Federal Board of Revenue (FBR) on Monday said that pensioners are allowed complete exemption from income tax under Income Tax Ordinance, 2001.

    They said that any pension received by a citizen of Pakistan from a former employer will be exempted from income tax, other than where the person continues to work for the employer (or an associate of the employer).

    Provided that where the person receives more than one such pension, the exemption applies only to the higher of the pensions received.

    The exemption from income tax also available on any pension –

    (i) received in respect of services rendered by a member of the Armed Forces of Pakistan or Federal Government or a Provincial Government;

    (ii) granted under the relevant rules to the families and dependents of public servants or members of the Armed Forces of Pakistan who die during service.

    Any payment in the nature of commutation of pension received from Government or under any pension scheme approved by the FBR for the purpose of this clause is also exempted.

    Any income representing any payment received by way of gratuity or commutation of pension by an employee on his retirement or, in the event of his death, by his heirs as does not exceed –

    (i) in the case of an employee of the Government, a Local Government, a statutory body or corporation established by any law for the time being in force, the amount receivable in accordance with the rules and conditions of the employee’s services;

    (ii) any amount receivable from any gratuity fund approved by the Commissioner in accordance with the rules in Part III of the Sixth Schedule;

    (iii) in the case of any other employee, the amount not exceeding three hundred thousand rupees receivable under any scheme applicable to all employees of the employer and approved by the Board for the purposes of this sub-clause; and

    (iv) in the case of any employee to whom sub-clause (i), (ii) and (iii) do not apply, fifty per cent of the amount receivable or seventy-five thousand rupees, whichever is the less:

    Provided that nothing in this sub-clause shall apply –

    (a) to any payment which is not received in Pakistan;

    (b) to any payment received from a company by a director of such company who is not a regular employee of such company;

    (c) to any payment received by an employee who is not a resident individual; and to any gratuity received by an employee who has already received any gratuity from the same or any other employer.

  • Draft return, wealth statement forms for traders finalized

    Draft return, wealth statement forms for traders finalized

    ISLAMABAD: Federal Board of Revenue (FBR) has finalized simple income tax return and wealth statement for small traders, sources said on Sunday.

    The FBR has not issued officially the draft returns and wealth statement forms for traders but sources said that the draft had been finalized and would be issued soon.

    The draft income tax return form has been simplified. The form is one-page with 15 entries to be filled.

    The traders are required to basic information including name, address, business assets and number of employees and bank account number.

    The description in required fields to be filed are included: turnover/receipts; cost of sales; opening stock; purchases; closing stock; other direct expenses; gross profit; overhead expenditure; net profit/taxable income; income from all other sources; tax chargeable; minimum tax; tax payable whichever is higher; tax already paid; net tax payable/refundable.

    The wealth statement form has also been simplified with small amount of required information.

    Draft income tax return form for traders:

    Draft wealth statement form for traders:

  • FBR starts phasing out final tax regime

    FBR starts phasing out final tax regime

    ISLAMABAD: Federal Board of Revenue (FBR) has started phasing out final tax regime for an equitable taxation system.

    Sources in the FBR said on Saturday that in the budget 2019/2020 final tax regime had been withdrawn for various sectors, which were enjoying this regime for the past many years.

    The FBR in a report said that income tax by its inherent nature is tax charged and levied on income.

    However some persons involved in certain transactions are not required to pay tax on their actual profit.

    Instead, the tax collected or deducted on these transactions is treated as final tax liability.

    Previously, this regime is available persons to such as commercial importers, commercial suppliers of goods, contractors, persons deriving brokerage or commission income and persons earning income from CNG stations.

    The tax collected or deducted from the aforesaid persons are now treated as minimum tax liability except for exporters, persons winning prizes and sellers of petroleum products.

    This measure is designed as a first step for gradual phasing out of the final tax regime and transition to income based taxation for all persons.

  • FBR to meet for addressing small traders’ concerns

    FBR to meet for addressing small traders’ concerns

    ISLAMABAD: Federal Board of Revenue (FBR) has decided to launch a series of meetings with representatives of traders associations to address concerns of small traders, sources said on Saturday.

    In this regard a combined meeting of traders’ representatives and senior officers of FBR will be held on January 22, at FBR House Islamabad.

    In the meeting, the chairperson and other senior officers of FBR will brief the traders about the progress on the agreement with the traders and will take them into confidence.

    It is worth mentioning that the FBR and traders associations signed an agreement on October 30, 2019 in which 11-point was agreed by the both sides to bring small traders and shopkeepers into the tax net through introduction of fixed tax and simple income tax return form.

    The sources said that representatives of traders and the FBR officers would hold a combined meeting on January 24, 2020 at Regional Office Islamabad/Rawalpindi, January 27, 2020 at Karachi, January 29, 2020 at Multan, January 30, 2020 at Faisalabad and January 31, 2020 at Lahore Regional Office.

    The sources said that an important meeting between representatives of Trade Associations and Senior officers of Federal Board of Revenue was held last week at FBR House Islamabad.

    The traders’ representatives included Kashif Chaudhry, Naeem Mir and Ajmal Baloch whereas FBR Team was led by Acting Chairperson FBR Nausheen Amjad and included Member IR Policy Dr. Hamid Ateeq Sarwar and DG Retail Hameed Memon.

    It was agreed in the meeting that committees established throughout Pakistan will be completed in coming two days.

    The meeting had discussed issues arising due to turnover tax and decided the issue would be analyzed afresh in the future meeting with the tyre, mobile, ghee, sugar, pulses etc, cement, fertilizer, electronics, yarn, iron steel, paper, automobile and other sectors.