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.

Three new slabs added for taxation on income from property

ISLAMABAD: Three additional slabs have been added to income from property in order to generate more revenue under this head, sources in Federal Board of Revenue (FBR) said on Friday.

They said that in the last budget 2019/2020, effective from July 01, 2019, three additional slabs have been added to income from property in order to generate more revenue.

Prior to the amendment there were five taxable slabs of income from property with the highest slab’s rate being Rs. 200,000/- plus 20 percent of income exceeding Rs2000,000.

After the amendment said slab has been limited from Rs 2000,000/- to 4,000,000/- and thereafter three additional brackets of income between four to six million, six to eight million and exceeding eight million have been added.

The updated table of tax on income from property is as under:

S.No.	Gross amount of rent	Rate of tax
(1)	(2)	(3)
1.	Where the gross amount of rent does not exceed Rs.200,000.	Nil
2.	Where the gross amount of rent exceeds Rs.200,000 but does not exceed Rs.600,000.	5 per cent of the gross amount exceeding Rs.200,000.
3.	Where the gross amount of rent exceeds Rs.600,000 but does not exceed Rs.1,000,000.	Rs.20,000 plus 10 per cent of the gross amount exceeding Rs.600,000.
4.	Where the gross amount of rent exceeds Rs.1,000,000 but does not exceed Rs.2,000,000.	Rs.60,000 plus 15 per cent of the gross amount exceeding Rs.1,000,000.
5.	Where the gross amount of rent exceeds Rs.2,000,000 but not exceed Rs. 4000,000	Rs.210,000 plus 20 per cent of the gross amount exceeding Rs.2,000,000”
6.	Where the gross amount of rent exceeds Rs.4,000,000 but does not exceed Rs.6,000,000.	Rs.610,000 plus 25 per cent of the gross amount exceeding Rs.4,000,000.
7.	Where the gross amount of rent exceeds Rs.6,000,000 but does not exceed Rs.8,000,000.	Rs.1,110,000 plus 30 per cent of the gross amount exceeding Rs.6,000,000.
8.	Where the gross amount of rent exceeds Rs.8,000,000.	Rs.1,710,000 plus 35 per cent of the gross amou

(b) The rate of tax to be deducted under section 155, in the case of company shall be 15 percent of the gross amount of rent.

The chargeability of tax on income from property has been explained in Section 155 of Income Tax Ordinance, 2001.

Section 155. Income from property.— (1) Every prescribed person making a payment in full or part (including a payment by way of advance) to any person on account of rent of immovable property (including rent of furniture and fixtures, and amounts for services relating to such property) shall deduct tax from the gross amount of rent paid at the rate specified in Division V of Part III of the First Schedule.

Explanation.- “gross amount of rent” includes the amount referred to in sub-section (1) or (3) of section 16, if any.

(3) In this section, “prescribed person” means –

(i) the Federal Government;

(ii) a Provincial Government;

(iii) Local Government;

(iv) a company;

(v) a non-profit organization or a charitable institution;

(vi) a diplomatic mission of a foreign state;

(via) a private educational institution, a boutique, a beauty parlour, a hospital, a clinic or a maternity home;

(vib) individuals or association of persons paying gross rent of rupees one and a half million and above in a year; or

(vii) any other person notified by the Board for the purpose of this section.

January 17, 2020

FBR processes refund claims with data errors under FASTER system

KARACHI: Federal Board of Revenue (FBR) on Friday said it processed refund claims with data errors under Fully Automated Sales Tax e-Refund (FASTER) system.

The FBR urged FASTER Refund claimants to file refund claims in sequence i.e. July 2019 and then August 2019 and so on.

“Claims with data errors, rolled back and re-submitted claims relating to July 2019 have been processed,” the FBR said.

Such claims relating to August 2019 are under process which will be followed by September 2019 and onwards claims.

BCA Data is being sorted and Commercial Exporters Claims shall be processed in the coming week, the FBR added.

The FBR recently introduced electronic refund processing system to facilitate taxpayers. However, due to glitches in the form submission created difficulties for taxpayers in obtaining refunds.

The FBR issued a guideline for claiming refund under FASTER System.

01. Annex-H is a stock statement of input goods / services which shows flow of inputs in terms of quantity, value and sales tax involved in opening / closing balances, purchases and consumption in exports and local sales.

02. Quantities / values of finished products (exports and local) and output tax on local sales should not be mentioned in Annex-H.

03 Use Annex H to upload for the month transactions i-e purchase, import and Consumption only, Opening and Closing are derived /calculated automatically.

Same is applicable for Excel file uploading otherwise objection of duplicate value will arise.

04. The brought forward and carry forward tax amount in the return should match with opening balance and closing balance tax amount in the Annex-H.

05. The value of purchases and input tax paid thereon in the return should match with the corresponding figures in columns “purchased / imported during the month” in Annex-H.

Properly filled Annex-H without objections and anomalies of data will ensure processing in 72 Hours, the FBR said.

January 17, 2020
FBR issues list of 3,184 registered NPOs, NGOs

ISLAMABAD: Federal Board of Revenue (FBR) issued a list of 3,184 Non-Profit Organizations (NPOs) and Non-Governmental Organization (NGOs) that are registered with the tax authorities.

The income tax regime has been revised for NPOs and charitable organizations and tax credit shall be available to such organizations on filing of income tax returns.

The FBR conducted fresh scrutiny of NPOs and NGOs and then registered the organizations.

Section 100C of Income Tax Ordinance, 2001 deals with tax credit for NPOs, which is as follow:

Section 100C: Tax credit for certain persons.

Sub-Section (1): The income of Non-profit organizations, trusts or welfare institutions, as mentioned in sub-section (2) shall be allowed a tax credit equal to one hundred per cent of the tax payable, including minimum tax and final taxes payable under any of the provisions of this Ordinance, subject to the following conditions, namely:-

(a) return has been filed;

(b) tax required to be deducted or collected has been deducted or collected and paid;

(c) withholding tax statements for the immediately preceding tax year have been filed;

(d) the administrative and management expenditure does not exceed 15 percent of the total receipts:

“Provided that clause (d) shall not apply to a non-profit organization, if—

(a) charitable and welfare activities of the non-profit organization have commenced for the first time within last three years; and

(b) total receipts of the non-profit organization during the tax year are less than one hundred million Rupees”;

(e) approval of Commissioner has been obtained as per the requirement of clause (36) of section 2:

Provided that this clause shall take effect from the first day of July, 2020; and

(f) none of the assets of trusts or welfare institutions confers, or may confer, a private benefit to the donors or family, children or author of the trust or his descendents or the maker of the institution or to any other person:

Provided that where such private benefit is conferred, the amount of such benefit shall be added to the income of the donor:

Sub-Section (1A): Notwithstanding anything contained in sub-section (1), surplus funds of non-profit organization shall be taxed at a rate of ten percent.

(1B) For the purpose of sub-section (1A), surplus funds mean funds or monies:

(a) not spent on charitable and welfare activities during the tax year;

(b) received during the tax year as donations, voluntary contributions, subscriptions and other incomes;

(c) which are more than twenty-five percent of the total receipts of the non-profit organization received during the tax year; an

(d) are not part of restricted funds.

Explanation.- For the purpose of this sub-section, “restricted funds” mean any fund received by the organization but could not be spent and treated as revenue during the year due to any obligation placed by the donor.

Sub-Section (2): Persons and incomes eligible for tax credit under this section include-

(a) any income of a trust or welfare institution or non-profit organization from donations, voluntary contributions, subscriptions, house property, investments in the securities of the Federal Government and so much of the income chargeable under the head “income from business” as is expended in Pakistan for the purposes of carrying out welfare activities:

Provided that in the case of income under the head “income from business”, the exemption in respect of income under the said head shall not exceed an amount which bears to the income, under the said head, the same proportion as the said amount bears to the aggregate of the incomes from the aforesaid sources of income.

(b) a trust administered under a scheme approved by the Federal Government in this behalf and established in Pakistan exclusively for the purposes of carrying out such activities as are for the benefit and welfare of—

(i) ex-servicemen and serving personnel, including civilian employees of the Armed Forces, and their dependents; or

(ii) ex-employees and serving personnel of the Federal Government or a Provincial Government and their dependents, where the said trust is administered by a

committee nominated by the Federal Government or, as the case may be, a Provincial Government;

(d) income of a university or other educational institution being run by a non-profit organization existing solely for educational purposes and not for purposes of profit;

(e) any income which is derived from investments in securities of the Federal Government, profit on debt from scheduled banks and microfinance banks, grant received from Federal Government or Provincial Government or District Governments, foreign grants and house property held under trust or other legal obligations wholly, or in part only, for religious or charitable purposes and is actually applied or finally set apart for application thereto:

Provided that nothing in this clause shall apply to so much of the income as is not expended within Pakistan:

Provided further that if any sum out of the amount so set apart is expended outside Pakistan, it shall be included in the total income of the tax year in which it is so expended or of the year in which it was set apart, whichever is the greater, and the provisions of section 122 shall not apply to any assessment made or to be made in pursuance of this proviso.

Explanation.— Notwithstanding anything contained in the Mussalman Wakf Validating Act, 1913 (VI of 1913), or any other law for the time being in force or in the instrument relating to the trust or the institution, if any amount is set apart, expended or disbursed for the maintenance and support wholly or partially of the family, children or descendents of the author of the trust or the donor or, the maker of the institution or for his own maintenance and support during his life time or payment to himself or his family, children, relations or descendents or for the payment of his or their debts out of the income from house property dedicated, or if any expenditure is made other than for charitable purposes, in each case such expenditure, provision, setting apart, payment or disbursement shall not be deemed, for the purposes of this clause, to be for religious or charitable purposes; or

(f) any income of a religious or charitable institution derived from voluntary contributions applicable solely to religious or charitable purposes of the institution:

Provided that nothing contained in this clause shall apply to the income of a private religious trust which does not ensure for the benefit of the public.”

January 17, 2020
Sales tax on mobile phones reduced by 85% to promote digital economy: FBR

ISLAMABAD: Federal Board of Revenue (FBR) has reduced sales tax on imported mobile phones by 85 percent in order to promote digital economy in the country.
(more…)

January 16, 2020
Return filing for tax year 2019 must for salary income above Rs400,000

KARACHI: Persons having salary income above Rs400,000 are required to file income tax returns for tax year 2019 as slabs revised through Finance Act, 2019 will be applicable for tax year 2020, officials said on Thursday.

The officials said that there were misconceptions about the filing of income tax returns for tax year 2019 by the salary persons due to changes brought in Income Tax Ordinance, 2001 through Finance Act, 2019.

As per the amendment the minimum threshold for filing income tax returns for tax year 2020 has been increased to Rs600,000 for which the return filing will be due in September 2020. However, the salary persons are required to file income tax returns on the basis of minimum threshold of Rs400,000.

The date for filing of income tax return has been extended to January 31, 2020. The actual date for filing of income tax returns for tax year 2019 was September 30, 2019. However, since then the FBR extended the date for five times.

The tax officials said that the persons required to file income tax returns before the applicable of new tax rates should discharge their liabilities in order to avoid penal action.

The tax rates for salary persons under Income Tax Ordinance, 2001 prior to amendments through Finance Act, 2019 are as follow:

Where the income of an individual chargeable under the head “salary” exceeds fifty per cent of his taxable income, the rates of tax to be applied shall be as set out in the following table, namely:—

01. Where the taxable income does not exceed Rs400,000: the tax rate shall be zero percent

02. Where the taxable income exceeds Rs400,000 but does not exceed Rs800,000: the tax rate shall be Rs1,000

03. Where the taxable income exceeds Rs800,000 but does not exceed Rs1,200,000: the tax rate shall be Rs2,000

04. Where the taxable income exceeds Rs1,200,000 but does not exceed Rs2,500,000: the tax rate shall be 5 percent of the amount exceeding Rs1,200,000

05. Where the taxable income exceeds Rs2,500,000 but does not exceed Rs4,000,000: the tax rate shall be 65,000 + 15 percent of the amount exceeding Rs. 2,500,000

06. Where the taxable income exceeds Rs4,000,000 but does not exceed Rs8,000,000: the tax rate shall be 290,000 + 20 percent of the amount exceeding Rs4,000,000

07. Where the taxable income exceeds Rs. 8,000,000: the tax rate shall be Rs1,090,000 + 25 percent of the amount exceeding Rs8,000,000

Provided that where the taxable income exceeds eight hundred thousand rupees the minimum tax payable shall be two thousand rupees.

January 16, 2020
FBR directs withholding agents to clearly mention CNIC of non-ATL persons

KARACHI: Withholding agents have been directed to clearly mention the Computerized Identity Card Number (CNIC) of persons whose amounts have been withheld under various transactions.

The withholding agents have been directed to provide CNIC particularly those persons who are not appearing on the Act Taxpayers List (ATL).

Sources in Federal Board of Revenue (FBR) said that withholding agents will submit biannual statement related to transactions for the period July – December 2019 during this month.

The FBR officials said that 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.

January 15, 2020
Income tax return filing hits new record high

KARACHI: Income tax return filing has increased to a new record high of 2.76 million as people making compliance to avoid 100 percent additional tax on persons not appearing on Active Taxpayers List (ATL).
(more…)

January 15, 2020
Uniform income tax rate applied on dividend income

ISLAMABAD: The income tax rates on dividend income on various shares of companies have been increased to make an uniform rate applicable for tax year 2020 and onwards.

Sources in Federal Board of Revenue (FBR) said that the various rates of dividend rates had been uniformed at 15 percent.

Prior to budget 2019/2020 dividend income is not part of income under normal tax regime and is subject to separate taxation. The standard rate of tax on dividend income is now 15 percent.

The previous tax rate of 7.5 percent on dividend received on shares of a company set up for power generation or on shares of a company supplying coal exclusively to power generation projects has been increased to 15 percent.

Further, tax rate of dividend which was charged at 25 percent for persons receiving dividend from companies which enjoy exemption of tax on income or where no tax is payable due to availability of tax credits or due to brought forward business or depreciation losses.

Previously the rate of tax on dividend received by a person from a mutual fund was 10 percent and 12.5 percent. Persons those were receiving dividend from stock fund is also taxed 12.5 percent.

Furthermore dividend received by a person from a development REIT scheme was reduced by 50 percent of the normal rate.

Now all these rates are being enhanced to 15 percent, the FBR said.

For withholding tax on dividend also a standard rate of 15 percent is being applied for persons receiving income.

January 15, 2020
FBR upgrades data entry operators to BS-14

ISLAMABAD: Federal Board of Revenue (FBR) has upgraded the post of Data Entry Operators (DEOs) to BS-14 from BS-12 following the approval of the finance ministry.

The FBR on Tuesday issued an office order stating that in pursuance of Finance Division letter dated December 17, 2019 wherein to standardize the pay scale of DEOs the Finance Division had given concurrence to the upgradation of the post of Data Entry Operators from BS-12 to BS-14 under the federal government as per NOC contained in Establishment Division letter dated September 23, 2019; the post of DEOs of Inland Revenue Department in the field formations and FBR Headquarters stands upgraded to BS-14.

The competent authority is pleased to appoint all incumbent DEOs (BS-12) to the upgraded post of DEO (BS-14) with effect from December 17, 2019.

January 14, 2020
FBR to impose penalty for not printing retail price on imported goods

ISLAMABAD: Federal Board of Revenue (FBR) on Tuesday said that printing of retail price on imported consumer items is mandatory and any violation by importer/manufacturer will attract fine and penalty.

Through recent Tax Laws (Second Amendment) Ordinance, 2019, penalty has been introduced for importers and manufacturers violating the provision of printing retail price.

The FBR said that it had received queries from various Customs Clearing Agents and Customs Collectorates regarding application of newly inserted Serial No.26 in Section33 of the Sales Tax Act, 1990, related to penalty.

In this regard it is clarified that at import stage the mechanism of clearing of goods already defined in STGO 103 of 2019 is to be followed.

The STGO recognizes that in some situations, the printing of retail price is not possible and allows clearance of goods on payment of Sales Tax in the manner as provided therein subject to furnishing of an undertaking that the retail price shall be duly printed.

Therefore, the provisions of the STGO be followed by the Customs Authorities.

However, the aforesaid undertaking shall mention that the importer shall print the retail price within ten days of release/clearance of the consignment and intimate the Commissioner concerned for inspection before further supply.

However, if inspection is not made within ten days after intimation the importer/manufacturer will be free to supply in the market.

The newly inserted penal provisions shall be invoked if the manufacturer/importer violates the undertaking or is otherwise non-compliant with requirement of retail price taxation.

January 14, 2020