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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.

  • LTU Karachi collects Rs688 billion in first half

    LTU Karachi collects Rs688 billion in first half

    KARACHI: Large Taxpayers Unit (LTU) Karachi has collected Rs688 billion during first six months (July – December) of 2019/2020 as against Rs598 billion in the corresponding period of the last fiscal year, showing 15 percent growth, a statement said on Tuesday.

    So far as December 2019 is concerned, LTU Karachi collected Rs160 billion as compared with Rs144 billion in the same month of the last year.

    The rise in collection has been attributed to various tax facilitation and enforcement projects during the last six months by the LTU Karachi.

    The unit issued Rs17.8 billion as sales tax refunds during the period in order to effectively address liquidity problems of the manufacturing sector.

    In ongoing Broadening of Tax Base (BTB), the LTU Karachi retrieved data of unregistered commercial and industrial gas consumers and shared with the territorial regional tax offices for issuance of notices and registering the non-filers on income tax returns. This effort resulted in substantial increase in return filers.

    The statement said that pursuing proactive policy of Federal Board of Revenue (FBR), various steps had been taken for the purpose of early disposal of litigation cases pending with the courts. On this account, senior officers have been specifically deployed for assistance of the High Court of Sindh for early disposal of cases.

    The LTU Karachi said that strong enforcement as well as on site monitoring of production had been steadily reinforced and the exercise had brought growth in revenue especially in sugar and cement sectors.

    The unit further said that strong internal accountability mechanism had been strengthened at Chief Commissioner Secretariat, whereby activities of officers and staff were being personally monitored by the Chief Commissioner himself.

    All major taxpayers of LTU Karachi were actively engaged and appreciated for their substantial revenue contribution. In order to educate and enlighten the taxpayers regarding new tax measures and procedures, numerous taxpayer education and facilitation seminars were held during this period.

    These endeavors brought significant improvement in taxpayer’s voluntary compliance besides creating congenial atmosphere between taxpayers and tax collectors.

  • Profit on debt above Rs36 million to be treated as normal tax

    Profit on debt above Rs36 million to be treated as normal tax

    KARACHI: The rate of tax on profit on debt above Rs36 million shall be treated as normal tax rate, tax officials said on Tuesday.

    Sources in Federal Board of Revenue (FBR) said that the tax rates were revised through Finance Act, 2019.

    The revised tax rates for profit on debt not exceeding Rs 5 million have be increased from 10 percent to 15 percent, between Rs5 million and Rs25 million tax rates have been increased from 12.5 percent to 17.5 percent and from Rs25 million to Rs36 million tax rates are being increased from 15 percent to 20 percent.

    The rate of advance withholding tax on payment of profit on debt has also been enhanced from 10 percent to 15 percent.

    Furthermore, the separate rates mentioned above would be applicable for profit on debt up to Rs.36 million and for amounts exceeding Rs36 million the profit on debt will be made part of the total income and taxed at normal rates.

    Previously the profit on debt is taxed separately and is not part of the income in normal tax regime.

    The tax rates were 10 percent, 12.5 percent and 15 percent for slabs up to five million rupees, between five million to twenty five million rupees and above twenty five million rupees, respectively.

    The FBR sources said that due to changes the tax collection under this head registered phenomenal growth during first six months of current fiscal year. The sources estimated that the collection from profit on debt had been increased by around 150 percent during July – December of 2019/2020.

    The sources said that persons not appearing on Active Taxpayers List (ATL) are also liable to pay around 30 percent as withholding tax.

    The FBR collects profit on debt under Section 7B and Section 151 of Income Tax Ordinance, 2001.

    The sources said that high interest rates attracted investment towards deposits of banking system. This factor has also contributed the high growth of tax from profit on debt.

  • Determination of fair market value explained

    Determination of fair market value explained

    KARACHI: The fair market value of assets shall be the value of property in open market at the time of purchase, sources in Federal Board of Revenue (FBR) said.

    The FBR sources said that Section 68 of Income Tax Ordinance, 2001 explained the methodology for determining the fair market value.

    Section 68: Fair market value

    Sub-Section (1): For the purposes of this Ordinance, the fair market value of any property or rent, asset, service, benefit or perquisite at a particular time shall be the price which the property 2[or rent], asset, service, benefit or perquisite would ordinarily fetch on sale or supply in the open market at that time.

    Sub-Section (2): The fair market value of any property or rent, asset, service, benefit or perquisite shall be determined without regard to any restriction on transfer or to the fact that it is not otherwise convertible to cash.

    Sub-Section (3): Where the price “other than the price of immoveable property” referred to in sub-section (1) is not ordinarily ascertainable, such price may be determined by the Commissioner.

    Sub-Section (4): Notwithstanding anything contained in sub-sections (1) and (3), the Board may, from time to time, by notification in the official Gazette, determine the fair market value of immovable property of the area or areas as may be specified in the notification.

    Sub-Section (5): Where the fair market value of any immovable property of an area or areas has not been determined by the Board in the notification referred to in sub-section (4), the fair market value of such immovable property shall be deemed to be the value fixed by the District Officer (Revenue) or provincial or any other authority authorized in this behalf for the purposes of stamp duty.

    (6) In respect of immovable property—

    (i) component A of the formula in sub-section (2) of section 37;

    (ii) consideration received as mentioned in Division X of Part IV of First Schedule;

    (iii) value of immovable property as mentioned in Divisions XVIII of Part IV of the First Schedule; and

    (iv) valuation for the purposes of section 111,shall not be less than the fair market value as determined under sub-section (4) or (5).

    Explanation.—(1)For the removal of doubt, it is clarified that the fair market value as determined under sub-section (4) or(5) shall be for carrying out the purposes of this Ordinance only.

    (2) It is further clarified that for the purposes of clauses (i) to (iv) of this sub-section if the fair market value determined under sub-section (4) or (5) is different than the auction price the applicable price shall be the higher of the two.

  • Another key FBR official granted 12-day leave

    Another key FBR official granted 12-day leave

    The Federal Board of Revenue (FBR) is once again in the spotlight as another key official, Ms. Seema Shakil, a BS-21 officer of Inland Revenue Service, has been granted a 12-day leave.

    (more…)
  • No rift in economic team: FBR

    No rift in economic team: FBR

    ISLAMABAD: Federal Board of Revenue (FBR) has strongly rebuffed the reports about rifts in government economy team and due to this the chairman of the revenue authority is on leave.

    The FBR in a statement on Monday said that FBR chairman Shabbar Zaidi is on a two weeks leave which is going to end this Friday.

    He is likely to resume office on Monday and his first day business will include Prime Ministers interaction with all Pakistan traders.

    The leave of Chairman FBR was necessisated by his annual medical check up in Karachi and some family commitments.

    The Chairman as a part of economic team of the prime minister enjoys full confidence of the Prime Minister and his Advisor on Finance.

    “Any rumours of any sort of rift in the economic team are utterly incorrect,” the FBR said.

  • Advance tax on purchase of immovable property to be paid on fair market value

    Advance tax on purchase of immovable property to be paid on fair market value

    KARACHI: Federal Board of Revenue (FBR) will collect advance income tax on sale of immovable properties on the basis of fair market value.

    Sources in FBR said that the purchaser of immovable property shall make payment of advance tax income tax on the amount determined at fair market value not on the DC value or valuation tables notified by the FBR.

    Under Section 236K of Income Tax Ordinance, 2001, advance tax on purchase or transfer of immovable property.

    (1) Any person responsible for registering, recording or attesting transfer of any immovable property shall at the time of registering, recording or attesting the transfer shall collect from the purchaser or transferee advance tax at the rate specified in Division XVIII of Part IV of the First Schedule.

    Explanation,—For removal of doubt, it is clarified that the person responsible for registering, recording or attesting transfer includes person responsible for registering, recording or attesting transfer for local authority, housing authority, housing society, co-operative society and registrar of properties.

    (2)The advance tax collected under sub-section (1) shall be adjustable.

    (3) Any person responsible for collecting payments in installments for purchase or allotment of any immovable property where the transfer is to be effected after making payment of all installments, shall at the time of collecting installments collect from the allotee or transferee advance tax at the rate specified in Division XVIII of Part IV of the First Schedule.

    (4) Nothing contained in this section shall apply to a scheme introduced by the Federal Government, or Provincial Government or an Authority established under a Federal or Provincial law for expatriate Pakistanis:

    “Provided that the mode of payment by the expatriate Pakistanis in the said scheme or schemes shall be in the foreign exchange remitted from outside Pakistan through normal banking channels.”

    The rate of tax to be collected under section 236K shall be 1 percent of the fair market value from a person appeared on Active Taxpayers List (ATL). The rate shall be at two percent of the fair market value from persons not appearing on the ATL.

  • Tax return to be valid on submission of information

    Tax return to be valid on submission of information

    KARACHI: Submission of relevant particulars or information shall make a return of income a valid document.

    Officials at Federal Board of Revenue (FBR) said that taxpayers should ensure making all relevant entries before filing income tax return in order to avoid hassle at the time of scrutiny,

    They said that although the tax authorities treated the income tax return as assessment order when it is filed to the FBR’s portal. However, when it is selected under defined parameters or identification of any concealment the missing entries can make problems for taxpayers, they added.

    The officials also said that a taxpayer should also ensure the payment of tax as calculated on the basis of tax chart for the relevant year for which the return is filed.

    They said that a return of income –

    (a) shall be in the prescribed form and shall be accompanied by such annexures, statements or documents as may be prescribed;

    (b) shall fully state all the relevant particulars or information as specified in the form of return, including a declaration of the records kept by the taxpayer;

    (c) shall be signed by the person, being an individual, or the person’s representative where section 172 applies;

    (d) shall be accompanied with evidence of payment of due tax as per return of income;

    (e) shall be accompanied with a wealth statement as required under section 116; and

    (f) shall be accompanied with a foreign income and assets statement as required under section 116A.

  • PM to announce tax relief package for traders on January 20

    PM to announce tax relief package for traders on January 20

    ISLAMABAD: Prime Minister Imran Khan is set to unveil a tax relief package for traders on January 20, 2020, as confirmed by Syed Shabbar Zaidi, the chairman of the Federal Board of Revenue (FBR), on Saturday.

    (more…)
  • Desk audit recommended for increasing amount paid with returns

    Desk audit recommended for increasing amount paid with returns

    ISLAMABAD: The Federal Board of Revenue (FBR) has expressed concerns over lower than expected tax payment with return despite significant increase in return filing, a report said.

    A FBR report said that the trend for filing of income tax returns had not been satisfactory in Pakistan.

    Keeping in view very low compliance, FBR had initiated a Broadening of Tax Base (BTB) drive few years back, which had not started paying dividends in shape of growth in the number of filers.

    The income tax returns which were just 1.5 million in Tax Year 2016 have crossed the two million mark first time in the history of FBR.

    During Tax Year 2017 the number of income tax filers reached to 1.9 million and in Tax Year 2018 2.2 million.

    During TY 2018 the number of return filers increased by 17.1 percent or 316,526 in absolute terms.

    This performance in terms of number of returns is satisfactory but payment with returns has a meager growth of 3 percent, which is the matter of concern.

    The desk audit of filed returns can be helpful increasing the amount paid with returns.

  • No advance tax on domestic electricity consumers on billed amount below Rs75,000

    No advance tax on domestic electricity consumers on billed amount below Rs75,000

    KARACHI: The domestic consumers of electricity whose monthly billed amount is below Rs75,000 are not liable to pay advance income tax.

    According to Section 235A of Income Tax Ordinance, 2001, the domestic electricity consumers are subject to payment of advance income tax, officials of Federal Board of Revenue (FBR) said.

    As per tax rate, a domestic consumer is liable to pay 7.5 percent advance income tax in case of above monthly bill is Rs75,000 or above.

    However, there is zero percent advance income tax in case the monthly billed amount is below Rs75,000.

    Section 235A. Domestic electricity consumption.-

    (1) There shall be collected advance tax at the rates specified in Division XIX of Part IV of the First Schedule on the amount of electricity bill of a domestic consumer.

    Explanation.— For removal of doubt, it is clarified that for the purposes of this section, electricity consumption bill referred to in sub-section (2) means electricity bill inclusive of sales tax and all incidental charges.

    (2) The person preparing electricity consumption bill shall charge advance tax under sub-section (1) in the manner electricity consumption charges are charged.

    (3) Tax collected under this section shall be adjustable against tax liability.