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.

FTO committee expresses distress over tax recovery from bank accounts

ISLAMABAD: The advisory committee of the Federal Tax Ombudsman (FTO) has expressed distress over attachment of bank accounts and coercive recovery by Federal Board of Revenue (FBR) from bank accounts of taxpayers.

A meeting of the advisory committee of the FTO was held recently and discussed various issues related to refunds and coercive recovery of the FBR from bank accounts of taxpayers, according to the FTO new letter issued last month.

The committee expressed great distress about the attachment of bank accounts and coercive recoveries. The participants suggested that attachment of accounts may be affected only after Tribunal’s decision.

On the issue of refunds, the participants observed following:

Delayed refund is a serious issue which continuously poses challenge to the survival of business community.

Refund amount should be paid after two stages of appeals in favor of taxpayer, even if department then goes to reference before the higher court.

An online system for tracking of refund by claimants should be put in place by FBR.

A system of adjustment of refund in the next return should be devised to get rid of the chronic issue of delayed refund.

Even after verification of claim, cheques are not issued in time.

The refund payment system ought to be dovetailed with magnitude of amount as 70-75 percent of refunds fall in the category of up to Rs100,000 only and need automated settlement.

Compensation for delayed refunds should be ensured as delayed has its own cost.

Regarding assessment by the tax officials, the FTO advisory committee observed following:

Arbitrary, coercive and malafide assessment is the root cause of all subsequent tax maladministration and victimization of business community.

There is no accountability on arbitrary, coercive and malafide assessment.

There should be some check on the quality of assessment made by an assessing officer.

At times undated orders are issued.

December 7, 2019
FBR notifies transfers, postings of BS-20 IRS officers

ISLAMABAD: Federal Board of Revenue (FBR) on Friday notified transfers and postings of BS-20 officers of Inland Revenue Service (IRS) with immediate effect until further orders.

The FBR notified transfers and postings of following officers:

01. Muhammad Farrukh Majid (Inland Revenue Service/BS-20) has been transferred and posted as Commissioner Inland Revenue Inland Revenue (Appeals-V), Lahore from the post of Commissioner, (HRM) Corporate Regional Tax Office, Lahore.

02. Ms. Irum Sarwar (Inland Revenue Service/BS-20) has been transferred and posted as Commissioner Inland Revenue (Appeals-VI), Lahore from the post of Commissioner, (HRM) Large Taxpayers Unit, Lahore.

03. Ms. Ayesha Imran Butt (Inland Revenue Service/BS-20) has been transferred and posted as Commissioner Inland Revenue (Appeals-VII), Lahore from the post of Commissioner, (IP/TFD/HRM) Regional Tax Office II, Lahore.

The FBR said that the officers who are drawing performance allowance prior to issuance of this notification shall continue to draw this allowance on the new place of posting.

December 7, 2019
FBR announces implementation of agreement with traders from next week

ISLAMABAD: Federal Board of Revenue (FBR) on Friday announced implementation of agreement with traders from next week.

FBR chairman Syed Shabbar Zaidi in a tweet message said that committees represented by the traders of each area/ market, covering the whole country will be notified.

“Traders and FBR will work together for registration,” the chairman said and termed it a new beginning for taxation history of Pakistan.

The FBR and trade community were at odd on the implementation of some of initiatives for documentation of economy, especially the introduction of CNIC.

However, on October 30, 2019 an agreement was signed between FBR and traders.

Following is the 11-point agreement between the tax authorities and traders associations:

01. The tax rate shall be lowered to 0.5 percent from 1.5 percent for traders having turnover up to Rs100 million.

02. No liability on a trader having up to Rs100 million to collect / deposit withholding tax on transactions.

03. Threshold of annual electricity bill of Rs600,000 for mandatory sales tax registration has been increased to Rs1.2 million.

04. Turnover tax for sectors having lower returns will be revisted with consultation with traders associations.

05. Tax issues of jewelers will be resolved in consultation with jewelers associations.

06. The renewal license fees on middlemen will be revisited.

07. To resolve traders taxation issues a desk at FBR headquarters will be set up with immediate effect. A BS-20/21 officer will be designated to resolve the traders’ problems.

08. For new registration of traders a simple income tax return form in Urdu Language will be introduced. Trade associations will cooperation in FBR’s registration drive.

09. Which trader will be exempted from registration having 1000 square feet shop will be decided by traders committees.

10. The registration of those retailers engaged in wholesale business will be decided in consultation with traders community.

11. The FBR will take no action on sales transactions without CNIC information till January 31, 2020.

December 6, 2019
Tax authorities to receive bulk information of bank account holders after disposal of court cases

KARACHI: Tax authorities will receive a huge bunch of financial transactions from banks after a court dispose of all the petitions that were restricting the tax authorities to obtain information.

Sindh High Court on Thursday disposed of petitions by banks. The disposal of cases has now allowed the Federal Board of Revenue (FBR) to obtain information of bank account holders making financial transactions in the undocumented economy.

The disposal of petitions came after an agreement signed between FBR and Pakistan Banks Association (PBA) on November 27, 2019.

The FBR sources said that the tax authorities would able to access the information of banking account holders. The FBR has been authorized to obtain information from banks under Section 165A of the Income Tax Ordinance, 2001.

This section was introduced through Finance Act, 2013. However the implementation of the section was remained subjudice before the courts for the last six years.

The FBR sources said that the section was introduced to detect persons having taxable income but remained outside of the tax net. They said that the disposal of the cases by the higher court would give boost to the broadening of tax efforts of the FBR.

The FBR will get following information under Section 165A:

(1) Notwithstanding anything contained in any law for the time being in force including but not limited to the Banking Companies Ordinance, 1962 (LVII of 1962), the Protection of Economic Reforms Act, 1992 (XII of 1992), the Foreign Exchange Regulation Act, 1947 (VII of 1947) and the regulations made under the State Bank of Pakistan Act, 1956 (XXXIII of 1956), if any, on the subject every banking company shall make arrangements to provide to the Board in the prescribed form and manner,—

(a) a list of persons containing particulars of cash withdrawals exceeding fifty thousand Rupees in a day and tax deductions thereon, aggregating to Rupees one million or more during each preceding calendar month.”;

(b) a list containing particulars of deposits aggregating rupees ten million or more made during the preceding calendar month;

(c) a list of payments made by any person against bills raised in respect of a credit card issued to that person, aggregating to rupees two hundred thousand or more during the preceding calendar month;

“(d) a list of persons receiving profit on debt exceeding five hundred thousand rupees and tax deductions thereon during preceding financial year.”

(2) Each banking company shall also make arrangements to nominate a senior officer at the head office to coordinate with the Board for provision of any information and documents in addition to those listed in sub-section (1), as may be required by the Board.

(3) The banking companies and their officers shall not be liable to any civil, criminal or disciplinary proceedings against them for furnishing information required under this Ordinance.

(5) Subject to section 216, all information received under this section shall be used only for tax purposes and kept confidential.

December 6, 2019
FBR to issue around Rs3 billion tax refunds in next couple of days: Hafeez Shaikh

ISLAMABAD: Federal Board of Revenue (FBR) will issue another Rs2 to 3 billion tax refunds in next couple of days, Dr. Abdul Hafeez Shaikh, Adviser to the Prime Minister on Finance and Revenue, said on Thursday in a meeting with leading businessmen.

The adviser told the businessmen that FBR was working very hard to facilitate the exporters and another Rs 2 to 3 billion tax refunds would also be issued within the next couple of days.

The meeting discussed and reviewed progress on the issues pertaining to payment of Sales Tax refunds to exporters.

Adviser to Adviser Commerce Ali Habib, Chairman FBR Syed Shabbar Zaidi and Secretary Finance Naveed Kamran Baloch were also present in the meeting which was attended by leading exporters from Lahore and Karachi, including Shahid Soorty, Musaadiq Zulqarnain, Fawad Anwer, Shahid Abdullah, Bashir Ali Mohammad, Rizwan Dewan, Asif Tata, Ahmed Ibrahim, Sameer Chinoy and Khurram Mukhtar.

During the proposals, various proposals were put forward from the businessmen and exporters and FBR was advised to work more aggressively on reforming and simplifying the processes through automation for early and prompt payment of sales tax refunds.

He told the businessmen he had already constituted a committee comprising officials from FBR and members of APTMA to simplify the Form-H within the next few days to make it simpler and easy for the exporters claiming sales tax refunds.

The businessmen were asked to nominate anyone they liked to become part of the Committee as he wanted to ensure a hassle-free submission of tax refund claims and their subsequent payment without any delay.

The businessmen thanked the Adviser and his team in FBR for ensuring payment of Rs 32 billion sales tax refunds to the exporters in the last couple of days.

December 5, 2019
FBR attaches shareholding of Golden Globe Holding in Benami properties case

KARACHI: Federal Board of Revenue (FBR) has attached shareholding of Golden Globe Holding in Thatta Cement in Benami properties case, according to a notice issued on Thursday.

Thatta Cement Company Limited in a notice sent to Pakistan Stock Exchange (PSX) informed that in order issued by deputy commissioner/initiating officer, Inland Revenue Division of FBR (Anti Banmi Zone-III) to M/s. Golden Globe Holding (Pvt) Limited informing them that FBR official had provisionally attached, for the period of 90 days, the shareholding of M/s. Golden Globe Holding (Pvt) Limited in Thatta Cement Company Limited.

Sources in the FBR said that the properties had been attached as per the law defined in Benami Transaction Act, 2017.

They said that initiating office had been authorized to provisionally attach a benami property for a period of 90 days if he thinks that the person in possession.

They further said that the officer had also been authorized to pass an order continuing the provisional attachment of the property with the prior approval of the approving authority, the passing of the order made by the adjudicating authority.

December 5, 2019

Salary persons having income above Rs400,000 require to file return for tax year 2019

KARACHI: Persons driving salary income above Rs400,000 are remained liable to file annual income tax returns for tax year 2019.

Through Finance Act, 2019 the threshold income for salary persons for the purpose of income tax deduction has been increased to Rs600,000. However, this threshold is applicable for the tax year 2020.

The last date for filing income tax returns for tax year 2019 is December 16, 2019, which was extended third time. The actual filing date was due on September 30, 2019.

Following is the table of income for salary persons required to file their income tax returns for tax year 2019:

S. No.	Taxable income	Rate of tax
(1)	(2)	(3)
1.	Where the taxable income does not exceed Rs. 400,000	0%
2.	Where the taxable income exceeds Rs. 400,000 but does not exceed Rs. 800,000	Rs. 1,000
3.	Where the taxable income exceeds Rs. 800,000 but does not exceed Rs. 1,200,000	Rs. 2,000
4.	Where the taxable income exceeds Rs. 1,200,000 but does not exceed Rs. 2,500,000	5% of the amount exceeding Rs. 1,200,000
5.	Where the taxable income exceeds Rs.2,500,000 but does not exceed Rs. 4,000,000	65,000 + 15% of the amount exceeding Rs. 2,500,000
6.	Where the taxable income exceeds Rs. 4,000,000 but does not exceed Rs. 8,000,000	290,000 + 20% of the amount exceeding Rs. 4,000,000
7.	Where the taxable income exceeds Rs. 8,000,000	1,090,000 + 25% of the amount exceeding Rs. 8,000,000

However, this rate of tax is applicable where head salary exceeds 50 percent of taxable income of a salary person.

The FBR further clarified that where the taxable income exceeds eight hundred thousand rupees the minimum tax payable shall be two thousand rupees.

December 5, 2019

FBR extends date up to Dec 15 for online integration of large retail houses

ISLAMABAD: Federal Board of Revenue (FBR) has extended last date up to December 15, 2019 for large retail houses to integrate their systems for online sales reporting to the tax authorities.

In an official memorandum circulated on Wednesday to all chief commissioners of Regional Tax Offices (RTOs) and Large Taxpayers Units (LTUs), saying that the mandatory requirement for Tier-I retailers to integrated their outlets with FBR’s computerized system for real time reporting of sales, the date has been extended up to December 15, 2019.

According to Sales Tax Act, 1990, Tier-1 retailers means,

(a) a retailer operating as a unit of a national or international chain of stores;

(b) a retailer operating in an air-conditioned shopping mall, plaza or centre, excluding kiosks;

(c) a retailer whose cumulative electricity bill during the immediately preceding twelve consecutive months exceeds Rupees six hundred thousand;

(d) a wholesaler-cum-retailer, engaged in bulk import and supply of consumer goods on wholesale basis to the retailers as well as on retail basis to the general body of the consumers”; and

(e) a retailer, whose shop measures one thousand square feet inarea or more.

According to the statute, in case a Tier-1 retailer does not integrate his retail outlet in the manner as prescribed under sub-section (9A) of section 3, during a tax period or part thereof, the adjustable input tax for whole of that tax period shall be reduced by 15 percent.

The Sales Tax Act further said that Tier-1 retailers shall pay sales tax at the rate as applicable to the goods sold under relevant provisions of this Act or a notification issued there under:

Provided that the customers of a Tier-1 retailer shall be entitled to receive a cash back of up to five percent of the tax involved, from such date in the manner and to the extent, as may be prescribed by the Board:

Provided further that from such date, and in such mode and manner, as prescribed by the Board, all Tier-1 retailers shall integrate their retail outlets with Board’s computerized system for real-time reporting of sales.

The FBR notified rules separately for the integration of retailers with the system.

150ZEA. Application.– The provisions of this Chapter shall apply to supplies of finished fabric and locally manufactured finished articles of textile and textile made-ups and leather and artificial leather, as covered in Table II in Notification No. S.R.O. 1125(I)/2011, dated the 31st December, 2011, under sub-serial (vii) of S. No. 1 and S. No. 3, as are made by the registered persons who are integrated with Board’s online system for the purpose of availing lower rate on supplies as specified in condition (xv) of the said Notification.

December 4, 2019
FBR issues Rs5.5bn refunds through automated system: Shabbar Zaidi

ISLAMABAD: Syed Shabbar Zaidi, Chairman, Federal Board of Revenue (FBR) on Wednesday said that around Rs5.5 billion sales tax refunds were issued through fully automated system.

In a massage, he said that the FBR had released to this date around Rs 5.5 billion worth of refunds under fully automated FASTER system.

“However the most important feature and the change in paradigm is that such refunds have been issued under fully automated, impersonal, harassment and corruption free system.”

In August 2019 the FBR amended the Sales Tax Rules, 2006 through SRO 918(I)/2019 to make mandatory the routing of refund claims through RMS of the FBR’s computerized system.

Based on the parameters in RMS, a refund claim shall be routed to any of the following three channels as described below, namely:−

(a) Fully Automated Sales Tax e-Refund System (FASTER), The provisions related to this channel are prescribed in Chapter V-A.

(b) Expeditious Refund System (ERS), The claims filed by the manufacturer cum-exporters under section 10 of the Act that do not fulfill parameters of FASTER channel and the same are considered as involving medium risk by RMS shall be routed to ERS. The RPO for verified amount shall be generated and forwarded to CSTRO for payment.

(c) Sales Tax Automated Refund Repository (STARR), The claims that do not fulfill criteria for both FASTER and ERS channels shall be processed through STARR in the manner as provided in rule 29.

For the refund claims processed through FASTER or ERS, the part of the refund claim that is not verified or not found admissible shall be subjected to system validation checks every week and Refund Payment Order (RPO) shall be generated for the amount found valid during each validation check. After every validation process, the information regarding RPO generated, if any, as well as the objections shall be communicated by the system to the refund claimant and also to the concerned RTO or LTU for information.

The FBR said that RPO so generated shall be communicated to the State Bank of Pakistan for payment in the aforesaid manner. After eight validation checks, including the initial one, if any amount still remains un-cleared, the same shall then be processed under STARR channel.

December 4, 2019
Penalties for not filing, late filing income tax return, wealth statement

KARACHI: The tax laws have defined both soft and harsh penalties for persons having taxable income or registered with tax authorities but failed to file their annual returns or file their returns after the due date.

According to Income Tax Ordinance, 2001 updated up to June 30, 2019 issued by the Federal Board of Revenue (FBR) explained the different amount of fine and penalties for non-compliance to mandatory requirement.

Section 114 of the Ordinance is related to persons required to file annual income tax returns and Section 116 is related to filing of wealth statement.

According to Income Tax Ordinance, 2001:

— Where any person fails to furnish a return of income as required under section 114 within the due date.

Such person shall pay a penalty equal to 0.1 percent of the tax payable in respect of that tax year for each day of default subject to a maximum penalty of 50 percent of the tax payable provided that if the penalty worked out as aforesaid is less than forty thousand rupees or no tax is payable for that tax year such person shall pay a penalty of forty thousand rupees:

Provided that If seventy-five percent of the income is from salary and the amount of income under salary is less than five million Rupees, the minimum amount of penalty shall be five thousand Rupees.

Explanation.— For the purposes of this entry, it is declared that the expression “tax payable” means tax chargeable on the taxable income on the basis of assessment made or treated to have been made under section 120, 121, 122 or 122C.

— Where any person fails to furnish wealth statement or wealth reconciliation statement.

Such person shall pay a penalty of “0.1 percent of the taxable income per week or Rs 100,000 whichever is higher.”

— Where any person fails to furnish a foreign assets and income statement within the due date.

Such persons shall pay a penalty of 2 percent of the foreign income or value of the foreign assets for each year of default.

— Where a person:

(a) makes a false or misleading statement to an Inland Revenue Authority either in writing or orally or electronically including a statement in an application, certificate, declaration, notification, return, objection or other document including books of accounts made, prepared, given, filed or furnished under this Ordinance;

(b) furnishes or files a false or misleading information or document or statement to an Income Tax Authority either in writing or orally or electronically;

(c) omits from a statement made or information furnished to an Income Tax Authority any matter or thing without which the statement or the information is false or misleading in a material particular.

Such person shall pay a penalty of twenty five thousand rupees or 100 percent of the amount of tax shortfall whichever is higher:

Provided that in case of an assessment order deemed under section 120, no penalty shall be imposed to the extent of the tax shortfall occurring as a result of the taxpayer taking a reasonably arguable position on the application of this Ordinance to the taxpayers’ position.

Under Section 182A where return not filed within due date, the FBR said that such person shall not be included in the active taxpayers’ list for the year for which return was not filed within the due date:

Provided that without prejudice to any other liability under this Ordinance, the person shall be included in the active taxpayers’ list on filing return after the due date, if the person pays surcharge at Rupees-

(i) twenty thousand in case of a company;

(ii) ten thousand in case of an association of persons;

(iii) one thousand in case of an individual.

Explanation.—For the removal of doubt it is clarified that the provisions of this section shall apply from tax year 2018 and onwards for which the first Active Taxpayers List is to be issued on first day of March, 2019 under Income Tax Rules, 2002.; and

(b) not be allowed, for that tax year, to carry forward any loss under Part VIII of Chapter IV;

(c) not be issued refund during the period the person is not included in the active taxpayers’ list; and

(d) not be entitled to additional payment for delayed refund under section 171 and the period the person is not included in the active taxpayers’ list, shall not be counted for computation of additional payment for delayed refund.

The income tax ordinance also explained under Section 191 that any person who, without reasonable excuse, fails to —

(a) comply with a notice under sub-section (3) and sub-section (4) of section 114 or sub-section (1) of section 116; shall commit an offence punishable on conviction with a fine or imprisonment for a term not exceeding one year, or both.

If a person convicted of an offence, without reasonable excuse, to furnish the return of income or wealth statement to which the offence relates within the period specified by the Court, the person shall commit a further offence punishable on conviction with a fine not exceeding fifty thousand rupees or imprisonment for a term not exceeding two years, or both.

December 4, 2019