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.

Tax authorities to determine values of immovable properties, motor cars on discovery of concealment

ISLAMABAD: The tax authorities shall determine value of immovable properties and motor cars for tax purpose on discovery of concealment by a person or a company.

Officials in Federal Board of Revenue (FBR) said that under Section 111 of Income Tax Ordinance, 2001 any disclosed income or assets will be taken as concealed income and leviable to tax and prevailing fine and penalties.

Income Tax Rules, 2002 has outlined the determination of assets that are concealed by a person or a company.

(1) The valuation of immovable property for the purposes of section 111 shall be taken to be-

(a) the fair market value of immovable property shall be the value notified by the Board under sub-section (4) of section 68, in respect of area or areas specified in the said notifications;

(b) if the fair market value of any immovable property of any area or areas has not been determined by the Board in the notification referred to in sub-section (4) of section 68, 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; and

(c) in the case of agricultural land, the value shall be equal to the average sale price of the sales recorded in the revenue record of the estate in which the land is situated for the relevant period or time;

(d) if in a case sale price recorded in the instrument of sale of any property is higher than the fair market value as determined under clauses (a), (b) and (c), the applicable price shall be higher of the two; and

(e) in the case of sale price of any auctioned property or the fair market value as determined under clauses (a), (b) and (c), the higher price shall be applicable.

(2) For the purposes of section 111 and subject to sub-rule (2), the value of motor cars and jeeps shall be determined in the following manner, namely:-

(a) the value of the new imported car or jeep shall be the C.I.F. value of such car or the jeep, as the case may be, plus the amount of all charges, customs-duty, sales tax, levies, octroi fees and other duties and taxes leviable thereon and the costs incurred till its registration;

(b) the value of a new car or jeep purchased from the manufacturer or assembler or dealer in Pakistan, shall be the price paid by the purchaser, including the amount of all charges, customs-duty, sales tax and other taxes, levies, octroi, fees and all other duties and taxes leviable thereon and the costs incurred till its registration;

(c) the value of used car or jeep imported into Pakistan shall be the import price adopted by the customs authorities for the purposes of levy of customs-duty plus freight, insurance and all other charges, sales tax, levies octroi, fees and other duties and taxes leviable thereon and the costs incurred till its registration;

(d) the value of a car or jeep specified in clause (a), (b) and (c) at the time of its acquisition shall be the value computed in the manner specified in the clause (a), (b) or (c), as the case may be, as reduced by a sum equal to ten percent of the said clause for each successive year, upto a maximum of five years; or

(e) the value of a used car or jeep purchased by an assessee locally shall be taken to be the original cost of the car or the jeep determined in the manner specified in clause (a), (b) or (c), as the case may be, as reduced by an amount equal to ten percent for every year following the year in which it was imported or purchased from a manufacturer.

(3) In no case shall the value be determined at an amount less than fifty percent of the value determined in accordance with clause (a), (b) or (c) or the purchase price whichever is more.

(4) For the purposes of section 61, the value of any property donated to a non-profit organization shall be determined in the following manner, namely:-

(a) the value of articles or goods imported into Pakistan shall be the value determined for the purposes of levy of customs duty and the amount of such duty and sales tax, levies, fees, octroi and other duties, taxes or charges leviable thereon and paid by the donor;

(b) the value of articles and goods manufactured in Pakistan shall be the price as recorded in the purchase vouchers and the taxes, levies and charges leviable thereon and paid by the donor;

(c) the value of articles and goods which have been previously used in Pakistan and in respect of which depreciation has been allowed, the written down value, on the relevant date as determined by the Commissioner;

(d) the value of a motor vehicle shall be the value as determined in accordance with rule; and

(e) the value of articles or goods other than those specified above, shall be the fair market value as determined by the Commissioner.

November 2, 2019
FBR asks taxpayers to file return by Nov 30 to avoid harsh penalties

ISLAMABAD: Federal Board of Revenue (FBR) has asked persons/companies having taxable income to file their income tax returns for tax year 2019 by November 30, 2019 to avoid harsh penalties including imprisonment up to three years.

The FBR on October 31, 2019 extended the last date for filing income tax returns up to November 30, 2019. The cutoff date for filing returns tax year 2019 was September 30, 2019 in case of salaried persons, business individuals, Association of Persons (AOPs) and companies having special tax year.

The FBR granted first date extension on September 30, 2019 and extended up to October 31, 2019. However, on the request of the stakeholders the FBR further extended the last date up to November 30, 2019.

FBR spokesman in a tweet message asked persons having taxable income to file their income tax returns for tax year 2019 by November 30, 2019 in order to avoid harsh penalties including fine for late filing and imprisonment of one to three years in case of deliberate ignoring mandatory requirement under the statute.

The spokesman said that in case persons failed to file their returns for tax year 2019, then they would be liable to pay double rate of withholding tax. “FBR will assess the applicable tax without serving any notice,” according to the message.

“Legal action will be taken resulting into imprisonment of one to three years,” it added.

Besides, fine will be charged on late submission of income tax returns.

The FBR said that the persons who filed their income tax returns by due date would be added to Active Taxpayers List (ATL), which would be issued on March 01, 2020.

Through Finance Act, 2019 an important 10th Schedule was inserted to Income Tax Ordinance, 2001. Under the schedule persons not appearing on the ATL will be liable to 100 percent more rate of withholding tax on various transactions.

November 2, 2019
FPSC to conduct promotion examination of IR inspectors

ISLAMABAD: Federal Public Service Commission (FPSC) will conduct examination for departmental promotion of Inland Revenue (IR) Inspectors, Federal Board of Revenue (FBR) said on Friday.

In compliance of Supreme Court of Pakistan judgment dated June 05, 2017 in Civil Petitions No.2246, 2269, 2270 & 2308 of 2016 and Recruitment Rules notified vide Notification S.R.O. No.728(1)/2014 dated 11.07.2014, the matter regarding departmental promotion examination to the post of Inspector-IR (BS-16) was taken up with the Federal Public Service Commission (FPSC), Islamabad.

On completion of due formalities with FPSC and consultation with Directorate General of Training and Research, Inland Revenue, Lahore the subject examination is to be conducted in near future.

As a first step, the Federal Public Service Commission as informed that they are inviting online application from eligible candidates from November 04, 2019 to November 14, 2019.

In view of the above, all eligible employees o Inland Revenue Department in terms of Recruitment Rules notified vide Notification S.R.O. No. 728(1)/2014 dated July 11, 2014 may be informed to apply online to FPSC for the departmental promotion examination for the post of Inspector IR (BS-16) within the given time frame.

Online application form for the subject purpose will be available at the FPSC website.

Conditions of eligibility for examination are:

— 02 Years Service in BS-14 as Supervisor. Must pass departmental promotion examination in a manner prescribed by Federal Board of Revenue and to be conducted by the Directorate of Training & Research (IR) or FPSC or BY NTS.

— 05 years service in BS-14 as Stenotypist. Must pass departmental promotion examination in a manner prescribed by Federal Board of Revenue and to be conducted by the Directorate of Training & Research (IR) or FPSC or by NTS.

— 07 years service in BS-09 as UDC. Must pass departmental promotion examination in a manner prescribed by the Federal Board of revenue and to be conducted by the Directorate of Training & Research (IR) or FPSC or by NTS.

— 10 years service in BS-07 as LDC. Must pass departmental promotion examination in a manner prescribed by the Federal Board of Revenue and to conducted by the Directorate of Training & Research (IR) or FPSC or by NTS.

November 2, 2019
FBR needs around Rs4,267 billion in eight months to achieve FY20 target

ISLAMABAD: The revenue collection target for fiscal year 2019/2020 appears to be more difficult as Federal Board of Revenue (FBR) requires Rs4,267 billion more in remaining eight months to achieve Rs5,550 billion tax collection target for current fiscal year.

The FBR provisionally collected Rs1,283 billion during first four months (July – October) of fiscal year 2019/2020, which is only 23 percent of the total target of Rs5,550 billion set for the current fiscal year.

The FBR is now required to collect Rs533 billion as average monthly collection in the remaining eight months of the current fiscal year, which appears to be tough ask.

In a tweet message, Chairman FBR Shabbar Zaidi on Thursday, “FBR has collected Rs 320 billion during the month October 2019 and has maintained overall increase over last year of 16 percent and domestic tax over 25 percent. This is after taking into account negative aspect of import contraction of around Rs 50 billion.”

Reportedly, the FBR collected Rs566 billion as sales tax during first four months, followed by about Rs468 billion through income and about Rs109 billion in customs.

The remaining Rs137 billion came were collected via other taxes including Rs71 billion in federal excise duty.

November 1, 2019
Monthly ST return filing date extended to November 08

ISLAMABAD: Federal Board of Revenue (FBR) on Thursday extended the last date for filing monthly sales tax and federal excise tax return for the month of September 2019 up to November 08, 2019.

A notification issued by the FBR stated that it had further extended the date of submission of sales tax and federal excise return up to November 11, 2019 for the tax period of September 2019, which was due on October 18, 2019 and extended up to October 25, 2019.

October 31, 2019
FBR extends date for filing income tax returns up to November 30

ISLAMABAD: Federal Board of Revenue (FBR) has extended the last date for filing income tax returns and wealth statements for tax year 2019 up to November 30, 2019, according to a notification issued on Thursday.

The FBR issued Circular No. 15/2019 to extend the last date for filing income tax returns from October 31, 2019 to November 30, 2019.

The FBR said that the individuals and association of persons who were required to file their income tax returns and statements of final taxation for the tax year 2019, which were earlier due on September 30, 2019, which was extended to October 31, 2019 but failed to file their income tax returns / statements, are hereby allowed to file their returns/statements by November 30, 2019.

The FBR further said that the companies which were required to file returns of total income/statements of final taxation for the tax year 2019, which were due on September 30, 2019 and further extended up to October 31, 2019 but failed to file their income tax returns/statements, though have paid 90 percent of the admitted tax liability, are hereby allowed to file their returns/statements by November 30, 2019.

October 31, 2019
FBR may extend date beyond Oct 31 for return filing tax year 2019

KARACHI: Federal Board of Revenue (FBR) is likely to extend the last date for filing income tax returns for salaried and business individuals beyond October 31, 2019.

The FBR may extend the date on the request of tax bars and huge number of people who failed to comply with mandatory requirement. Through Finance Act, 2019 the law was amended and last date for filing annual income tax return for salaried person was set September 30 from August 31.

Therefore, taxpayers such as salaried persons, business individuals, Association of Persons, taxpayers falling in final tax regime and companies having special tax year are required to file their income tax returns for tax year 2019 by September 30, 2019.

The FBR already extended the last date for filing Tax Year 2019 income tax return up to October 31, 2019 from September 30, 2019. FBR chairman Syed Shabbar Zaidi recently disclosed that around 918,027 income tax returns were filed by 9:00PM on October 25, 2019.

The total income tax returns for tax year 2018 reached to 2.65 million. It means that 1.73 million more taxpayers required to file their returns under the income tax laws for the tax year 2019.

Therefore, it was almost impossible for FBR web portal to accept such huge number of returns in remaining six days.

Recently, Pakistan Tax Bar Association (PTBA) in a letter to FBR chairman pointed out that draft return 2019 for individuals, salaried individuals and AOPs was uploaded on August 23, 2019 through SRO 951 and final return 2019 was uploaded on IRIS on September 02, 2019 through SRO 979 of 2019, which shows lapse of statutory period of two months (62 days) and all burden shifts on FBR.

It further stated that the manual return of income form for tax year 2019 was issued on September 27, 2019 through SRO 1160 of 2019, so the small volume taxpayers could file their returns of income for the year 2019 within time.

The PTBA said that as per law and statutory time period for filing of income tax return is 90 days under Section 118 of the Income Tax Ordinance, 2001 read with Rule 34 of Income Tax Rules, 2002 while on the contrary only 48 days have been give here so far between September 02 and October 31, 2019 for online filing and only 31 days available for manual filing.

The FBR allowed income tax return filing for tax year 2018 up to August 09, 2019 means 11 months time was given. The PTBA said that now only one month has been given for tax year 2019, which clearly shows the floating injustice with the taxpayers.

October 31, 2019
Hafeez Shaikh terms agreement with traders to increase tax revenue

ISLAMABAD: Dr. Abdul Hafeez Shaikh, advisor to Prime Minister on Finance and Revenue, on Wednesday confirmed the agreement between the government and traders on various tax issues, including deferring the condition of Computerized National Identity Card (CNIC).

“An agreement has been reached between the government and the traders community to increase tax revenue for growth and public development and to provide support for the traders and generate economic activity,” Dr. Hafeez Shaikh said in a tweet message.

According to the agreement the government has relaxed the condition of CNIC on a single sale transaction above Rs50,000 for three months i.e. January 31, 2020.

Following is the 11-point agreement that is shared by the advisor:

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.

October 30, 2019
CNIC condition on sales tax transactions deferred till January 2020, traders claim

The Federal Board of Revenue (FBR) has announced its decision to defer the implementation of the Computerized National Identity Card (CNIC) condition on sales transactions exceeding Rs50,000 until January 31, 2020.
(more…)

October 30, 2019
Opposition to CNIC condition because of misjudgment

KARACHI: State Bank of Pakistan (SBP) on Monday said opposition from traders against CNIC condition on sales transactions was because of misunderstanding.

In its annual report on State of Pakistan Economy, the SBP said that as part of the Finance Bill 2019, the federal government proposed an amendment in the Sales Tax Act of 1990.

Initially, the registered persons were required to issue a serially numbered tax invoice at the time of the sale of goods. The invoices had to include the name, address and registration number of the supplier and recipient of the goods; the date of issue of the invoice; the description and quantity of goods; value of the sales tax applied; and the price inclusive and exclusive of the GST.

According to the amendment, which was to become effective from 1st August, 2019 (but was later delayed), the requirements were elaborated further and the registered persons were instructed to record NIC number or NTN of the recipients unregistered with FBR for sales tax in addition to the details being recorded of the registered recipients.

A relaxation from this clause was granted for sales up to Rs 50,000, provided that the recipient is an ordinary customer (i.e. a person who is buying goods for his or her own consumption and not for the purpose of reselling).

The amendment caused significant unrest in the market, with a majority of the businesses taking a stance against it. Protests were arranged by the associations across the country and the government was asked to abolish the CNIC restriction.
However, much of the opposition against the reforms arose because of the misunderstanding about the announced measures.

In this regard, the following points are important:

— The CNIC/NTN condition only pertains to sales of businesses that are registered with FBR. Those firms which are working informally do not need to ask for CNIC details from their purchasers, as they do not file tax returns. However, if those firms procure raw material from a registered firm, then they would have to provide the requisite CNIC details to the supplier.

— The buyer does not have to be a registered person. Registered firms can continue to transact with unregistered buyers; the only addition is that they would have to document the CNIC of the buyer in question.

— Sellers only have to record the NTN/CNIC number on the invoice; physical copies of the identity cards are not required. According to news reports, some businesses were fearing that they would have to keep photocopies of the recipients’ CNIC for record purposes, stating that such a measure would unjustly increase their operating and storage costs. However, no such provision has been proposed in the Finance Act.

— No action will be taken against the business if the CNIC/NTN details are found to be incorrect upon subsequent inspection. The following provision is to be made part of the Sales Tax Act upon its revision: “Provided also that if it is subsequently proved that CNIC provided by the purchaser was not correct, liability of tax or penalty shall not arise against the seller, in case of sale made in good faith.” It was later clarified that no action would be undertaken without the approval of the Chief Commissioner of the respective jurisdiction. Lastly, even if action against the seller is warranted, it would be taken only after necessary action has been taken against the person who provided the non-genuine CNIC. A further clarification released by FBR explained that the NIC/NTN of the buyer with respect to taxable supplies to an unregistered person shall be deemed to have been reported in good faith provided that:

(i) The tax invoice complies with the requirements ofsection 23(b) of the Act;

(ii) Payment made by or on behalf of the unregistered purchaser of the amount of the tax invoice, inclusive of sales tax and applicable further tax, is deposited into the supplier’s declared business bank account;

(iii) The NIC provided by the purchaser is found authenticated by NADRA; and

(iv) The NIC/NTN provided is not of the employee of the seller or of his associates as defined under the Income Tax Ordinance, 2001.

— The documentation clause would not result in the halt of purchasing by end-consumers. This is because ordinary buyers are exempted from such a condition, provided that the value of their purchases is up to Rs 50,000.

— The amendment would not result in any price hike, given that no additional tax measures have been adopted under the Finance Bill 2019.

— Sales tax filers feel that registered businesses have been unfairly tasked with the burden of identifying the nonfilers.

According to FBR, if the documentation efforts are not expanded to identify those individuals that are not paying any taxes, then the tax burden on existing registered enterprises would continue to remain high.

— The condition would not be enforced on small businesses in the cottage industry. According to the revised definition followed by FBR, a cottage industry player is one that: does not have an industrial gas or electricity connection; is located in a residential area; does not have a total labor force of more than ten workers; and has an annual turnover from all supplies not exceeding two million rupees.

It is important to note that such structural reforms are unpopular in nature (and were thus delayed earlier) as these might increase businesses’ transaction costs, create liquidity issues, and affect overall economic activity in the short term.

In particular, the introduction of the CNIC condition for sales tax purposes has faced serious resistance (including threats of lockdowns and protests) from traders across the country.

The FBR has since then issued clarification circulars and engaged with the businesses on various forums to help clarify the matters and take feedback. Therefore, it is important to build capacity within the FBR and to further digitize its functions to streamline procedures.

Moreover, the authority needs to continue the dialogue with relevant stakeholders for ensuring smooth implementation of policies, and alleviate regulatory and policy mistrust.

October 29, 2019