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.

Property tax collection sharply rises by 214 percent

KARACHI: The collection of property tax witnessed unprecedented growth of 214 percent owing to back to back increase in valuation of immovable properties by Federal Board of Revenue (FBR), sources said.

The quarterly data released by the finance ministry revealed that the provinces had collected property tax to the tune of Rs7.8 billion during first quarter (July – September) 2019/2020 as compared with Rs2.48 billion in the corresponding period of the last fiscal year.

The sources attributed the significant rise in property tax to increase in FBR valuation which was introduced in August 2016 and increased by 20 percent in February 2019 and further increased with the same ratio in July 2019.

The provinces have jurisdiction over the collection of property tax in the shape of rented properties in their respective localities.

The sources said that with the increase of FBR valuation the provinces could able to increase their revenue because the rent agreements are being made on the basis of existing valuation.

On the other hand the valuations of immovable properties notified by the provinces are very low comparing the open market values. However, under the proposed reform program funded by the World Bank the provinces may review their valuations of immovable properties.

The major increase in property tax comes from Punjab as the province collected Rs6 billion during first quarter of the current fiscal year.

It was followed by Sindh, which collected Rs1.5 billion, Khyber Pakhtoonkhwa collected Rs243 million and Balochistan collected Rs89 million.

The sources said that digitalization of property record and effective measures of documentation would further help the provinces to increase the revenue collection under the head of property tax.

December 1, 2019
FBR collects Rs1,617 billion in five months; shortfall increases by Rs206 billion

ISLAMABAD: The shortfall in revenue collection by Federal Board of Revenue (FBR) has soared to Rs206 billion during first five months (July – November) 2019/2020 making it more difficult for revenue authorities to achieve full year target of Rs5,550 billion.

As per the revenue collection till Friday evening, the FBR provisionally collected Rs1617 billion during July – November 2019/2020 as compared with the five – month target of Rs1,829 billion.

The FBR sources said that the provisional figures may increase to Rs1623 billion after finalization of collection.

However, the FBR achieved 17 percent growth in first five months by collecting Rs1617 billion when compared with Rs1383 billion in the corresponding months of the last fiscal year.

In the month of November 2019 the FBR collected Rs334 billion, which is 18 percent higher when compared with Rs282 billion in the same month of the last year.

The FBR also missed the monthly target for the month of November 2019, which was Rs381 billion.

It is worth mentioning here that the collection for fiscal year 2018/2019 had posted negative growth in 51 years.

November 30, 2019
Information of account holders to be furnished by banks under Section 165A

KARACHI: Federal Board of Revenue (FBR) and banks have agreed on sharing information of financial transactions made by account holders.

The information to be furnished by the banks was to be implemented in 2013 but due to litigation it was not enforced.

However, on November 27, 2019 the banks, in a meeting with FBR chairman, agreed to provide information of transactions. They also agreed to withdraw cases filed against implementation of Section 165A.

The Section 165A was introduced to Income Tax Ordinance, 2001 through Finance Act, 2013.

165A. Furnishing of information by banks

(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.

November 30, 2019
Exporters claim Rs62 billion fresh refunds stuck up despite FBR’s 72-hour clearance assurance

KARACHI: The new 72-hour sales tax refund clearance strategy of Federal Board of Revenue (FBR) has failed as another Rs62 billion refunds were stuck up since launch of the new systems, exporters said.

Muhammad Jawed Bilwani, Chairman, Pakistan Apparel Forum in a statement on Friday said that around Rs62 billion of textile exporters liquidity held up with the government under FASTER Refund System in last 4 months, after imposition of 17 percent Sales Tax on Exports.

Before abolishing SRO 1125 – zero percent sales tax for five export oriented industries –the government committed that sales tax refund claims payments will be paid immediately after submission of GD like Bangladesh Model.

Contrary to Bangladesh Refund Model, Govt. launched FASTER by which sales tax refunds to be paid within 72 hours electronically. New FASTER system has been failed and FBR processing claims manually and SBP paying refund on advice of FBR.

He said that huge amount of exporters’ liquidity of billions of rupees in Sales Tax Refund, Custom Rebate, Withholding Tax, DDT and DLTL has been stuck up with the government causing great sufferings to the already burdened exporters who are now at a loss to understand how to make both ends meet and such an alarming situation will ruin the export business of the Value Added Textile Exporters.

On the demand of exporters, the government has withdrawn Refund Bonds electronically but payments against refund bonds have not been paid yet to the exporters, he informed.

FBR also claimed that Custom Rebates shall be paid electronically with Export Proceeds as a result of system automation, however, the plan has not been turned into reality but previous backlog of eight months have been increased to twelve months.

He added that due to financial hardships, Value Added Textile SMEs are not taking new export orders.

It is pertinent to note that meager increase in the exports of value added textile sector due to previous policies of Government before Budget 2019-20.

The impact of the policies of current Budget 2019-20 will be arrived in 2020 calendar year. It is a great irony that FBR vide SRO 747(I)/2019 dated 9th July, 2019 has withdrawn the exemption of sales tax and federal excise duty on buying of locally procured input goods by Export Oriented Units under SRO327.

This Scheme was introduced on the pattern of Export Processing Zone (EPZ) where there is no taxes on buying of locally procured input goods and no taxes on utilities.

Industries registered in Export Oriented Units (EOU) are liable to export 80% of their annual production. FBR should withdraw amendment to omit the clause 10 sub-section (b) and (c) of the Export Oriented Units and Small and Medium Enterprises Rules, 2008 so that exporters operating under Export Oriented Units can procure input goods without taxes as this is the safest scheme and item-wise individual analysis card is submitted in WEBOC.

He said that exporters have a gut feeling that FBR with its harsh policies is trying to destroy value added textile export sector which is the largest export sector and labour intensive.

It is an alarming situation that new comers are not interested in the business of export sector due to harsh incumbent government policies. Our existing Export Industry gets spillover orders from the international buyers and is surviving due to economy of scale and efficiency in the production.

He demanded that government should clear all pending refund payments of exporters forthwith and restore zero rating (0%) of sales tax – no payment no refund regime in the best interest of exports, economy, foreign exchange earnings, employment etc.

November 30, 2019
Income tax return filing date extended to December 16

In a significant relief for taxpayers, the Federal Board of Revenue (FBR) has once again extended the deadline for filing income tax returns and wealth statements for the tax year 2019. According to FBR’s latest notification – Circular No. 16/2019 – the new date for submission has been set as December 16, 2019, offering individuals and companies a final opportunity to comply with their tax obligations.
(more…)

November 29, 2019
FBR, PBA agree on sharing account holders information; banks to withdraw court cases

KARACHI: Federal Board of Revenue (FBR) has made major breakthrough regarding obtaining information of bank account holders ahead of FATF review.

The FBR and commercial banks agreed on sharing information of financial transactions by account holders, which was remained under litigation since 2013.

The FBR sources said that it would help the tax machinery to identify the movement of black economy and also ensure compliance to FATF conditions regarding prevention of money laundering and other fiscal crimes.

The FATF next review is scheduled in February 2020 to decide Pakistan status, as the country is presently in the grey list.

FBR chairman Syed Shabbar Zaidi in a tweet message on Friday said: “On behalf of FBR, I thank Pakistan Bank Association and Presidents of all the banks for agreeing to withdraw pending litigation on the matter of furnishing of certain information. This positivity has been achieved by mutual consultation. A way forward of cooperation has opened.”

In a meeting held on November 27, 2019 at the Large Taxpayers Unit (LTU) Karachi which was chaired by FBR Chairman and attended by members of Pakistan Banks Association (PBA).

The meeting discussed the issued regarding information to be provided by the banks under Section 165A of the Income Tax Ordinance, 2001.

The chairman emphasized that the Section 165A had been amended on the specific request of the PBA in 2014, 2018, and recently through Supplementary Finance Amendment Act, 2019.

Therefore, members should have no objection to the withdrawal of petition in the higher courts, the chairman said.

After detailed deliberations, the meeting decided that the PBA would withdraw their petitions from the higher courts and provide information under Section 165A after mutual consultation with the FBR.

The participants of the meeting besides FBR chairman Syed Shabbar Zaidi, included Muhammad Aurangzeb, President/CEO, Habib Bank Limited, Chairman, PBA and Imran Maqbool, President/CEO, MCB Bank limited, Vice Chairman, PBA.

Representatives of banks who are also executive members of PBA were also present at the meeting.

November 29, 2019
FBR auditor awarded dismissal from service for availing NAB plea bargain

ISLAMABAD: Federal Board of Revenue (FBR) has imposed major penalty on a senior auditor (BS-18) for making money through corruption and avail plea bargain of National Accountability Bureau (NAB).

In a notification issued on Friday, the FBR said that Ali Akbar Tunio, Assistant Director (Audit) ( BS-18), Regional Tax Office-II, Karachi had availed the benefits of plea bargain in terms of section 25 (b) of National Accountability Ordinance, 1999 as per Accountability Court-III, Sindh, Karachi judgement dated May 23, 2019.

The competent authority i.e. Secretary Revenue Division, after examining the case in light of provisions contained in Rule 8 of the Government Servants (Efficiency & Discipline) Rules 1973 has imposed major penalty of “Dismissal from Service” under Rule 4 (1)(b)(iv) with effect from the date of conviction i.e. May 23, 2019.

In light of the above, major penalty of dismissal from service is imposed upon Ali Akbar Tunio, Assistant Director (Audit) ( BS-18), Regional Tax Office-II, Karachi under Rule 4(1)(b)(iv) of the Government Servants (Efficiency & Discipline) Rules, 1973 with effect from the date of conviction i.e. 23.05.2019.

Ali Akbar Tunio, Assistant Director (Audit) ( BS-18), Regional Tax Office-II, Karachi shall have a right to file an appeal to Appellate Authority under Civil Servants (Appeal) Rules, 1977 within a period of 30 days from the date of communication.

November 29, 2019
FBR publishes valuation rulings to facilitate trade

KARACHI: Federal Board of Revenue (FBR) on Thursday published customs valuations on its official portal to facilitate trade and for ease of doing business.

A day earlier FBR Chairman directed the authorities to ensure availability of valuation rulings in order to trade facilitation and ease of doing business.

The FBR published following valuation rulings at its website:

1429/2019: Determination of Customs Values of Frequency Inverters under Pct Heading (8504.4090) under Section 25-A of the Customs Act, 1969 11/26/2019

1430/2019: Determination of Customs Values of Skimmed Milk Powder & Instant Milk Powder under Section 25-A of the Customs Act, 1969 11/26/2019

1427/2019: Determination of Customs Values of Base Cap for Bulbs PCT (8539.9020) under Section 25-A of the Customs Act, 1969 11/19/2019

1428/2019: Determination of Customs Values of Uncoated Offset Paper for Writing, Printing and Photocopy under Section 25-A of the Customs Act, 1969 11/19/2019

1426/2019: Determination of Customs Values of LED Decoration Strip Lights/Christmas/Rice/Festival/Madni/Larris Lights PCT (9405.3000) under Section 25-A of the Customs Act, 1969 11/8/2019

1409/2019: Determination of Customs Values of Latex Rubber Threads under Section 25-A of the Customs Act, 1969 11/8/2019

1425/2019: Determination of Customs Values of Printed Circuit Board PCT (8534.0000) under Section 25-A of the Customs Act, 1969 11/6/2019

1424/2019: Determination of Customs Values of Tractors Parts under Section 25-A of the Customs Act, 1969 11/5/2019

1420/2019: Determination of Customs Values of Hair Brushes/Cleaning/Washing/Sweeping Dusting and Similar kind of Brushes and Feeder Brushes under Section 25-A of the Customs Act, 1969 11/4/2019

1421/2019: Determination of Customs Values of Replacement Wheel Rim (Alloy/Other than Alloy) under Section 25-A of the Customs Act, 1969 11/2/2019

1422/2019: Determination of Customs Values of Motor Cycle Parts under Section 25-A of the Customs Act, 1969 11/2/2019

1423/2019: Determination of Customs Values of Wall Papers under Section 25-A of the Customs Act, 1969 11/2/2019

1407/2019: Determination of Customs Values of Stationer Items under Section 25-A of the Customs Act, 1969 11/2/2019

1417/2019: Determination of Customs Values of Waist Belts (Artificial Leather Low-eng Brands), under Section 25-A of the Customs Act, 1969 11/2/2019

1418/2019: Determination of Customs Values of Circuit Breakers PCT (8526.2010, 8536.2090, 8536.9090) under Section 25-A of the Customs Act, 1969 11/2/2019

1419/2019: Determination of Customs Values of Hot & Cold Water Dispenser and Parts under Section 25-A of the Customs Act, 1969 11/2/2019

1408/2019: Determination of Customs Values of Ball, Taper,Needle,Roller,Spherical,Cylindrical Bearings PCT (8482.1000, 8482.2000, 8482.3000 8482.4000, 8482.5000, 8482.6000, 8482.7000, 8482.8000) and Parts/Components of Bearings PCT (8482.9100, 8482.9910, 8482.9990) under Section 25-A of the Customs Act, 1969 11/1/2019

1410/2019: Determination of Customs Values of Toiletries/Face/Talcum Powder,Face and Skin Creams/Lotions, Tooth Paste, After Shave, Shaving Cream/Gel/Foam, Soap in ot her Forms and Facial Wash under Section 25-A of the Customs Act, 1969 11/1/2019

1411/2019: Determination of Customs Values of Hair Care Products/Shampoos/Conditionsers and Hair Spray/Gel/Wax/Cream/Colour/Oil/Coat/Aqua/Hydrogen Peroxide Liquid/Develor/Accelerator under Section 25-A of the Customs Act, 1969 11/1/2019

1412/2019: Determination of Customs Values of PVC Trunking Duct Patti under Section 25-A of the Customs Act, 1969 11/1/2019

1413/2019: Determination of Customs Values of Used Photocopier Machine under Section 25-A of the Customs Act, 1969 11/1/2019

1414/2019: Determination of Customs Values of File Covers, File Folder, Pouches and Envelopes made of plastic under Section 25-A of the Customs Act, 1969 11/1/2019

1415/2019: Determination of Customs Values of Aluminium Radiators under Section 25-A of the Customs Act, 1969 11/1/2019

1416/2019: Determination of Customs Values of Iron Pad Locks PCT (8301.1000) under Section 25-A of the Customs Act, 1969 11/1/2019

1406/2019: Determination of Customs Values of Medium Density Fiber (MDF) Board under Section 25-A of the Customs Act, 1969 11/1/2019

1405/2019: Determination of Customs Values of Low-End Brands Shoes, Slippers, Sandals,Chappals and Joggers under Section 25-A of the Customs Act, 1969 10/31/2019

1400/2019: Determination of Customs Values of Engine Parts (Replacement Auto Parts) under Section 25-A of the Customs Act, 1969 10/30/2019

1401/2019: Determination of Customs Values of Cam Shaft, Crank Shaft, Spark Plugs, Lamps Light Lenses, Sealed Beam and Rubber Parts (Replacement Auto Parts) under Section 25-A of the Customs Act, 1969 10/30/2019

1402/2019: Determination of Customs Values of Water Pumps, Oil Pumps, Fuel Pumps, Oil Filers, Fuel Filters and Air Filters (Replacement Auto Parts) under Section 25-A of the Customs Act, 1969 10/30/2019

1403/2019: Determination of Customs Values of Transmission Group, Brake Assembly, Steering & Suspension and Body Parts Group (Replacement Auto Parts) under Section 25-A of the Customs Act, 1969 10/30/2019

1404/2019: Determination of Customs Values of Colour Cosmetics under Section 25-A of the Customs Act, 1969 10/30/2019

1397/2019: Determination of Customs Values of Children Garments (Baby/Baba) Garments of Low End Brands of China Vietnam,Indonesia, Thailand Malaysia, UAE,sri Lanka & Other Origins under Section 25-A of the Customs Act, 1969 10/28/2019

1398/2019: Determination of Customs Values of Children Garments of Low End Brands of China,Indonesia,Malaysia,UAE,Bangladesh,sri Lanka,Thailand,Vietnam & Other Origins under Section 25-A of the Customs Act, 1969 10/28/2019

1395/2019: Determination of Customs Values of Mobile Phone LCD Screens (HS Code 8517.7000) under Section 25-A of the Customs Act, 1969 10/25/2019

1396/2019: Determination of Customs Values of White Oil, under Section 25-A of the Customs Act, 1969 10/25/2019

1394/2019: Determination of Customs Values of Non-carbon releasing paper, Art Card/Coated Board/Paper and Light Weight Coated Papers under Section 25-A of the Customs Act, 1969 10/17/2019

1393/2019: Determination of Customs Values of Chandeliers,Pendants & Others Hanging Lights and Parts Thereof under Section 25-A of the Customs Act, 1969 10/16/2019

1392/2019: Determination of Customs Values of (1) Perfumes (2) Eau De Toilet Perfumes (3) Eau De Toilt (4) Eau De Cologne (5) Body Spray (6) Personal Deodorants (7) Roll-on (8) Anti-Perspirant (9) Body Deo (10) Deo Stick under Section 25-A of the Customs Act, 1969 10/15/2019

1391/2019: Determination of Customs Values of Aerosol Spray Paints under section 25-A of the Customs Act, 1969 10/3/2019

1390/2019: Determination of Customs Values of Ginger and Garlic under section 25-A of the Customs Act, 1969 9/24/2019

1388/2019: Determination of Customs Values of Thermal Paper/Fax Machine Paper in Roll under section 25-A of the Customs Act, 1969 9/5/2019

1387/2019: Determination of Customs Values of Polyester Filament Yarn under section 25-A of the Customs Act, 1969 9/3/2019

1386/2019: Determination of Customs Value of Ball Bearings and Taper Bearings under Section 25-A of the Customs Act, 1969 7/25/2019

1385/2019: Determination of Customs Values of Printed Polyester Microfiber Fabric for Bed Sheets under Section 25-A of the Customs Act, 169 7/18/2019

1384/2019: Determination of Customs Values of Non-Dairy Topping/Whipping Cream Under Section 25-A of the Customs Act, 1969 7/17/2019

1382/2019: Determination of Customs Values of PVC Electric Insulation Tape Under Section 25-A of the Customs Act, 1969 7/15/2019

1383/2019: Determination of Customs Values of Water Based Acrylic Type Self Adhesive Tape (BOPP/OPP) and Hot Melt Rubber Based Self Adhesive Tape in Jumbo/Log Rolls or in Retail Packing Under Section 25-A of the Customs Act, 1969 7/15/2019

1381/2019: Determination of Customs Values of Aseptic Packaging Material for Liquid Food/Beverages Under Section 25-A of the Customs Act, 1969 7/12/2019

1380/2019: Determination of Customs Values of Aerosoft & Similar Brands of Footwear of Thailand Origin Under Section 25-A of the Customs Act, 1969 7/9/2019

1378/2019: Determination of Customs Value of Three wheelers Cargo Loaders in CKD/SKD conditions and Parts/Components thereof under Section 25-A of the Customs Act, 1969 6/27/2019

1377/2019: Determination of Customs Value of Refrigeration Gases (in Retail Packing and ISO Tanks/Drums) under Section 25-A of the Customs Act, 1969 6/12/2019

1376/2019: Determination of Customs Value of Artificial Imitation Jewellery under Section 25-A of the Customs Act, 1969 5/30/2019

1375/2019: Determination of Customs Value of Food Supplements/Multivitamis/Mineral Supplements and Whey Protein under Section 25-A of the Customs Act, 1969 5/24/2019

1373/2019: Determination of Customs Value of Branded Milk (Lacnor, Almariai, Soyafresh, etc.) under Section 25-A of the Customs Act, 1969 5/15/2019

1372/2019: Determination of Customs Value of Aluminum Beverage Cans under Section 25-A of the Customs Act, 1969 5/14/2019

1371/2019: Determination of Customs Value of Hydrogen Peroxide 50% under Section 25-A of the Customs Act, 1969 5/9/2019

1369/2019: Determination of Customs Value of Toner Powder Black/Coloured in Bulkfor Photocopiers and Printers under Section 25-A of the Customs Act, 1969 5/6/2019

1370/2019: Determination of Customs Value of Butter (Derived From Milk/Dairy) under Section 25-A of the Customs Act, 1969 5/6/2019

1366/2019: Determination of Customs Value of Sauces / Salad Dressing / Mayonnaise / Mustard and Tomato Ketchup under Section 25-A of the Customs Act, 1969 4/30/2019

1367/2019: Determination of Customs Value of Formic Acid under Section 25-A of the Customs Act, 1969 4/30/2019

1368/2019: Determination of Customs Value of Dry Coconut/Dry Copra under Section 25-A of the Customs Act, 1969 4/30/2019

The Valuation Rulings can be downloaded here.

November 29, 2019
FBR may extend return filing date further to facilitate taxpayers

ISLAMABAD: Federal Board of Revenue (FBR) may further extend the last date for filing income tax returns for tax year 2019 beyond November 30, 2019 as large number of filing is still pending.

The last date for filing income tax returns is expiring on November 30, 2019.

The actual last date for filing income tax returns was September 30, 2019. This cutoff date was for return filing including salaried persons, business individuals, Association of Persons (AOPs) and corporate entities falling under special tax year.

However, the FBR granted first extension from September 30 to October 31, 2019. Further, the next extension was granted up to November 30, 2019.

The income tax return filing for tax year 2019 has been recorded at 1.6 million by November 25, 2019. Whereas the number of income tax returns was increased to record 2.7 million for tax year 2018.
Therefore, it is estimated that a large number may not file their returns by due date.

The Pakistan Tax Bar Association (PTBA), the apex tax bar of the country, recently through a letter urged the FBR that the date of filing income tax returns of individuals, salaried individuals, Association of Persons (AOP) for the tax year 2019 should be extended up to December 31, 2019 in order to facilitate the genuine taxpayers in the country, who are regularly contributing in the national exchequer as their moral and legal obligation.

The tax bar previously through different communications on September 27, 2019 and October 28, 2019 already advised the FBR to extend the date for filing Tax Year 2019 returns up to December 31, 2019.

The FBR chairman has been informed that the draft return Form 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 laps of statutory period of two months and all burden shifts on FBR.

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

Furthermore, 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 the Income Tax Rules, 2002.

The PTBA said that the date for filing income tax returns was extended up to August 09, 2019 for tax year 2018. This shows the FBR allowed 11 months for the filing for last year returns and for current year it is allowing only two months, which is injustice with the bar members and taxpayers as well.

The tax bar also pointed out towards the political uncertainty due to sit-in at Islamabad, which was remained continue from start of November 2019 to mid of this month.

November 29, 2019
Cash gifts received without banking channel chargeable to tax

ISLAMABAD: Any cash gift received by a person other than banking channel will be treated as chargeable to tax, sources in Federal Board of Revenue (FBR) said on Thursday.

The sources said that in the past people were taking advantage of incentives granted on gifts and concealed their income to evade taxes.

However, the change in the law through last budget those people will no more dodge the tax authorities of claiming gift from their relatives and evade taxes.

The FBR had conducted an analysis of income tax returns filed in previous years, which showed that huge amount of non recurring receipts from un-related persons are transferred in the garb of gifts to avoid incidence of taxation.

The sources said that in order to discourage this practice of undisclosed receipts, Section 39 of Income Tax Ordinance, 2001 had been amended through Finance Act, 2019.

The amendment enabled the tax authorities to include any amount or fair market value of any property received by a person without consideration or received as a gift in income under the head ‘income from other sources.’

However, gift received from grandparents, parents, spouse, brother, sister, son or a daughter shall not be included in such income.

The new income provision is subject to sub-section 3 of Section 39 which states that an amount received by a person otherwise than by a cross cheque drawn on a bank or through a banking channel from a person holding a National Tax Number (NTN) shall be treated as income chargeable to tax under the head ‘income from other sources’.

This means that the gift received by a person is chargeable to tax if gift is not received from grandparents, parents, spouse, brother, sister, son or a daughter of the recipient.

However, even if cash gift is received from the relations mentioned above but the same has not be received through cross cheque or banking channel, as the case may be, the amount of gift will still be added in income chargeable to tax under the head, income from other sources.

November 29, 2019