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.

FBR issues guidelines to facilitate issuance of sales tax refunds in 72 hours

ISLAMABAD: Federal Board of Revenue (FBR) has issued guidelines to facilitate taxpayers in issuance of sales tax refunds within 72 hours.

The FBR issued user guidelines for filing Annexure – H i.e. details of stock position of sales tax registered persons. This annexure is mandatory for refund claimants and they may submit statement within 120 days from due date of return filing of particular tax period; other registered persons are encouraged to provide these details, the FBR said.

The FBR advised the sales tax registered persons to use Annexure – H to upload transactions for the month i.e. purchase, import and consumption only.

Opening and closing balances are derived/calculated automatically. Same is with Excel uploading otherwise objection of duplicate value will arise.

The FBR said that opening and closing balance in sales tax return must match with Annexure – H.

It is further advised to sales tax registered persons to use Annexure – H column consumed / exported during the month (domestic zero rated / export for amount of refund on export mentioned in return (minus tax on local supplies).

The FBR advised the sales tax registered persons to use column consumed / sold during the month (domestic taxable supplies) for consumption against domestic supplies in relation to output tax declared in return.

Mark invoice wise inadmissible input tax in Annexure – A relating to SRO 490. Do not attach / claim GD of imports or/and exports that have already been claimed or not relevant.

The FBR said that credit brought forward from previous claim will automatically be available in Annexure – H.

The FBR added new items in list of items: sizing, yarn dyeing, yarn doubling, weaving, knitting, processing (bleaching, dyeing and printing), stitching, embroidery.

The FBR said that RCPC for refund preparation system has been replaced with Annexure – H for all types of sales tax refund claims from July 2019 onward.

Properly filled Annexure – H without objections and anomalies of data will ensure processing in 72 hours.

November 9, 2019
Jewelers, real estate agents to maintain register, report suspicious transactions: draft rules issued

ISLAMABAD: Federal Board of Revenue (FBR) has proposed to make mandatory for jewelers and real estate agents to report suspicious transactions. In this regard the FBR issued draft rules through SRO 1320(I)/2019 to make amendments in Income Tax Rules, 2002.

As per the draft rules, the designated persons as jewelers and real estate agents should maintain documents and records, where the value of transaction exceeds Rs2 million in case of immovable properties and Rs one million in other cases.

The FBR said that the designated persons would require to obtain and maintain the following relating to its buyers and sellers, namely:

In case of an individual any of the following documents should be obtained by jewelers and real estate agents:

i. copy of computerized National Identity Card (CNIC) issued by National Database and Registration Authority (NADRA).

ii. copy of National Identity Card for Overseas Pakistanis (NICOP) issued by NADRA.

iii. copy of Pakistan Origin Card (POC) issued by NADRA.

iv. copy of Alien Registration Card (ARC) issued by NADRA, and

v. copy of passport, having valid visa on it or any other proof of legal stay along with the passport (foreign nationals only).

The jewelers and real estate agents also required to keep a list of all such customers where the business transaction was refused or needed to be closed either on account of failure of the customer to provide the relevant documents or the original documents for viewing as required.

Regarding furnishing of information, according to the draft rules, the sale and purchase register for the immediately preceding calendar month shall be uploaded by the designated persons on the IRIS online system within 15 days of the end of the preceding calendar month for transactions.

The draft rules said that the designated persons would mark a transaction as suspicious in the IRIS online system if the person has reason to believe that the transaction or a pattern of transactions of which the transaction is a part:

(a) involves funds derived otherwise than from the business activity or assets declared to the income tax authorities;

(b) is designed to evade any requirement of the Income Tax Ordinance, 2001 or to conceal the beneficial owner or his activity.

(c) has no apparent economic or lawful purpose after examining the available facts, including the background and possible purpose of the transaction; or

(d) involves financing of terrorism, including fund collected, provided, used or meant for, or otherwise linked or related to, terrorism, terrorist acts or organization and individual concerned with terrorism.

According to the draft rules, the designated persons have also been asked to mark as suspicious transaction if the buyer or seller –

(a) frequently changes bank accounts;

(b) uses a bank account other than an account maintained in the name of beneficial owner;

(c) makes or receives payment in cash or primarily in cash; or

(d) maintains a creditor or debtor account with the designated person and instructs the designated person to adjust the balance of his account against a creditor debtor account of another buyer or seller.

November 9, 2019
FBR withdraws 3pc value addition tax on imported consumer items
ISLAMABAD: Federal Board of Revenue (FBR) has withdrawn three percent minimum value addition tax on import of consumer items on which sales tax is paid on retail basis.

The FBR on Friday issued SRO 1321(I)/2019 and amended the Twelfth Schedule of Sales Tax Act, 1990 under which three percent minimum value addition sales tax has been imposed on all imported goods subject to exclusions.

As per the amendment the FBR withdrew the imposition of minimum value addition tax on import of goods specified in the Third Schedule of the Sales Tax Act, 1990.

Following is Third Schedule to Sales Tax in which consumer items are mentioned for collection of sales tax on the basis of printed retail price:
- Fruit juices and vegetable juices.
- Ice Cream.
- Aerated waters or beverages.
- Syrups and squashes.
- Cigarettes.
- Toilet soap
- Detergents
- Shampoo
- Toothpaste
- Shaving cream
- Perfumery and cosmetics.
- Tea
- Powder drinks
- Milky drinks
- Toilet paper and tissue paper
- Spices sold in retail packing bearing brand names and trade marks
- Shoe polish and shoe cream
- Fertilizers
- Cement sold in retail packing
- Mineral/bottled water
- Household electrical goods, including air conditioners, refrigerators, deep freezers, televisions, recorders and players, electric bulbs, tube-lights, electric fans, electric irons, washing machines and telephone sets.
- Household gas appliances, including cooking range, ovens, geysers and gas heaters.
- Foam or spring mattresses and other foam products for household use.
- Paints, distempers, enamels, pigments, colours, varnishes, gums, resins, dyes, glazes, thinners, blacks, cellulose lacquers and polishes sold in retail packing
- Lubricating oils, brake fluids, transmission fluid, and other vehicular fluids sold in retail packing.
- Storage batteries excluding those sold to
- Automotive manufacturers or assemblers
- Tyres and tubes excluding those sold to automotive manufacturers or assemblers
- Motorcycles
- Auto rickshaws
- Biscuits in retail packing with brand name
- Tiles
- Auto-parts, in retail packing, excluding those sold to automotive manufacturers or assemblers.
Procedure and conditions under the Twelfth Schedule has been defined as:

(1) The sales tax on account of minimum value addition as payable under this Schedule (hereinafter referred to as value addition tax), shall be levied and collected at import stage from the importers on all taxable goods as are chargeable to tax under section 3 of the Act or any notification issued thereunder at the rate specified in the Table in addition to the tax chargeable under section 3 of the Act or a notification issued thereunder:

Prior to the latest amendment the value addition tax under this Schedule shall not be charged on:

(i) Raw materials and intermediary goods meant for use in an industrial process which are subject to customs duty at a rate less than 16% ad valorem under First Schedule to the Customs Act, 1969;

(ii) The petroleum products falling in Chapter 27 of Pakistan Customs Tariff as imported by a licensed Oil Marketing Company for sale in the country;

(iii) Registered service providers importing goods for their in-house business use for furtherance of their taxable activity and not intended for further supply;

(iv) Cellular mobile phones or satellite phones;

(v) LNG / RLNG;

(vi) Second hand and worn clothing or footwear (PCT Heading 6309.000);

(vii) Gold, in un-worked condition; and

(viii) Silver, in un-worked condition.”
November 9, 2019
FBR officials display banners against proposed layoff plan

KARACHI: The officials of Federal Board of Revenue (FBR) have protested against new reform program planned by the government, which may result in layoff in the revenue body.

The officials at the Income Tax Building Karachi on Friday displayed protest banners around the building to express their resentment against the reform plan, which can cause surpluses of staff.

The officials through banners expressed their displeasure against IMF linked policy in Pakistan.

The officials are protesting against news reports which said around 10,500 IRS officials would become surplus in the new system.

The sources in the tax office said that for the past many years the government had banned new appointment in the FBR and the many of the existing staff were on verge of retirement.

November 8, 2019
FBR proposed to collect sales tax on services

ISLAMABAD: The federal government is planning to takeover right to collect sales tax on services from the provinces as it was felt the true potential of collection was not realized.

According to minutes of the meeting chaired by the prime minister to review proposed restructuring of Federal Board of Revenue (FBR) and domestic resource mobilization, held last month, it is discussed that revenue potential of General Sales Tax (Services) is not being fully realized owing to jurisdiction issues between FBR and provincial revenue authorities.

It is also discussed that cross provincial jurisdictional and conflict of interest issues also stifles collection of GST on services.

The sales tax on services needs to be collected centrally by FBR as per rates legislated by provincial governments.

Tax proceeds of GST on services can be transferred directly to provinces as per delineated jurisdiction and share.

In this regard it is decided that a joint committee comprising representatives of ministry of finance, FBR and provincial revenue authorities would be constituted to finalize proposal for central collection of GST on Services by the FBR.

It is further decided mechanism of transfer of tax proceeds of GST on services be worked out by the ministry of finance.

It is worth mentioning that prior the 18th Amendment to the Constitutions, the FBR was collecting sales tax on services. However, after the amendment the Sindh government was the first to establish a separate entity to collect sales tax on services arising within the jurisdiction of the province.

The other provinces also followed the same and set up their revenue collecting agencies.

Experts believed that the plan of the federal government would be reversal of such transfer of rights to the provinces.

November 8, 2019
FBR allows raids against unregistered manufacturers, suppliers

ISLAMABAD: Federal Board of Revenue (FBR) has given go ahead to directorate of intelligence and investigation for conducting raids against manufacturers and suppliers not registered under sales tax laws.

In this regard the Directorate of Intelligence and Investigation, Inland Revenue carried out raids against three unregistered units in Gujranwala, said a statement issued by Federal Board of Revenue (FBR) on Thursday.

The statement said that in continuation of a drive against un-registered persons involved in making taxable supplies who are liable to be registered under the Sales Tax Act, 1990, the Directorate of Intelligence and Investigation-Inland Revenue, Lahore has carried out action under Section 38 and 40 of the Sales Tax Act, 1990 after obtaining search warrants from the Area magistrate against the manufacturing/business premises of three un-registered units in Gujranwala on November 05, 2019.

The three unregistered units were involved in manufacture and supply of taxable goods i.e. sanitary ware, detergents and household gas appliances.

During the search carried out available record was resumed which is under scrutiny and further investigation in this regard is underway.

“The Directorate General Intelligence and Investigation-Inland Revenue shall continue such operations in order to unearth unregistered units/businesses which are making taxable supplies without payment of due amount of sales tax and causing huge loss to the national exchequer,” the FBR said.

November 7, 2019
FBR officials, taxpayers interaction restricted to Bar Code based communication

ISLAMABAD: Tax officials have been restricted taxpayers interaction to barcode-based communication only, officials said on Tuesday.

The Federal Board of Revenue (FBR) has imposed a bar on officials of Inland Revenue and Pakistan Customs for direct communication with taxpayers effective from November 01, 2019.

However, the FBR authorized the officials to communicate taxpayers in legal notice or official communication with QR code/Bar code or any other code/manner prescribed under the law.

The FBR issued an official memorandum on October 28, 2019 prohibiting officials for personal interaction with taxpayers/business.

The FBR said that in view of prevailing perception of the FBR and also in order to do away with fake communication from some quarters and order to build confidence level of taxpayers, it has been decided that no officer/official of the FBR Headquarters or its field formation will contact with any taxpayer or businessman in any form i.e. physical visit, telephonic / mobile calls, SMS or email etc. except when legally authorized to do so, which in every case is to be a legal notice or official communication with QR code/Bar code or any other code/manner as may be prescribed under the law.

“This policy shall come into force from November 01, 2019 and any officer/official found indulged in such activity shall be proceeded against strictly under the Government Servants (Conduct) Rules, 1964 read with Government Servants (E&D) Rules, 1973.”

These directions shall apply to all formations of FBR being Inland Revenue (Income Tax, Sales Tax and Federal Excise Duty) and Customs.

Taxpayers, business community and trade bodies have been asked to assist in implementing the policy by reporting to FBR any contravention of these directions.

The FBR circulated this memorandum to heads of departments, included: Members (FBR); Chief Commissioner (Inland Revenue); Chief Collectors (Customs); Director General (Inland Revenue); and Director General (Customs).

November 5, 2019
Income tax return filing increases to record 2.667 million

ISLAMABAD: The income tax return filing has increased to record level of 2.667 million, according to Active Taxpayers List (ATL) for tax year 2018 released on Monday.
(more…)

November 4, 2019
FBR notifies transfers, postings of Customs officers in BS-17-19

ISLAMABAD: Federal Board of Revenue (FBR) on Monday notified transfers and postings of customs officers of BS-17-19 with immediate effect and until further orders.

The FBR notified transfers and postings of following officers:

01. Ghulam Nabi Kamboh (Pakistan Customs Service/BS-19) on joining FBR (HQ), Islamabad has been posted as Additional Collector, Model Customs Collectorate of Preventive, Multan.

02. Jamshed Ali Talpur (Pakistan Customs Service/BS-18) on return from MCMC has been posted as Secretary (OPS), FATF Cell, Federal Board of Revenue (HQ), Islamabad.

03. Muhammad Akbar Jan Gandapur (Pakistan Customs Service/BS-18) has been transferred and posted as Deputy Collector, Model Customs Collectorate of Preventive, Quetta from the post of Deputy Collector, Model Customs Collectorate of Preventive, Karachi.

04. Hameer Khan (Pakistan Customs Service/BS-17) has been transferred and posted as Assistant Collector, Model Customs Collectorate of Preventive, Quetta from the post of Assistant Collector, Model Customs Collectorate of Preventive, Karachi.

05. Syeda Sidra Munawar Kazmi (Pakistan Customs Service/BS-17) has been transferred and posted as Assistant Collector (Prob), Model Customs Collectorate (AIIA), Lahore from the post of Assistant Collector (Prob), Model Customs Collectorate of Preventive, 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.

November 4, 2019
FBR proposed imposing additional sales tax on failure to implement CNIC condition

KARACHI: SITE Association of Industry on Monday proposed the Federal Board of Revenue (FBR) to imposed additional sales tax as the government failed to implement condition of Computerized National Identity Card (CNIC).

Instead of disallowing proportionate input tax for sales made without CNICs, alternate is recommended for sales made without submission of CNIC to increase the further tax at 5 percent of sales till December 31, 2019, 7.5 percent of further sales till March 31, 2020 and further tax at 10 percent of sales till June 30, 2020.

The SITE Association of Industry proposed new formula to end the deadlock between Government and traders on the condition of production of CNIC on sales and purchase of goods by the Federal Board of Revenue.

Chairman of Taxation Committee of the Association Saud Mehmood has suggested that input tax inadmissibility against sales made without CNIC should be replaced with progressive increase in rate of further sales tax.

He said that the FBR has not been able to successfully implement the CNIC condition due to the complex nature of disallowing input against sales made without CNIC which is difficult for sellers as well.

Because of the complex nature of this condition, sales tax registered sellers have made CNIC submission the only option whereas legislation allows for sales without CNIC as well.

Saud further said that in order to make implementation of CNIC submission smooth, SITE Association of Industry strongly recommends that input tax inadmissibility be replaced with progressive increase in further tax. “Progressive increase in further tax will make the transition smooth. Moreover, it will be in line with the existing system of charging further tax of 3 percent of sales made to non-filers,” he added.

SITE Association of Industry believes in the documentation of the economy. When submission of CNIC is mandatory for availing a mobile connection then there is no reason to shy away from submitting CNIC for purchases above PKR 50,000/-.

“We feel that more than the requirement of CNIC, the sudden imposition is one of the causes of the stiff resistance being faced by FBR. A gradual and progressive implementation of further sales tax on sales without CNIC will make the whole process more palatable.”

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November 4, 2019