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Tag: Federal Board of Revenue

The Federal Board of Revenue is Pakistan’s apex tax agency, overseeing tax collection and policies. Pakistan Revenue is committed to providing timely updates on the Federal Board of Revenue to its readers.

  • FBR starts obtaining CNIC information on purchases above Rs50,000

    FBR starts obtaining CNIC information on purchases above Rs50,000

    KARACHI: Federal Board of Revenue (FBR) has started obtaining CNIC information of buyers making purchases above Rs50,000 in order to realize sales tax and for broadening of tax base.

    Sources in FBR said that sales tax registered persons would provide details of Computerized National Identity Card (CNIC) of buyers making purchases above Rs50,000.
    The registered persons will provide the details of CNIC through their monthly sales tax return that is due on March 18, 2020 for the month of February 2020.

    The FBR made it mandatory for sales tax registered persons to obtain CNIC details of unregistered buyers. In this regard an amendment was made to Section 23 of Sales Tax Act, 1990 through Finance Act, 2019.

    The condition was made mandatory on supplies from August 01, 2019. However, on the objections from stakeholders including small traders and shopkeepers the condition was deferred till January 31, 2020.

    The sources said that the sales tax registered persons are required to obtain CNIC details of buyers from February 01, 2020 and provide the same information to the FBR through monthly returns of February 2020, which is due on March 18, 2020.

    They said that the condition is not applicable on ordinary customers.

    For the purpose of this clause, ordinary consumer means a person who is buying the goods for his own consumption and not for the purpose of re-sale or processing.

    The sources said that in case seller was unable to obtain the CNIC information of buyer then in such case the registered person would be responsible.

    However, the FBR through Sales Tax General Order No. 106 dated October 04, 2019 issued clarification regarding CNIC condition.

    The FBR clarified that the CNIC/NTN of the buyer with respect to taxable supplies to an unregistered person shall be deemed to have been reported in good faith by the suppliers with conditions that the invoice should complies with statutory requirements.

    It is also mandatory that 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.

    The CNIC provided by the purchaser is found authenticated by the National Data and Registration Authority (NADRA).

    The FBR also barred that CNIC/NTN provided was not of the employee of the seller or of his associates.

    The sources said that the tax authorities would impose penalty on registered persons on failure to comply with the requirement of obtaining CNIC.

  • FBR allows filing Annexure-H for July – October up to April 15

    FBR allows filing Annexure-H for July – October up to April 15

    ISLAMABAD: Federal Board of Revenue (FBR) has allowed taxpayers to submit their stock position for the period July – October 2019 up to April 15, 2020 in order to claim sales tax refunds under newly only verification and issuance system.

    In an official memorandum issued on Friday, the FBR condoned the time limit for filing of Annexure – H for the tax period July – October 2019 up to April 15, 2020.

    Annexure-H is a statement for providing stock position by taxpayers along with monthly sales tax return.

    The FBR from July 01, 2019 introduced expeditious payment of sales tax refunds within 72 hours subject to the true filing of Annexure – H.

    Recently, Karachi Tax Bar Association (KTBA) highlighted this issue and urged the tax authorities to resolve for facilitating exporters and manufacturers.

    The KTBA pointed out that as per the amendments made in Sales Tax Rules, 2006 vide SRO no. 918(I)/2019 dated August 7, 2019, mechanism for expeditious processing of refund claim has been devised only for manufacturers-cum- exporters.

    As per the Rules, refund will be treated as having been filed only after filing of Annexure H of the Sales Tax return, for which deadline of 120 days has been prescribed in the Rules and the same can be extended for a period of 60 days on the basis of approval from the Commissioner.

    However, the rules are silent about the mechanism for processing of Sales Tax refunds incase Annexure H has not been filed by manufacturer-cum-exporter for any reason. Considering the legal and legitimate right of the taxpayer to claim adjustment / refund of the input tax, either of the following two option be considered by the FBR for facilitation of exporters:

    Allow filing of Annexure H without any time limit [present time limit of 4 months be abolished and taxpayer be allowed to claim refund as and when required] ii. Incase present limit of 4 months cannot be abolished, registered persons be allowed at least to alternatively file refund on annual basis after the end of the tax year.

    Apart from the above, Annexure H is only being allowed to be filed to taxpayers who have filed the said Annexure from sales tax returns of July 2019 and onwards. Instead of claiming refund, some taxpayers have reported sales tax carried forward balance in their sales tax returns from July 2019 onwards. In case they now intend to file Annexure H from the current month,

    FBR’s online portal does not allow such taxpayers to enter opening balance of inventory / raw materials as the said field in blocked for editing. This limitation should be removed and taxpayers should be allowed to file Annexure H for any specific month, for which they intend to claim refund.

    From apparent mechanism being followed by the system, it appears that those taxpayers who have not filed Annexure H for the month of July 2019 will never be allowed to file Annexure H for any subsequent month. This apparent anomaly should be resolved at earliest.

  • FBR to launch online production monitoring of three major sectors

    FBR to launch online production monitoring of three major sectors

    ISLAMABAD: Federal Board of Revenue (FBR) to launch online monitoring of production in three major sectors for preventing tax evasion.

    The FBR has decided to launch real-time monitoring of production by cement, sugar and fertilizer sectors in order to prevent tax evasion.

    In this regard the FBR issued Invitation for Licence (IFL) for IT based solution for Electronic Monitoring (Trade and Trace System) of specified products i.e. cement, sugar and fertilizer.

    The FBR said that the trade and trace system established, maintained and operated must enable FBR to monitor production activities and to generate real-time information volumes produced at the manufacturing sites, including verification data of collection of applicable taxes relating to specified goods produced.

    The track and trace system must be able to provide FBR enforcement officials and delegated agencies with real-time information enabling them to monitor and control the movement of specified goods through the supply chain, including determination of the origin of the specified goods, as well as to determine their legal status.

    Foreign specified goods imported into Pakistan will have unique identification markings, applicable for Pakistan, already affixed or printed at the point of manufacture outside of country. Similarly, any specified goods produced in Pakistan for export shall be required to carry unique identification markings for intended destination markets.

    The licensee must guarantee to factor these requirements into the system to ensure readability for imported products and application for exported products as per Licensing Rules, 2019.

    The FBR said that though Large Scale Manufacturing (LSM), being the major and comparatively documented sector of our economy, contributes a sizeable chunk of revenue yet the real tax potential of LSM segments like Cigarette, Cement, Sugar, Beverages etc is yet to be realized.

    Currently across the globe Track and Trace technology offers the most feasible, reliable and straightforward solution.

    With minimum human interface Track and Trace technology if implemented in a proper transparent manner it can; a) Safeguard the interest of revenue by mapping and capturing unregistered segment; b) Act as anti-tax fraud tool entailing visible increase in revenue and dis-incentivizing under declaration and; c) Ensure level playing field to all in the aforesaid sectors.

    In order to prevent leakage of revenue, under-reporting of production and sales of specified goods and to ensure proper payment of duties/taxes on the manufacture and sale of specified goods, the FBR is mandated to licence the implementation of a track and trace system; which is to be developed, operated and maintained by the licensee for specified goods manufactured in and imported into Pakistan.

    To this end, the FBR is inviting applications for grant of licence to be issued under the Sales Tax Rules, 2006 (as amended Vide 250(I)/2019 dated 26.02.2019 and SRO. 918(I)/2019 dated 7th August, 2019) for the development, maintenance and operation of track and trace system in accordance with the provisions of the rules and the instructions.

  • No refund payment made on fake claims: FBR

    No refund payment made on fake claims: FBR

    KARACHI: Federal Board of Revenue (FBR) has said that it had never paid refunds against fake claims.

    In a statement issued on Thursday, the FBR clarified the news item about loss of revenue caused due to issuance of refund claims on fake registration by FBR published by some section of press and stated that no fake refund claim has been sanctioned or issued as mentioned in the news items.

    “As no fake refund payment has been made, therefore, the question of loss of government revenue does not arise,” FBR clarified.

    The FBR has initiated the fact finding on the basis of findings of Federal Tax Ombudsman and the report would be presented to FTO within the time limit as directed in the order passed on February 20, 2020.

  • Foreign transactions through debit, credit cards generate Rs670 million income tax

    Foreign transactions through debit, credit cards generate Rs670 million income tax

    KARACHI: The revenue authorities have collected Rs670 million as income tax from foreign transactions through debit or credit card during first eight months of current fiscal year.

    The tax was collected by Regional Tax Office (RTO)-II Karachi. The tax office collected only Rs83 million in the corresponding period of the last fiscal year.

    The collection of withholding tax was introduced through Finance Act, 2018 and it was second year of the collection under this head.

    Section 236Y was inserted to Income Tax Ordinance, 2001 through Finance Act, 2018.

    Under this provision, every banking company shall collect advance tax, at the time of transfer of any sum remitted outside Pakistan, on behalf of any person who has completed a credit card transaction, a debit card transaction, or a prepaid card transaction with a person outside Pakistan at the rate of one percent.

    However, this tax rate shall be 100 percent more in case the person making transactions is not on the Active Taxpayers List (ATL).

    The advance tax collected under this section shall be adjustable.

    Sources in the tax office said that the provision was introduced to check the outflows of remittances through debt and credit cards.

    They said that foreign payments increased phenomenally due to rise in quantum of foreign trade. People were using plastic money to make payments against their foreign purchases.

    The sources further said that many importers instead of opening letter of credit were engaged in direct purchases while making payment through credit cards.

    The FBR sources said that the purpose of introducing this provision was to check the transfer of money and its source. They said that the tax deducted on such transactions is adjustable.

    However, they said that the FBR is monitoring by obtaining information of persons making foreign transactions from banks issuing debit and credit cards.

  • FBR receives 20,000 tax returns in one week

    FBR receives 20,000 tax returns in one week

    ISLAMABAD: Around 20,000 taxpayers have filed their annual income tax returns during one week after expiry of filing date.

    According to latest Active Taxpayers List (ATL) the number of return filers increased to 2.55 million by March 08, 2020.

    There were around 2.53 million return filers when the Federal Board of Revenue (FBR) issued ATL for tax year 2019 on March 01, 2020.

    The last date for filing income tax returns for tax year 2019 was February 28, 2020.

    The return filers including salaried persons, business individuals, Association of Persons (AOPs) and companies can check their names on the ATL by visiting How to check ATL status?

    The filing of income tax return is mandatory for persons driving taxable income or specified under Section 114 of Income Tax Ordinance, 2001.

    The appearance of names on the ATL is only possible after filing income tax returns within due date. In case persons are not on the ATL then the rate of withholding tax shall be increased by 100 percent on various transactions.

    Persons fail to file their returns by due date but file after the date will also not qualify to enlist their name on the ATL until fine is not paid to the Federal Board of Revenue (FBR).

    Currently the ATL is in applicable on the basis of income tax returns filed for tax year 2018. The FBR will issue new ATL on the basis of returns filed for tax year 2019 on March 01, 2020.

    A taxpayer should check his/her status on the ATL before making transactions in order to avail reduced rate of tax rates.

  • Tax collection from rental income surges by 68% on better enforcement

    Tax collection from rental income surges by 68% on better enforcement

    The Regional Tax Office (RTO)-II Karachi has reported a remarkable surge in tax collection from property income during the first eight months (July-February) of the current fiscal year, marking a significant increase of 68 percent.

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  • FBR to promote IRS, PCS officers from BS-18 to BS-19

    FBR to promote IRS, PCS officers from BS-18 to BS-19

    ISLAMABAD: Federal Board of Revenue (FBR) on Tuesday announced that it will promote officers of Inland Revenue Service (IRS) and Pakistan Customs Service (PCS) from BS-18 to BS-19.

    In an office memorandum, the FBR said that the meeting of Departmental Selection Board (DSB) for promotion from BS-18 to BS-19 is being convened shortly.

    Therefore, the FBR directed all BS-18 officers of IRS/PCS and ex-cadre, who are in promotion zone to get their performance evaluation report (PERs) completed up to June 30, 2019 by March 25, 2020.

    The FBR also directed concerned reporting/countersigning officers to forward the PERs pending with them to the board immediately.

  • Tax collection from profit on banking deposits jumps up by 185%

    Tax collection from profit on banking deposits jumps up by 185%

    KARACHI: The collection of withholding tax from profit on banking deposits surged by 185 percent during first eight months (July – February) 2019/2020 owing to higher interest rates maintained by the central bank.

    The withholding tax collection from profit on debt (banking deposits) increased to Rs43.75 billion during first eight months of current fiscal year as compared with Rs15.32 billion in the same period of the last fiscal year.

    The sources in Regional Tax Office (RTO)-II, Karachi, a revenue collecting arm of the FBR said that that due to prevailing high rate ofinterest attracted bank deposits.

    The State Bank of Pakistan (SBP) has keptpolicy rate unchanged at 13.25 percent. The policy rate was gradually increasing since August 2018 when the rate was 7.5 percent.

    The sources explained that under Section 151(1)(b) withholding tax is collected on profit on debt paid by banking companies or financial institutions on account or deposit maintained.

    Every banking company is required to collect 10 percent of the gross yield/profit paid up to Rs500,000 or 15 percent of the gross yield / profit paid exceeding amount Rs500,000 at the time the profit on debt is credited to the account of the recipient or is actually paid, whichever is earlier.

    The sources said that it is mandatory for the banks to collect double the amount of withholding tax from those persons receiving profit on debt but not on the Active Taxpayers List (ATL).

    The government through Finance Act, 2019 introduced 10th Schedule to the Income Tax Ordinance, 2001 to enhance the rate of withholding tax by 100 percent on certain transactions.

    The measure has been taken to force persons making large transactions and paying withholding tax on such transactions but remained outside the tax net.

    The sources said that after the implementation of the 10th Schedule the pace of return filing for Tax Year 2018 increased in order to avoid paying 100 percent higher rate of withholding tax.

  • FBR allows tier-1 retailers to integrate POSs by March 30

    FBR allows tier-1 retailers to integrate POSs by March 30

    ISLAMABAD: Federal Board of Revenue (FBR) has allowed big retailers to integrate their point of sale (POS) with FBR’s online system by March 31, 2020 in order to avoid legal action.

    The FBR on Monday extended the date of online integration of Tier-1 retailers.

    The FBR said that it had condoned the time limit as provided in Sales Tax Rules, 2006 up to March 31, 2020, for online integration of tier-1 retailers’ POSs with board’s computerized system for real-time reporting of sales.

    However, this permission is subject to condition that the teir-1 retailers should furnish in writing their willingness to integrated all their POSs in terms of the rules to respective Regional Tax Offices (RTOs)/Large Taxpayers Units (LTUs) by March 15, 2020.

    Previously, the deadline was expired on December 15, 2019 which was given by the FBR to tier-1 retailers to integrate their POSs with the FBR online system.

    All tier-1 retailers are required to integrate all their POSs with FBR’s computerized system.

    Tier-1 retailer is defined in section 2(43A) of the Sales Tax Act, 1990, to be a person who falls in any of the following categories:

    (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 twelve 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 in area or more.