KARACHI: Tax authorities have said that payment for purchase of immovable properties above Rs5 million is mandatory to be paid through banking channel. (more…)
Tag: Federal Board of Revenue
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FBR may invoke provisions for third party recovery
ISLAMABAD: Federal Board of Revenue (FBR) may invoke provisions related to third party recovery of tax defaulted by a taxpayer.
FBR sources said that the tax authorities may invoke Section 140 of Income Tax Ordinance, 2001 in order to make recovery from a defaulter.
The FBR recently notified draft rules through SRO 111(I)/2020 dated February 14, 2020 to implement Section 140 of the Ordinance.
As per the draft rules the tax authorities would be empowered to recover tax from a defaulter through third party, who owes money to the defaulted taxpayer.
The sources said that the FBR soon issue the notification to make draft rules to part of the statute.
The FBR is facing huge revenue shortfall for achieving this revenue collection target. Therefore, the tax machinery may apply all possible ways to recovery outstanding amount.
The Section 140 explains the procedure of recovery through third party.
Section 140: Recovery of tax from persons holding money on behalf of a taxpayer
Sub-Section (1): For the purpose of recovering any tax due by a taxpayer, the Commissioner may, by notice, in writing, require any person –
(a) owing or who may owe money to the taxpayer; or
(b) holding or who may hold money for, or on account of the taxpayer;
(c) holding or who may hold money on account of some other person for payment to the taxpayer; or
(d) having authority of some other person to pay money to the taxpayer, to pay to the Commissioner so much of the money as set out in the notice by the date set out in the notice:
“Provided that the Commissioner shall not issue notice under this sub-section for recovery of any tax due from a taxpayer if the said taxpayer has filed an appeal under section 127 in respect of the order under which the tax sought to be recovered has become payable and the appeal has not been decided by the Commissioner (Appeals), subject to the condition that ten per cent of the said amount of tax due has been paid by the taxpayer.”
Sub-Section (2): Subject to sub-section (3), the amount set out in a notice under sub-section (1) —
(a) where the amount of the money is equal to or less than the amount of tax due by the taxpayer, shall not exceed the amount of the money; or
(b) in any other case, shall be so much of the money as is sufficient to pay the amount of tax due by the taxpayer.
Sub-Section (3): Where a person is liable to make a series of payments (such as salary) to a taxpayer, a notice under sub-section (1) may specify an amount to be paid out of each payment until the amount of tax due by the taxpayer has been paid.
Sub-Section (4): The date for payment specified in a notice under sub-section (1) shall not be a date before the money becomes payable to the taxpayer or held on the taxpayer’s behalf.
Sub-Section (5): The provisions of sections 160, 161, 162 and 163, so far as may be, shall apply to an amount due under this section as if the amount were required to be deducted from a payment under Division III of Part V of this Chapter.
Sub-Section (6): Any person who has paid any amount in compliance with a notice under sub-section (1) shall be treated as having paid such amount under the authority of the taxpayer and the receipt of the Commissioner constitutes a good and sufficient discharge of the liability of such person to the taxpayer to the extent of the amount referred to in such receipt.
Sub-Section (10): In this section, “person” includes any Court, Tribunal or any other authority.
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FBR issues values of minerals for tax collection
ISLAMABAD: Federal Board of Revenue (FBR) has notified values of minerals for collection of advance tax at the time of extracted, produced, dispatched and carried away from the licensed or leased areas of the mines.
The FBR issued SRO140(I)/2020 dated March 02, 2020 for notifying values of minerals to collect advance tax at the rate of five percent. The tax is applicable only on those persons not on the active taxpayers list (ATL).
The FBR inserted Rule 231I for values of minerals for the purpose of sub-section 4 of section 236 of the Income Tax Ordinance, 2001:
The values are:
S.No. Name of mineral Rate per metric tonne (in Rupee) (1) (2) (3) 01 Argilacoeous clay 500 02 Asbestos 4875 03 Antimony 11700 04 Agglomerate 6500 05 Barite 6500 06 Basalt 9100 07 Bentonite 3900 08 Bauxite 4550 09 Bajri 780 10 Brine/salt 570 11 Barytes 875 12 Ball clay 875 13 Coal 5000 14 Clay 1625 15 China Clay 625 16 Calcite 1300 17 Celestite 1625 18 Conglomerate 1950 19 Chromite 18750 20 Chalk 2500 21 Dolomite 2250 22 Diorite 6500 23 Flourite 10400 24 Fullers Earth 1300 25 Fire Clay 1300 26 Gypsum 1950 27 Granite 13000 28 Gabro stone 9750 29 Granodiorite 9750 30 Gravel 750 31 Iron ore 5200 32 Limestone (for manufactures of cement) 4500 33 Limestone (other than cement factory) 1500 34 Laterite 815 35 Lake salt 875 36 Marble onyx 16250 37 Magnesite 3900 38 Marble (other than onyx) 3900 39 Manganese 5200 40 Ochre/ red ochre 3900 41 Ordinary stone 910 42 Pumice 1950 43 Quartz 3900 44 Quardzite 3250 45 Rock salt 875 46 Silica sand 4500 47 Sulphur 3900 48 Soap stone 5250 49 Serpentine 3250 50 Shale (cement industry) 2500 51 Sand 650 52 Shale 750 53 Slate Stone 1875 54 Sandstone 750 55 Tar sand 490 56 Tufff 1625 The FBR said that advance tax shall be collected by the provincial authority or a person authorized by the provincial authority to collect or recover royalty on minerals excavated and transported from leased area.
The FBR further said that where a person having authority to collect or recover royalty on behalf of the provincial authority:
(a) fails to collect tax as required; or
(b) having collected tax fails to pay the tax to commissioner as required under Section 160
the person having authority to collect of recover royalty as well as provincial authority shall be jointly and severally liable to pay the amount of tax to the commissioner who may pass an order to that effect and proceed to recover the same.
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People can file their returns after due date for appearance in ATL: FBR
KARACHI: People can still file their annual income tax returns after due date for appearing on the Active Taxpayers List (ATL) after paying default surcharge.
The last date for filing income tax returns for tax year 2019 was February 28, 2020 and FBR issued ATL – 2019 of March 01, 2020. With the issuance of new ATL the ATL-2018 was no more applicable. Thus, those persons filed income tax returns for tax year 2018 and availing reduced rate of withholding tax rates on the basis of ATL 2018.
However, those persons filed their returns for tax year 2019 will avail the reduced rate of withholding tax rates and their names appeared on the ATL 2019 till the next ATL issued on March 01, 2021.
The FBR issued a clarification on the news items relating to actual number of tax returns filed in Tax Year 2019 and Tax Year 2018 published in the newspapers. FBR has clarified that number of tax returns filed in Tax Year 2018 till 28th February 2019 were 16,95,560 whereas the number of tax returns filed in Tax Year 2019 till 28th February, 2020 were 24,72,609 which showed an increase of 45 % compared to corresponding month in the last Tax Year.
FBR has further stated that date for filing tax returns were extended in Tax Year 2018 and the last date for filing tax returns was set as 9th August, 2019. The news items depicted the comparison of tax returns filed till the last date of Tax Year 2018 with last date of Tax Year 2019 which gave the perception that the actual tax returns filed in Tax Year 2019 have decreased compared to Tax Year 2018.
FBR has further added that the total period from the last date of Tax Year 2018 till last date of Tax Year 2019 consists of almost six months. This period of six months for Tax Year 2019 is comparably very short with that of Tax Year 2018. The number of Tax Returns 24,72,609 filed in six months for Tax Year 2019 shows great achievement of FBR.
The people continue to file tax returns to come on Active Taxpayers List even after last date but the returns can only be filed by paying surcharge after the set last date.
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FBR launched crackdown against 300,000 non-filers
ISLAMABAD: Federal Board of Revenue (FBR) has launched crackdown action against around 300,000 non-filers of annual returns for tax year 2019.
The tax authorities have started sending notices to individuals and companies who filed their returns and declaration of assets for tax year 2018 but failed to comply this obligation in the subsequent year.
The FBR issued Active Taxpayers List (ATL) on March 01, 2020 for tax year on the basis of return filed up to February 29, 2020.
The ATL revealed that around 2.53 million individuals/companies filed annual returns for tax year 2019. Meanwhile, the estimated return filing for tax year 2018 was increased to record high of over 2.83 million, showing a gap of around 300,000 returns.
However, the return filing has increased by 60 percent when compared with 1.6 million returns filed till February 28, 2019.
Under Section 114 of Income Tax Ordinance, 2001, the FBR explained the mandatory requirement of return filing on certain classes of individuals and companies.
As per the law every company registered with Securities and Exchange Commission (SECP) is required to file returns. But in contrast the FBR received around 40,988 corporate returns for tax year 2019.
On the other hand the SECP had registered around 100,000 companies till June 30, 2019. This shows that around 59 percent corporate entities had failed to comply with mandatory requirement.
A statement issued by the FBR on February 29 revealed that it had received 2.34 million returns from salary and business individuals. While another 62,403 returns were filed by Association of Persons (AOPs).
Tax officials said that the tax authorities had started issuing notices giving opportunity to non-filers to ensure compliance along with payment of late filing.
The sources said that the action had been initiated after expiry of due date for filing tax returns, which was February 28, 2020.
In case persons/company deliberately default then penal provisions may be invoked.
According to tax ordinance, in case a person fails to file return of income by due date than such person is required to 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.
In case a person deliberately not comply with the notice for filing return then such person would be liable to fine or imprisonment for one year.
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Source of money for immovable property purchase may be questioned
KARACHI: Federal Board of Revenue (FBR) has said that a commissioner of Inland Revenue has been empowered to ask source of money used for purchase of immovable properties under legal provisions related to undeclared assets.
The FBR in explanations related to purchase of immovable properties, said that the commissioner of Inland Revenue can ask to explain the source of funds in the investment made in immovable property and apply the provision of unexplained income under Section 111 of Income Tax Ordinance, 2001 by providing opportunity of being heard.
The tax authority explained to general queries related to FBR valuations of immovable properties. The FBR responded in a scenario when a person is not a filer of income tax returns and the person intended to purchase property at FBR’s notified rates and required to pay advance tax under Section 236K at the time of purchase.
The general query was whether commissioner can ask the question of source of investment for such property.
The FBR in another query related to purchase of an immovable property at FBR’s notified value on which advance tax payable whether commissioner of Inland Revenue shall still be empowered to re-determine the value of property?
The FBR said that the commissioner was not empowered to re-determine the value of the immovable property purchased on the valuation as determined by the FBR for which advance tax under Section 236K of Income Tax Ordinance, 2001 has been paid on such valuation.
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Persons not on new ATL to pay 100% additional withholding tax
KARACHI: Persons who have failed to submit their annual income tax returns and declaration of assets for tax year 2019 will pay 100 percent additional withholding tax on certain transactions, sources in Federal Board of Revenue (FBR) said on Monday.
They said that those taxpayers availing the benefit of reduced rate of withholding tax on the basis of returns filed for tax year 2018 would not more eligible.
The FBR issued new Active Taxpayers List (ATL) for tax year 2019 including names of those return filers who filed their returns up to February 29, 2020.
The new ATL included name of 2.53 million taxpayers who filed their returns for tax year 2019. These taxpayers were salaried persons, business individuals, Association of Persons (AOPs) and companies.
The FBR had extended the last date for filing income tax returns and declaration of assets up to February 28, 2020.
The sources said that through Finance Act, 2019 a new 10th Schedule to Income Tax Ordinance, 2001 was introduced under which the FBR imposed 100 percent additional withholding tax on those persons whose name were not on the ATL.
Previously, the law provides for the concept of a non-filer and stipulates higher withholding rates for the same which were adjustable at the time of filing of income tax return.
This tax regime has created a misconception that a non-filer can go scot free by choosing not to file income tax return.
The measure was meant to increase the number of filers, however over time the focus shifted to raising additional revenue only.
The measure had not achieved the desired results as the regime did not provide for any legal framework to ensure filing of return by such non filers.
In order to remove the aforesaid misconception, the concept and the term of “non-filer” was abolished from the statute, wherever occurring.
In its stead a separate Schedule is being introduced to specifically provide a legal framework for punitive measures for persons not appearing on ATL and to ensure filing of return by such persons.
The main attributes of this scheme are as under:-
— Persons whose names are not appearing on the ATL will be subjected to hundred percent increased rate of tax.
— The withholding agents will clearly specify the names, CNIC or any other identification of such persons in the withholding statement so that legal provisions to enforce return can come into effect.
— Where a withholding agent is of the opinion that hundred percent increased tax is not required to be collected on the basis that the person was not required to file return, the withholding agent shall furnish an intimation to the Commissioner setting out the basis on which the person is not required to file return.
The Commissioner shall accept or reject the contention on the basis of existing law. In case the Commissioner fails to respond within thirty days, permission shall be deemed to be granted to not deduct tax at hundred percent increased rate o Where the person’s tax has been deducted or collected at hundred percent increased rate and the person fails to file return of income for the year for which tax was deducted, the Commissioner shall make a provisional assessment within sixty days of the due date for filing of return by imputing income so that tax on imputed income is equal to the hundred percent increased tax deducted or collected from such person and the imputed income shall be treated as concealed income.
— The provisional assessment shall be of no effect if the person files return within forty five days of completion of provisional assessment and the provisions of the Ordinance shall apply accordingly. Where return is not filed within forty five days of provisional assessment, it shall be treated as final assessment and the Commissioner shall initiate penalty proceedings for concealment of income.
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FBR unearths benami properties worth Rs8bn of politically exposed persons
ISLAMABAD: Federal Board of Revenue (FBR) has unearthed benami properties amounting Rs8 billion of politically exposed persons (PEP), according to data made available on Monday.
The anti-benami zones of the FBR have attached 6 immovable properties and finalized 10 cases against PEP. The FBR summoned 140 politically exposed persons to explain the source of income for purchasing properties. The anti-benami zones filed six references against PEPs.
According to details around 35 beneficial owners have been detected to have benami properties as PEPs. The highest number of cases detected in Lahore zone while five each cases detected in Karachi and Islamabad.
These PEPs have purchased properties in the names of 90 benamidars. The highest number of 56 benamidars of PEPs was identified by Lahore zone, 24 by Karachi and 10 by Islamabad.
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FBR needs Rs2,500 billion in last four months to achieve revenue collection target
ISLAMABAD: Federal Board of Revenue (FBR) has to collect around Rs2,500 billion during last four months (March – June) 2020 in order to achieve revenue collection target of Rs5,238 billion set for the fiscal year 2019/2020.
The FBR provisionally collected Rs2,714 billion during first eight months (July – February) 2019/2020 as compared with Rs2,331 billion collected in the corresponding months of the last fiscal year, showing around 16.5 percent growth.
However, so far collection of the FBR is not sufficient for reaching the collection target for current fiscal year. The average monthly collection target during first eight months of the current fiscal year is Rs339.25 billion. While the revenue is required to collect revenue at monthly average of Rs625 billion, which appears to be an uphill task for the tax machinery.
The FBR collected Rs1,495 billion in the last four months (March – June) 2018/2019. In case maintain the growth pace of 16.5 percent then the FBR may able to collect Rs1741.67 billion during the last four months of current fiscal year.
Therefore, the FBR may able to reach total collection of Rs4,456 billion during the current fiscal year. Therefore, the estimated shortfall in revenue collection may be hit at Rs782 billion for the current fiscal year.
The FBR was initially given Rs5,550 billion revenue collection target for the fiscal year 2019/2020. However, the authorities were not optimistic to meet the target, therefore, in consultation with the IMF the revenue collection target was downgraded to Rs5,238 billion.
The tax authorities are estimating collection of around Rs2.45 trillion by June 30, 2020.
In recent document on budgetary achievement in first six months of current fiscal year, the finance ministry admitted the revenue collection target was historically high and challenging. The finance ministry also pointed out lower collection due to economic slowdown and contraction in consumption.
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FBR takes action against non-compliant return filers owned immovable properties
ISLAMABAD: Federal Board of Revenue (FBR) shall take penal action against persons who owned immovable property and remained non-compliant with filing of income tax returns.
Officials at the FBR said that date for filing income tax returns had expired on February 28, 2020. However, individuals and companies still can file their returns by paying penal amount besides late filing payment to appear on Active Taxpayers List (ATL) 2019.
The officials said that tax offices would scrutinize cases of persons who owned immovable properties during tax year 2019 i.e. July 01, 2018 to June 30, 2019.
They said that as per Section 114 of Income Tax Ordinance, 2001 every individual requires to file annual income tax returns, who owns immovable property with a land area of two hundred and fifty square yards or more or owns any flat located in areas falling within the municipal limits existing immediately before the commencement of Local Government Laws in the provinces; or areas in a Cantonment; or in Islamabad Capital Territory.
Besides, those individuals also require to file annual returns, who own immovable properties with a land area of five hundred square yards or more located in a rating area.
Further person, who owns flat, having covered area of two thousand square feet or more located in a rating area.
The FBR officials said that reportedly the real estate sector of the economy was known to be parking area for black money and money laundering. They said that the FBR had already launched aggressive drive to eliminate incidence of black money.
They said that persons who filed their income tax returns for tax year 2018 but not filed their returns for tax year 2019 and purchase immovable properties during tax year 2019 would be screened.
The tax authorities have obtained record of sales and purchase information from provincial registrars of immovable properties.
They said that those persons, who concealed their money used for purchase of immovable properties, would face action.