KARACHI: Filing of wealth statement is mandatory for making annual return form valid. Taxpayers are required to file asset declaration under Section 116 of Income Tax Ordinance, 2001.
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Sale tax refunds to be released on declared stock statement: FBR
ISLAMABAD: Federal Board of Revenue (FBR) on Monday said that refunds will be issued only on stock statement declared by sales tax registered persons.
The FBR issued Sales Tax Circular No. 04 of 2019 to explain the issuance of refund payment under FASTER refund module.
The FBR said that refund will be processed on the basis of entries in Annex-H.
Annexure H is a stock statement declared by a registered taxpayer through his return.
According to the FBR this annexure is mandatory for refund claimants and they may submit this statement within 120 days from due date of return filing of particular tax period; other registered persons are encouraged to provide these details.
The system will show and fill the relevant columns of those items whose closing balance will be greater than zero in proceeding return, but the registered person may add the new items and provide their data manually. The column wise filing details are as follows:
This annexure will be mandatory for refund claimants who will claim any amount of refund at serial 30 of main return and they may submit this statement within 120 days from due date of return filing of particular tax period.
In the latest circular No. 4, the FBR said that in wake of rescission of SRO 1125(I)/2011, it had committed with the exporters of the export oriented sectors i.e. textiles, leather, carpets, sports goods and surgical goods, that refunds shall be paid within 72 hours of filing of refund claim.
For this purpose, FASTER refund module has been developed, which will process claims of exporters of five export-oriented sectors for the tax period July, 2019, and onwards.
FBR has earlier clarified that submission of Annex-H, which is a form in the monthly sales tax return, shall be treated as submission of refund claim.
It is added that the number of refund claims received is not significant. The exporters are facing some difficulties in filing of their tax refund claims (Annex-H) under FASTER. Many claimants have approached the Board with request that they may be allowed revision of their return on the ground that the entries made in Annex-F do not match with those in Annex-H.
It is accordingly clarified that refund is processed on the basis of entries in Annex-H. The entries in Annex-F have no bearing on refund claim except that carry forward of value addition tax is excluded from refund amount.
Accordingly, the claimants are advised not to revise the returns on the ground that entries in Annex-F do not match with those in Annex-H.
They should submit Annex-H, if not already submitted so that their claims can be processed.
Further, field formations are advised not to draw an adverse inference if the Annex-F does not match with Annex-H in case of monthly returns already submitted.
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Tax collected on prize bond winning to be final
KARACHI: The withholding tax collected on winning of prize bond shall be final tax liability either it is collected from person appeared on Active Taxpayers List (ATL) or not.
Sources in Federal Board of Revenue (FBR) said that the withholding tax collected on winning of prize bonds may not be adjusted against the total tax liability of a taxpayer.
Similarly, the withholding tax deducted on winning from a raffle, lottery or winning a quiz, prize offered by companies will also not be adjustable.
The collection of tax has been made under Section 156 of Income Tax Ordinance, 2001. While from tax year 2020 the withholding tax under this section has been increased by 100 percent for those persons not appearing on ATL.
Section 156: Prizes and winnings
Sub-Section (1): Every person paying 10[prize on] a prize bond, or winnings from a raffle, lottery, prize on winning a quiz, prize offered by companies for promotion of sale, or cross-word puzzle shall deduct tax from the gross amount paid at the rate specified in Division VI of Part III of the First Schedule.
Sub-Section (2): Where a prize, referred to in sub-section (1), is not in cash, the person while giving the prize shall collect tax on the fair market value of the prize.
Sub-Section (3): The tax deductible under sub-section (1) or collected under sub-section (2) shall be final tax on the income from prizes or winnings referred to in the said sub-sections.
The tax rate as specified under Division VI of Part III of the First Schedule of Income Tax Ordinance, 2001, shall be:
(1) The rate of tax to be deducted under section 156 on a prize on prize bond or cross-word puzzle shall be 15 percent of the gross amount paid.
(2) The rate of tax to be deducted under section 156 on winnings from a raffle, lottery, prize on winning a quiz, prize offered by a company for promotion of sale, shall be 20 percent of the gross amount paid.
However, with the introduction of Tenth Schedule of Income Tax Ordinance, 2001 the tax rate to be collected on such winning will be increased by 100 percent from persons not appearing on the ATL.
Therefore the tax rate on winning prize bond from person not appearing on ATL will be 30 percent. Similarly, the rate of tax will be 40 percent from persons wining winnings from a raffle, lottery, prize on winning a quiz, prize offered by a company for promotion of sale.
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No refund, input adjustment to be entertained on invoice issued prior or after of blacklisting
KARACHI: Federal Board of Revenue (FBR) said invoices issued by a person prior or after blacklisting for sales tax will not be entertained for refunds or input adjustment.
The FBR issued Sales Tax Act, 1990 updated till June 30, 2019 incorporating amendments brought through Finance Act, 2019.
Section 21 of the Act explained blacklisting and suspension of a taxpayer for sales tax.
Section 21: De-registration, blacklisting and suspension of registration
Sub-Section (1): The Board or any officer, authorized in this behalf, may subject to the rules, de-register a registered person or such class of registered persons not required to be registered under this Act.
Sub-Section (2): Notwithstanding anything contained in this Act, in cases where the Commissioner is satisfied that a registered person is found to have issued fake invoices or has otherwise committed tax fraud, he may blacklist such person or suspend his registration in accordance with such procedure as the Board may by notification in the official Gazette, prescribe.
Sub-Section (3): During the period of suspension of registration, the invoices issued by such person shall not be entertained for the purposes of sales tax refund or input tax credit, and once such person is black listed, the refund or input tax credit claimed against the invoices issued by him, whether prior or after such black listing, shall be rejected through a self-speaking appealable order and after affording an opportunity of being heard to such person.
Sub-Section (4): Notwithstanding anything contained in this Act, where the Board, the concerned Commissioner or any officer authorized by the Board in this behalf has reasons to believe that a registered person is engaged in issuing fake or flying invoices, claiming fraudulent input tax or refunds, does not physically exist or conduct actual business, or is committing any other fraudulent activity, the Board, concerned Commissioner or such Officer may after recording reasons in writing, block the refunds or input tax adjustments of such person and direct the concerned Commissioner having jurisdiction for further investigation and appropriate legal action.
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Harsh penalties for pilferage of transshipped goods
KARACHI: Customs laws has defined harsh penalties for pilferage or replaced enroute of transshipment of goods without payment of duty.
Federal Board of Revenue (FBR) issued Customs Act, 1960 updated till June 30, 2019 incorporating changes brought through Finance Act, 2019.
According to the customs laws
If any goods which are loaded for transshipment, are pilfered, replaced en-route or failed to reach the port of destination, or any person transships goods not allowed to be transshipped;
Then such goods and the conveyance illegally carrying these goods shall be liable to confiscation and any person including the custodian involved in the offence and the bonded carrier shall be liable to a penalty not exceeding ten times the value of the goods and he shall further be liable, upon conviction by a Special Judge, to imprisonment for a term not exceeding seven years.
If any person contravenes any rule relating to transshipment other than mentioned above;
Then such person including the custodian and the inland carrier shall be liable to penalty not exceeding five hundred thousand rupees or three times the amount of duties and taxes involved.
Under Section 121 of the Act, the transshipment of goods without payment of duty has been allowed.
Section 121: Transshipment of goods without payment of duty
Sub-Section (1): Subject to the provisions of section 15 and the rules, the appropriate officer may, on application by the owner of any goods imported at any customs-station and specially and distinctly manifested at the time of importation as for transshipment to some other customs-station or foreign destination, grant leave to transship the same without payment of duty, if any, chargeable on such goods with or without any security or bond for the due arrival and entry of the goods at the customs-station of destination:
Provided that at customs-station where the Custom Computerized System, is operational, the system may automatically authorize transshipment to other customs-station subject to risk selectivity criteria.
Sub-Section (2): The Board may, subject to rules and such conditions as it may deem fit to impose, authorize certain carriers to transport goods under the multimodal, scheme. Goods transported under the multimodal scheme shall be specially and distinctly manifested at the time of importation as for transshipment to some other customs-station or foreign destination and shall not –
(a) require distinct permission for transshipment from the customs-station of first entry into the country to be transported to the customs-station of destination. The principal carrier issuing the multimodal bill of lading or air way bill will be responsible for the sanctity of the cargo during transportation between the customs-station of first entry into the country to the customs-station of destination; and
(b) be subject to the risk management system at the customs station of first entry.
Sub-Section (3): The Board may, subject to such conditions as it may deem fit, grant license to any carrier to carry goods under the multimodal scheme.
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Penalties for smuggling under Pakistan’s customs law
KARACHI: Award of death sentence has been prescribed for smuggling of narcotic drugs under Customs law of Pakistan.
The Federal Board of Revenue (FBR) updated Customs Act, 1969 updated till June 30, 2019 which explained penalties for different penalties.
According Customs Act, 1969:
- If any goods be smuggled into or out of Pakistan:
Such goods shall be liable to confiscation and any person concerned in the offence shall be liable to a penalty not exceeding ten times the value of the goods; and upon conviction by a Special Judge he shall further be liable to imprisonment for a term not exceeding fourteen years and to fine not exceeding ten times the value of such goods:
Provided that, in the case of such goods as may be notified by the Federal Government in the official Gazette, the sentence of imprisonment shall not be less than five years, and the whole or any part of his property shall also be liable to confiscation in accordance with the provisions of the Prevention of Smuggling Act,1977.
- If the smuggled goods are narcotics drugs, psychotropic substances or controlled substances,-
such goods shall be liable to confiscation and any person concerned in the offence shall be liable to –
(a) if the quantity of the narcotic drug, psychotropic substance of controlled substance is one hundred grams or less;
- imprisonment which may extend to two years, or with fine, or with both;
- imprisonment which may extend to seven years and shall also be liable to fine;
(b) if the quantity of the narcotic drug, psychotropic substance or controlled substance exceeds one hundred grams but does not exceed one kilogram;
death or imprisonment for life, or imprisonment for a term which may extend to fourteen years and shall also be liable to fine which may be up to one million rupees;
(c) if the quantity of the narcotic drug, psychotropic substance or controlled substance exceeds the limit specified in clause (b);
Provided that, if the quantity exceeds ten kilograms the punishment shall not be less than imprisonment for life.
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FBR extends last date for filing sales tax, federal excise return
ISLAMABAD: The Federal Board of Revenue (FBR) on has extended the last date for filing sales tax and federal excise return for the month of September 2019.
According to a notification issued on Friday, the FBR extended the last date for making payment of sales tax and federal excise duty for the month of September 2019 to October 22, 2019 from October 15, 2019.
The FBR extended the last date for submitting sales tax and federal excise return for the month to October 25, 2019 from October 18, 2019.
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Sellers must retain CNIC information for six years
ISLAMABAD: Sales tax registered persons selling goods are required to keep record of Computerized National Identity Card (CNIC) details for six years.
Sources in Federal Board of Revenue (FBR) said that the condition of CNIC against sales of goods had been implemented from August 01, 2019. “All the details of CNIC must be maintained by the suppliers for examination and scrutiny purposes,” a tax official said.
Under Section 24 of the Sales Tax Act, 1990, the records and documents must be retained for six years.
“A person, who is required to maintain any record or documents under this Act, shall retain the record and documents for a period of six years after the end of the tax period to which such record or documents relate or till such further period the final decision in any proceedings including proceedings for assessment, appeal, revision, reference, petition and any proceedings before an alternative Dispute Resolution Committee is finalized.”
The government through Finance Act, 2019 introduced significant changes to document the supply chain and made mandatory the information of CNIC on sales under Section 23 of the Sales Tax Act, 1990.
Section 23: Tax Invoices
Sub-Section (1): A registered person making a taxable supply shall issue a serially numbered tax invoice at the time of supply of goods containing the following particulars, in Urdu or English language, namely: –
(a) name, address and registration number of the supplier;
(b) name, address and registration, number of the recipient and NIC or NTN of the unregistered person, as the case may be, excluding supplies made by a retailer where the transaction value inclusive of sales tax amount does not exceed rupees fifty thousand, if sale is being made to an ordinary consumer.
Explanation. – 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:
Provided that the condition of NIC or NTN shall be effective from 1st August, 2019;
(c) date of issue of invoice;
(d) description including count, denier and construction in case of textile yarn and fabric, and quantity of goods;
(e) value exclusive of tax;
(f) amount of sales tax; and
(g) value inclusive of tax:
Provided that the Board may, by notification in the official Gazette, specify such modified invoices for different persons or classes of persons;
Provided further that not more than one tax invoice shall be issued for a taxable supply:
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.
Sub-Section (2): No person other than a registered person or a person paying retail tax shall issue an invoice under this section.
Sub-Section (3): A registered person making a taxable supply may, subject to such conditions, restrictions and limitations as the Board may, by notification in the official Gazette, specify, issue invoices to another registered person electronically and to the Board as well as to the Commissioner, as may be specified.
Sub-Section (4): The Board may, by notification in the Official Gazette, prescribe the manner and procedure for regulating the issuance and authentication of tax invoices.
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Incomplete particulars to make furnished annual return invalid
KARACHI: An income tax return filed by a taxpayer will be treated as invalid if the taxpayer has failed to provide complete particulars as required in return form.
Sources in Federal Board of Revenue (FBR) said that taxpayers should carefully make entries in income tax return form and wealth statement form before submitting.
The sources said that Section 120(3) of Income Tax Ordinance, 2001 stated that a commissioner of Inland Revenue is required to issue a notice to person, who had filed income tax return with incomplete particulars.
The Section 120 of the Ordinance, 2001 explained the assessment of taxpayers on the basis of submitted income and assets declaration.
Section 120: Assessments
Sub-Section (1): Where a taxpayer has furnished a complete return of income (other than a revised return under sub-section (6) of section 114) for a tax year ending on or after the 1st day of July, 2002,—
(a) the Commissioner shall be taken to have made an assessment of taxable income for that tax year, and the tax due thereon, equal to those respective amounts specified in the return; and
(b) the return shall be taken for all purposes of this Ordinance to be an assessment order issued to the taxpayer by the Commissioner on the day the return was furnished.
Sub-Section (1A): Notwithstanding the provisions of sub-section (1), the Commissioner may conduct audit of the income tax affairs of a person under section 177 and all the provisions of that section shall apply accordingly.
Sub-Section (2): A return of income shall be taken to be complete if it is in accordance with the provisions of sub-section (2) of section 114.
Sub-Section (3): Where the return of income furnished is not complete, the Commissioner shall issue a notice to the taxpayer informing him of the deficiencies (other than incorrect amount of tax payable on taxable income, as specified in the return, or short payment of tax payable) and directing him to provide such information, particulars, statement or documents by such date specified in the notice.
Sub-Section (4): Where a taxpayer fails to fully comply, by the due date, with the requirements of the notice under sub-section (3), the return furnished shall be treated as an invalid return as if it had not been furnished.
Sub-Section (5): Where, in response to a notice under sub-section (3), the taxpayer has, by the due date, fully complied with the requirements of the notice, the return furnished shall be treated to be complete on the day it was furnished and the provisions of sub-section (1) shall apply accordingly.
Sub-Section (6): No notice under sub-section (3) shall be issued after the expiry of one hundred and eighty days from the end of the financial year in which return was furnished, and the provisions of sub-section (1) shall apply accordingly.
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Importers require filing declaration within 10 days of goods arrival
KARACHI: Importers are required to file goods declaration within 10 days of arrival of goods at the port of entry.
The Federal Board of Revenue (FBR) issued Customs Act, 1969 update till June 30, 2019 incorporating changes brought through Finance Act, 2019.
Prior to Finance Act, 2019 the importers were allowed to file goods declaration within 15 days.
Section 79 of the Customs Act, 1969 described the filing of declaration and assessment.
Section 79: Declaration and assessment for home consumption or warehousing or transshipment.-
Sub-Section (1): The owner of any imported goods shall make entry of such goods for home consumption or warehousing or transshipment or for any other approved purposes, within ten days of the arrival of the goods, by,-
(a) filing a true declaration of goods, giving therein complete and correct particulars of such goods, duly supported by commercial invoice, bill of lading or airway bill, packing list or any other document required for clearance of such goods in such form and manner as the Board may prescribe ; and
(b) assessing and paying his liability of duty, taxes and other charges thereon, in case of a registered user of the Customs Computerized System:
Provided that if, in case of used goods, before filing of goods declaration, the owner makes a request to an officer of customs not below the rank of an Additional Collector that he is unable, for want of full information, to make a correct and complete declaration of the goods, then such officer subject to such conditions as he may deem fit, may permit the owner to examine the goods and thereafter make entry of such goods by filing a goods declaration after having assessed and paid his liabilities of duties, taxes and other charges:
Provided further that no goods declaration shall be filed prior to ten days of the expected time of arrival of the vessel.
Explanation.- For the purposes of this clause, the assessment and paying of duty, taxes and other charges in respect of transshipment shall be at the port of destination.
Sub-Section (2): If an officer, not below the rank of Additional Collector of Customs, is satisfied that the rate of customs duty is not adversely affected and that there was no intention to defraud, he may, in exceptional circumstances and for reasons to be recorded in writing, permit, substitution of a goods declaration for home consumption for a goods declaration for warehousing or vice versa.
Sub-Section (3): An officer of Customs, not below the rank of Assistant Collector of Customs, may in case of goods requiring immediate release allow release thereof prior to presentation of a goods declaration subject to such conditions and restrictions as may be prescribed by the Board.