Pkrevenue.com

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.

  • CRTO Karachi sets up monitoring cell to identify fake, flying invoices

    CRTO Karachi sets up monitoring cell to identify fake, flying invoices

    KARACHI: In order to identify taxpayers involved in fake and flying invoices, a monitoring cell has been established at Corporate Regional Tax Office (CRTO) Karachi.

    The cell has been established keeping in view the declining trend in sales tax payments during first quarter (July – September) 2019/2020.

    The monitoring cell has been assigned to identify cases involved in fake and flying invoices, fake transactions, sales suppressions and streamline tax mechanism.

    Jafar Raza Kazmi, Commissioner Inland Revenue, Zone-IV of the CRTO has been assigned to supervise the monitoring cell.

    According to a notification issued on Thursday, the cell would perform the following functions:

    — To analyze / monitor sales tax monthly sales tax returns to identify cases where action under Section 38 of the Sales Tax Act, 1990 is required to be taken on the basis of abnormalities causing huge decline in sales tax payment etc.

    — The cell shall prepare desk audit report showing details of records / data scrutinized discrepancies observed and potential revenue involved.

    — After due diligence, the cell shall take action under Section 38 of the Sales Tax Act, 1990 against the person as per law and submit the detailed report with impact of revenue to the chief commissioner CRTO Karachi.

    The monitoring cell will focus and take such cases for action under Section 38 of the Sales Tax Act, 1990, which may yield substantial revenue.

    The cell has been strictly advised that action in specific cases should be taken with reasonable interval of time. The exercise should not be made frequently and be restricted to cases involving sizeable revenue leakages.

    Section 38: Authorised officers to have access to premises, stocks, accounts and records –

    Sub-Section (1) Any officer authorised in this behalf by the Board or the Commissioner shall have free access to business or manufacturing premises, registered office or any other place where any stocks, business records or documents required under this Act are kept or maintained belonging to any registered person or a person liable for registration or whose business activities are covered under this Act or who may be required for any inquiry or investigation in any tax fraud committed by him or his agent or any other person; and such officer may, at any time, inspect the goods, stocks, records, data, documents, correspondence, accounts and statements, utility bills, bank statements, information regarding nature and sources of funds or assets with which his business is financed, and any other records or documents, including those which are required under any of the Federal, Provincial or local laws maintained in any form or mode and may take into his custody such records, statements, diskettes, documents or any part thereof, in original or copies thereof in such form as the authorised officer may deem fit against a signed receipt.

    Sub-Section (2): The registered person, his agent or any other person specified in sub-section (1) shall be bound to answer any question or furnish such information or explanation as may be asked by the authorised officer.

    (3) The department of’ direct and indirect taxes or any other Government department, local bodies, autonomous bodies, corporations or such other institutions shall supply requisite information and render necessary assistance to the authorised officer in the course of inquiry or investigation under this section.

  • FBR launches Urdu version official website

    FBR launches Urdu version official website

    ISLAMABAD: Federal Board of Revenue (FBR) on Thursday launched its official website in national language in order to aware large population of the country to understand taxation issues.

    Chairman FBR Syed Muhammad Shabbar Zaidi inaugurated the Urdu website of FBR.

    The Urdu version of website has been launched to facilitate the taxpayers.

    Member FATE Mustafa Sajjad Hassan and Chief FATE Tehmina Aamer briefed the Chairman FBR about the features of the Urdu website.

    The senior officers of FBR HQ, Member Administration Nausheen Javed Amjad, Member IR Operations Seema Shakil, Member Customs Operations Jawwad Awais Agha, Special Assistant to Chairman Zubair Bilal were also present on the inauguration.

    The Urdu website offers online facilitation and services to the taxpayers about Income Tax, Sales Tax, Customs and FBR Maloomaat.

    The Urdu version contains special features which contain useful reservoir of information relating to taxation and customs.

    With the launch of Urdu website, the people can not only file their complaints in Urdu but can also seek responses of their queries in the national language.

    The website offers facilitation to the people to read the Tax and Customs laws and rules, SROs and Circulars in Urdu language.

    Chairman FBR appreciated the efforts of FATE Wing officers and staff who worked tirelessly to make the launch of Urdu website possible in the shortest possible time for the facilitation of the taxpayers.

    Chairman FBR stated on the inauguration that FBR will soon achieve complete automation in all areas which will certainly bring great ease for the taxpayers in future.
    Urdu website can be accessed by clicking on the Urdu button on the FBR’s website fbr.gov.pk.

    The Urdu website can also be logged into by accessing urdu.fbr.gov.pk.

  • Notices for filing income tax returns of past 10 years may be issued

    Notices for filing income tax returns of past 10 years may be issued

    ISLAMABAD: Tax officials have been empowered to issue notices to taxpayers for filing income tax returns of past 10 years.

    Sources in Federal Board of Revenue (FBR) said that there are many cases had been identified where persons had accumulated assets and making huge amount transactions but not filing their income tax returns and wealth statements.

    The sources said that the tax authorities may invoke Section 114(5) of the Income Tax Ordinance, 2001 for the purpose to compel such persons to file their returns of past 10 years.

    The Section 114(5) of the Ordinance stated: “A notice under sub-section (4) may be issued in respect of one or more of the last five completed tax years or assessment years.

    “Provided that in case of a person who has not filed return for any of the last five completed tax years, notice under sub-section (4) may be issued in respect of one or more of the last ten completed tax years.”

    Sub-Section (4) of Section 114 of the Ordinance stated that subject to sub-section (5), the Commissioner may, by notice in writing, require any person who, in the Commissioner’s opinion, is required to file a return of income under this section for a tax year or assessment year but who has failed to do so to furnish a return of income for that year within thirty days from the date of service of such notice or such longer or shorter period as may be specified in such notice or as the Commissioner may allow.

  • Tax officials empowered to recover short payment without notice

    Tax officials empowered to recover short payment without notice

    KARACHI: Tax officials have been authorized to recover short payment of sales tax through freezing bank accounts of taxpayers without serving show cause notice.

    Officials in Federal Board of Revenue (FBR) said that the officers of Inland Revenue had been authorized to make recovery of short payment of sales tax as declared in return of a taxpayer by taking measures including freezing bank account without issuing a show cause notice.

    The officials said that under Section 11A of Sales Tax Act, 1990, the powers of Inland Revenue officers had been explained.

    Section 11A: Short paid amounts recoverable without notice

    Notwithstanding any of the provisions of this Act, where a registered person pays the amount of tax less than the tax due as indicated in his return, the short paid amount of tax along with default surcharge shall be recovered from such person by stopping removal of any goods from his business premises and through attachment of his business bank accounts, without giving him a show cause notice and without prejudice to any other action prescribed under section 48 of this Act or the rules made thereunder:

    Provided that no penalty under section 33 of this Act shall be imposed unless a show cause notice is given to such person.

  • FBR takes measures to improve trade facilitation in Balochistan

    FBR takes measures to improve trade facilitation in Balochistan

    KARACHI: Federal Board of Revenue (FBR) has taken measures to improve trade facilitation and curb smuggling in Balochistan. Accordingly a senior BS-21 officer of Pakistan Customs Service(PCS) has been specifically posted as Chief Collector, Balochistan with dedicated Collectorates for Enforcement and Appraisement.

    Model Customs Collectorate (Preventive), Quetta was established to curb the menace of smuggling. Dedicated anti-smuggling units have been set-up with the available manpower and logistics and tasked to man the long and porous Pak Afghan border.

    The FBR has also established Model Customs Collectorate, Appraisement Quetta to facilitate trade and to expedite customs clearances from dry port and customs border stations in Balochistan.

    On directives of Chairman FBR Syed Shabbar Zaidi, adequate staff has been posted in the far flung customs stations of Taftan, Panjgur and Chaman border in order to ensure immediate clearance of goods especially perishable items like dry / fresh fruits and vegetables and to ensure clearances through the WeBOC-Glo automated system.

    Member Customs Operations has instructed all customs formations operating in Balochistan to ensure speedy clearances while at the same time to curb the menace of smuggling and apprehend those involved in these illegal movement of goods.

  • Method of accounting for computing income tax

    Method of accounting for computing income tax

    KARACHI: Federal Board of Revenue (FBR) has said that a person’s income chargeable to tax shall be computed in accordance with the method of accounting regularly employed by such person.

    The FBR issued Income Tax Ordinance, 2001 updated till June 30, 2019 incorporating amendments made through Finance Act, 2019. The FBR explained method of accounting in Section 32 of the Ordinance.

    Section 32: Method of accounting

    Sub-Section (1): Subject to this Ordinance, a person’s income chargeable to tax shall be computed in accordance with the method of accounting regularly employed by such person.

    Sub-Section (2): Subject to sub-section (3), a company shall account for income chargeable to tax under the head “Income from Business” on an accrual basis, while other persons may account for such income on a cash or accrual basis.

    Sub-Section (3): The Board may prescribe that any class of persons shall account for income chargeable to tax under the head “Income from Business” on a cash or accrual basis.

    Sub-Section (4): A person may apply, in writing, for a change in the person’s method of accounting and the Commissioner may, by order in writing, approve such an application but only if satisfied that the change is necessary to clearly reflect the person’s income chargeable to tax under the head “Income from Business”.

    Sub-Section (5): If a person’s method of accounting has changed, the person shall make adjustments to items of income, deduction, or credit, or to any other items affected by the change so that no item is omitted and no item is taken into account more than once.

    Section 33: Cash-basis accounting

    A person accounting for income chargeable to tax under the head “Income from Business” on a cash basis shall derive income when it is received and shall incur expenditure when it is paid.

    Section 34: Accrual-basis accounting

    Sub-Section (1): A person accounting for income chargeable to tax under the head “Income from Business” on an accrual basis shall derive income when it is due to the person and shall incur expenditure when it is payable by the person.

    Sub-Section (2): Subject to this Ordinance, an amount shall be due to a person when the person becomes entitled to receive it even if the time for discharge of the entitlement is postponed or the amount is payable by instalments.

    Sub-Section (3): Subject to this Ordinance, an amount shall be payable by a person when all the events that determine liability have occurred and the amount of the liability can be determined with reasonable accuracy.

    Sub-Section (5): Where a person has been allowed a deduction for any expenditure incurred in deriving income chargeable to tax under the head “Income from Business” and the person has not paid the liability or a part of the liability to which the deduction relates within three years of the end of the tax year in which the deduction was allowed, the unpaid amount of the liability shall be chargeable to tax under the head “Income from Business” in the first tax year following the end of the three years.

    Sub-Section (5A): Where a person has been allowed a deduction in respect of a trading liability and such person has derived any benefit in respect of such trading liability, the value of such benefit shall be chargeable to tax under the head “Income from Business” for the tax year in which such benefit is received.

    Sub-Section (6): Where an unpaid liability is chargeable to tax as a result of the application of sub-section (5) and the person subsequently pays the liability or a part of the liability, the person shall be allowed a deduction for the amount paid in the tax year in which the payment is made.

  • Payment for transactions above Rs50,000 must be made through crossed cheque

    Payment for transactions above Rs50,000 must be made through crossed cheque

    KARACHI: Federal Board of Revenue (FBR) has made it mandatory for buyers to make payment above Rs50,000 through crossed cheque or banking instruments ensuring transfer of payment to seller’s account.

    The FBR issued Sales Tax Act, 1990 updated till June 30, 2019 incorporating amendments brought through Finance Act, 2019. Under Section 73 of the Act, the FBR made it mandatory for buyers to make payment for any transaction above Rs50,000 through crossed cheque or through any banking instrument.

    Section 73: Certain transactions not admissible

    Sub-Section (1): Notwithstanding anything contained in this Act or any other law for the time being in force, payment of the amount for a transaction exceeding value of fifty thousand rupees, excluding payment against a utility bill, shall be made by a crossed cheque drawn on a bank or by crossed bank draft or crossed pay order or any other crossed banking instrument showing transfer of the amount of the sales tax invoice in favour of the supplier from the business bank account of the buyer:

    Provided that online transfer of payment from the business account of buyer to the business account of supplier as well as payments through credit card shall be treated as transactions through the banking channel, subject to the condition that such transactions are verifiable from the bank statements of the respective buyer and the supplier.

    Sub-Section (2): The buyer shall not be entitled to claim input tax credit, adjustment or deduction, or refund, repayment or draw-back or zero-rating of tax under this Act if payment for the amount is made otherwise than in the manner prescribed in sub-section (1), provided that payment in case of a transaction on credit is so transferred within one hundred and eighty days of issuance of the tax invoice.

    Sub-Section (3): The amount transferred in terms of this section shall be deposited in the business bank account of the supplier, otherwise the supplier shall not be entitled to claim input tax credit, adjustment or deduction, or refund, repayment or draw-back or zero-rating of tax under this Act.

    Explanation— For the purpose of this section, the term “business bank account” shall mean a bank account utilized by the registered person for business transactions, declared to the Commissioner in whose jurisdiction he is registered 1[through Form STR-1 or change of particulars in registration database.

  • Provisional release of offended imported goods

    Provisional release of offended imported goods

    KARACHI: The collector of customs has been empowered to allow provisional release of imported goods, on which any offence is detected, against duty and payment and submission of bank guarantee for penalty amount.

    The Federal Board of Revenue (FBR) issued Customs Act, 1969 updated till June 30, 2019 incorporating the changes brought through Finance Act, 2019.

    According to the Customs Act, 1969, where any offence is detected in respect of imported goods which are not liable to confiscation or needed for evidence at a later stage, the Collector of Customs may, on written request of owner of the goods, allow release of the same on payment of duty, taxes or other charges and furnishing bank guarantee or pay order against the amount of any penalty or fine which may be imposed on such goods.

    The FBR also explained the clearance for home consumption under Section 83 of the Act.

    It said that when the owner of any goods entered for home-consumption and assessed under section 80 or 81 has paid the import duty and other charges, if any, in respect of the same the appropriate officer, if he is satisfied that the import of the goods is not prohibited or in breach of any restrictions or conditions applying to the import of such goods, may make an order for the clearance of the same:

    Provided that, at customs-stations where the Customs Computerized System is operational the system may clear the goods through system generated clearance documents.

    (2) Where the owner fails to pay import duty and other charges within ten days from the date on which the same has been assessed under sections 80, or 81, he shall be liable to pay surcharge at the rate of KIBOR plus three percent on import duty and other charges payable on such goods.

  • Buyers, sellers jointly responsible for payment of unpaid tax

    Buyers, sellers jointly responsible for payment of unpaid tax

    KARACHI: The Federal Board of Revenue (FBR) has placed significant responsibility on both buyers and sellers in the supply chain for any instance where the payment of tax fails to be deposited into the national treasury.

    (more…)
  • FBR explains chargeability of tax on income from property

    FBR explains chargeability of tax on income from property

    KARACHI: The rent received or receivable by a person during a tax year is chargeable to tax under head of income from property.

    The FBR issued Income Tax Ordinance, 2001 updated June 30, 2019 and explained the taxability on income from property under Section 15.

    Section 15: Income from property

    Sub-Section (1): The rent received or receivable by a person for a tax year, other than rent exempt from tax under this Ordinance, shall be chargeable to tax in that year under the head “Income from Property”.

    Sub-Section (2): Subject to sub-section (3), “rent” means any amount received or receivable by the owner of land or a building as consideration for the use or occupation of, or the right to use or occupy, the land or building, and includes any forfeited deposit paid under a contract for the sale of land or a building.

    Sub-Section (3): This section shall not apply to any rent received or receivable by any person in respect of the lease of a building together with plant and machinery and such rent shall be chargeable to tax under the head “Income from Other Sources”.

    Sub-Section (3A): Where any amount is included in rent received or receivable by any person for the provision of amenities, utilities or any other service connected with the renting of the building, such amount shall be chargeable to tax under the head “Income from Other Sources”.

    Sub-Section (4): Subject to sub-section (5), where the rent received or receivable by a person is less than the fair market rent for the property, the person shall be treated as having derived the fair market rent for the period the property is let on rent in the tax year.

    Sub-Section (5): Sub-section (4) shall not apply where the fair market rent is included in the income of the lessee chargeable to tax under the head “Salary”.

    Sub-Section (6): Income under this section derived by an individual or an association of persons shall be liable to tax at the rate specified in Division VIA of Part I of the First Schedule.

    Sub-Section (7): The provisions of sub-section (1), shall not apply in respect of an individual or association of persons who derive income chargeable to tax under this section not exceeding two hundred thousand rupees in a tax year and does not derive taxable income under any other head.

    Section 15A: Deductions in computing income chargeable under the head “Income from Property”

    Sub-Section (1): In computing the income of a company chargeable to tax under the head “Income from Property” for a tax year, a deduction shall be allowed for the following expenditures or allowances, namely:-

    (a) In respect of repairs to a building, an allowance equal to one-fifth of the rent chargeable to tax in respect of the building for the year, computed before any deduction allowed under this section;

    (b) any premium paid or payable by the company in the year to insure the building against the risk of damage or destruction;

    (c) any local rate, tax, charge or cess in respect of the property or the rent from the property paid or payable by the company to any local authority or government in the year, not being any tax payable under this Ordinance;

    (d) any ground rent paid or payable by the company in the year in respect of the property;

    (e) any profit paid or payable by the company in the year on any money borrowed including by way of mortgage, to acquire, construct, renovate, extend or reconstruct the property;

    (f) where the property has been acquired, constructed, renovated, extended, or reconstructed by the company with capital contributed by the House Building Finance Corporation or a scheduled bank under a scheme of investment in property on the basis of sharing the rent made by the Corporation or bank, the share in rent and share towards appreciation in the value of property (excluding the return of capital, if any) from the property paid or payable by the company to the said Corporation or the bank in the year under that scheme;

    (g) where the property is subject to mortgage or other capital charge, the amount of profit or interest paid on such mortgage or charge;

    (h) any expenditure, not exceeding six per cent of the rent chargeable to tax in respect of the property for the year computed before any deduction allowed under this section, paid or payable by the company in the year wholly and exclusively for the purpose of deriving rent chargeable to tax under the head, “Income from Property” including administration and collection charges;”

    (i) any expenditure paid or payable by the company in the tax year for legal services acquired to defend the company’s title to the property or any suit connected with the property in a court; and

    (j) where there are reasonable grounds for believing that any unpaid rent in respect of the property is irrecoverable, an allowance equal to the unpaid rent where—

    (i) the tenancy was bona fide, the defaulting tenant has vacated the property or steps have been taken to compel the tenant to vacate the property and the defaulting tenant is not in occupation of any other property of the company;

    (ii) the company has taken all reasonable steps to institute legal proceedings for the recovery of the unpaid rent or has reasonable grounds to believe that legal proceedings would be useless; and

    (iii) the unpaid rent has been included in the income of the company chargeable to tax under the head “Income from Property” for the tax year in which the rent was due and tax has been duly paid on such income.

    Sub-Section (2): Where any unpaid rent allowed as a deduction under clause (j) of sub-section (1) is wholly or partly recovered, the amount recovered shall be chargeable to tax in the tax year in which it is recovered.

    Sub-Section (3): Where a person has been allowed a deduction for any expenditure incurred in deriving rent chargeable to tax under the head “Income from Property” and the person has not paid the liability or a part of the liability to which the deduction relates within three years of the end of the tax year in which the deduction was allowed, the unpaid amount of the liability shall be chargeable to tax under the head “Income from Property” in the first tax year following the end of the three years.

    Sub-Section (4): Where an unpaid liability is chargeable to tax as a result of the application of sub-section (3) and the person subsequently pays the liability or a part of the liability, the person shall be allowed a deduction for the amount paid in the tax year in which the payment is made.

    Sub-Section (5): Any expenditure allowed to a person under this section as a deduction shall not be allowed as a deduction in computing the income of the person chargeable to tax under any other head of income.

    Sub-Section (6): The provisions of section 21 shall apply in determining the deductions allowed to a person under this section in the same manner as they apply in determining the deductions allowed in computing the income of a person chargeable to tax under the head “Income from Business”.

    Sub-Section (7): Notwithstanding sub-section (6) of section 15, the provisions of this section shall apply to an individual or an association of persons deriving income exceeding Rs. 4 million under section 15, who opts to pay tax at the rate specified in Division I of Part I of the First Schedule.