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 sacks senior auditor for availing plea bargain benefit

ISLAMABAD: The Federal Board of Revenue (FBR) has imposed major penalty of ‘dismissal from service’ upon a senior auditor for availing plea bargain benefit in corruption case.

The FBR on Friday said that Kashif Naseer, Senior Auditor, BS-16 posted at Corporate Regional Tax Office, Lahore had availed the benefits of plea bargain in terms of section 25(b) of National Accountability Ordinance, 1999 as per Accountability Court-III, Sindh, Karachi judgment dated May 23, 2019.

Member (Admn), FBR after examining the case in light of provisions of the Government Servants (Efficiency & Discipline) Rules 1973 imposed the major penalty of “Dismissal from Service” upon Kashif Naseer, Senior Auditor with effect from the date of conviction May 23, 2019.

The FBR said that Kashif Naseer, Senior Auditor had a right to file an appeal to Appellate Authority under Civil Servants (Appeal) Rules, 1977 within a period of 30 days from the date of communication.

October 11, 2019
FBR acquires information of motor vehicle purchasers

KARACHI: Federal Board of Revenue (FBR) has asked motor vehicle registration authorities and car manufacturers to provide information of persons, who are registration or purchasing motor vehicles.

The FBR has advised motor vehicle registration authorities and manufacturers of motor vehicles to provide details of persons whose withholding tax was deducted under Section 231B at the time of motor vehicle registration or purchase of motor vehicles.

The tax authorities also advised the withholding agents to comply with the changes brought through Finance Act, 2019 under which the submission of withholding statement had been made mandatory twice in a year.

The FBR asked the motor vehicle registration authority and car manufacturers to provide information in case of both categories i.e. compliant taxpayers or persons not on the Active Taxpayers List (ATL).

From Tax Year 2020 (July 01, 2019 to June 30, 2020) the persons not appearing on ATL will liable to pay 100 percent higher withholding tax.

The FBR is acquiring information for broadening of tax base purpose. The tax authorities believed that number of individuals were purchasing cars or registering motor vehicles, who were not on the tax roll or in other case compliant but those were concealing true income.

Under Section 165 of the Income Tax Ordinance, 2001 the FBR empowered to obtain information from withholding agents.

While withholding agents are required to provide information of persons making transactions, included:

(a) the name, Computerized National Identity Card Number, National Tax Number and address of each person from whom tax has been collected under Division II of this Part or Chapter XII or the Tenth Schedule or to whom payments have been made from which tax has been deducted under Division III of this Part or Chapter XII or the Tenth Schedule in each half-year

(b) the total amount of payments made to a person from which tax has been deducted under Division III of this Part or Chapter XII or the Tenth Schedule in each half-year

(c) the total amount of tax collected from a person under Division II of this Part 1or Chapter XII or the Tenth Schedule or deducted from payments made to a person under Division III of this Part or Chapter XII or the Tenth Schedule in each half-year; and

(d) such other particulars as may be prescribed

Provided that every person as provided in sub-section (1) shall be required to file withholding statement even where no withholding tax is collected or deducted during the period.

Every prescribed person collecting tax under Division II of this Part or Chapter Xll or the Tenth Schedule or deducting tax under Division III of this Part of Chapter Xll or the Tenth Schedule shall furnish statements under sub-section (l) as per the following schedule, namely:-

(a) in respect of the half-year ending on the 30th June, on or before the 31st day of July; and

(b) in respect of the half-year ending on the 31st December, on or before the 31st day of January.

October 11, 2019
FBR makes mandatory for big retail chains to share real-time sales data from December 01

ISLAMABAD: The big retail chains in the country will share their sales data with the Federal Board of Revenue (FBR) on real-time basis from December 01, 2019.

In order to implement the decision the FBR issued SRO 1203(I)/2019 on Thursday to make amendments in Sales Tax Rules, 2006.

The revenue body notified mandatory integration of sales by Tier-I retailers.

As per notified rules, the FBR said that commencing from December 01, 2019, all Tier-1 retailers shall integrate their retail outlets with FBR’s computerized system for real-time reporting of sale.

According to the Sales Tax Act, 1990, the Tier-1 retailers have been defined as:

(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 Rs600,000;

(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.

The FBR said that the sales of finished fabric and locally manufactured finished articles of textile and textile made-ups and leather and artificial leathers would be entitled to reduced sales tax of 14 percent if sales made through integrated outlets.

The FBR, however, warned that the integrated suppliers who were found to have tampered with the system would not be entitled to claim input adjustment and also not be eligible for reduced sales tax rate.

Further, the FBR would initiate legal proceedings against such activities besides imposing penalty and recovery of tax.

The FBR also amended the rules regarding sales made through social media portals, and said that such sales would have same treatment of sales tax in case reported through point of sale in real-time manner.

October 10, 2019
Account holders with Rs10 million deposits on FBR’s radar

KARACHI: Bank account holders making aggregate deposits of Rs10 million in a month are on radar of Federal Board of Revenue (FBR) for the purpose of broadening of tax base and identifying concealed incomes.

Federal Board of Revenue (FBR) has said that banks are required to provide details of account holders having aggregate deposits of Rs10 million in a month.

The FBR issued Income Tax Ordinance, 2001 updated till June 30, 2019 incorporating changes brought through Finance Act, 2019.

Several changes have been introduced through Section 165A related to furnishing of information by banks of cash withdrawals and deposits.

Section 165A: Furnishing of information by banks

Sub-Section (1): Notwithstanding anything contained in any law for the time being in force including but not limited to the Banking Companies Ordinance, 1962 (LVII of 1962), the Protection of Economic Reforms Act, 1992 (XII of 1992), the Foreign Exchange Regulation Act, 1947 (VII of 1947) and the regulations made under the State Bank of Pakistan Act, 1956 (XXXIII of 1956), if any, on the subject every banking company shall make arrangements to provide to the Board in the prescribed form and manner,—

(a) a list of persons containing particulars of cash withdrawals exceeding fifty thousand Rupees in a day and tax deductions thereon 4[ ], aggregating to Rupees one million or more during each preceding calendar month.;

(b) a list containing particulars of deposits aggregating rupees ten million or more made during the preceding calendar month;

(c) a list of payments made by any person against bills raised in respect of a credit card issued to that person, aggregating to rupees two hundred thousand or more during the preceding calendar month;

(d) a list of persons receiving profit on debt exceeding five hundred thousand rupees and tax deductions thereon during preceding financial year.

Sub-Section (2): Each banking company shall also make arrangements to nominate a senior officer at the head office to coordinate with the Board for provision of any information and documents in addition to those listed in sub-section (1), as may be required by the Board.

Sub-Section (3): The banking companies and their officers shall not be liable to any civil, criminal or disciplinary proceedings against them for furnishing information required under this Ordinance.

Sub-Section (5): Subject to section 216, all information received under this section shall be used only for tax purposes and kept confidential.

October 10, 2019
Tax evading manufacturers, commercial importers supporting traders’ protest

ISLAMABAD: A large segment of tax evaders in manufacturing sector and commercial importers are behind the traders’ protest in order to force tax authorities to withdraw condition of computerized national identity card (CNIC).

The condition of CNIC has been introduced in order to identify persons in supply chain and plug leakages of revenue from manufacturing stage to end-consumers.

In recent surveys of the Federal Board of Revenue (FBR) it has been identified that markets are flooded with goods from domestic and import sources and without payment of duty and taxes.

Sources in FBR said that some manufacturers and importers were supplying unreported goods to such retailers, which sold to end-consumers without payment of duty and taxes.

The traders do not want to become part of documented economy on the behest of manufacturers or commercial importers in order to shelter the tax evasion.

In the past several measures were taken by the government to bring retailers into the tax net but all the times such efforts ended in a failure.

The latest wave of protests by the trade community is another bid to force the FBR to bow down their demand. But this time, the FBR chairman, who is from private sector, is committed to bring traders into the tax net.

The traders on Wednesday announced to observe a countrywide shutter-down strike on October 28 and 29, following the failure of talks with FBR officials.

A protest demonstration was held by the traders against the tax reforms introduced by the government.

The protesting traders attempted to move towards the FBR Headquarters.

However, the police stopped the protesters at the Serena Chowk, where they observed a sit-in.

A few enraged protesters attempted to cause damage to the public properties and tried to remove barbwires in the area.

This prompted the law enforcers to baton-charge the protesters. Meanwhile, the FBR decided to hold talks with the protesters, but they failed to yield any results.

The leaders of the protesting traders’ community claimed that the FBR is not ready to listen to their demands and added that they will not pay unjust tax.

They further that the business community will not accept the condition of presentation of a copy of their CNICs for the sale and purchase of goods.

The traders hoped that the present government led by Pakistan Tehreek-e-Insaf (PTI) would reconsider their demands and will provide them the fix tax scheme.

October 10, 2019
Repayment of drawback of export on imported goods explained

KARACHI: Federal Board of Revenue (FBR) has explained repayment of drawback of the export on imported goods under Customs Act 1969.

The FBR issued Customs Act, 1969 updated till June 30, 2019 incorporating changes brought through Finance Act, 2019.

Following are the provisions explaining the repayment of drawback:

Section 35: Drawback of the export on imported goods

Subject to the subsequent provisions of this Chapter and the rules, when any goods, capable of being easily identified, which have been imported into Pakistan and upon which customs-duties have been paid on importation, are exported to any place outside Pakistan or as provisions or stores for use on board a conveyance proceeding to a foreign territory, seven-eight of such duties shall be repaid as drawback, subject to the following conditions, namely:-

(1) the goods are identified to the satisfaction of an officer of customs not below the rank of Assistant Collector of Customs at the customs-station, to be the same as had been imported, and

(2) the goods are entered for export within two years of the date of their importation, as shown by the records of the custom-house or if such time is extended by the Board or the Collector of Customs for sufficient cause within such extended time:

Provided that the Collector of Customs shall not extend the time beyond three years of the importation of such goods.

Explanation.- For the purposes of this section, the goods shall be deemed to have been entered for export on the date on which the 3 [goods declaration] is delivered to the appropriate officer under section 131.

Section 36: Drawback on goods taken into use between importation and exportation

Notwithstanding anything contained in section 35, the repayment of duty as drawback in respect of goods which have been taken into use between their importation and subsequent exportation shall be made in accordance with the provisions of the rules made in that behalf.

Section 37: Drawback on goods used in the manufacture of goods which are exported

Where it appears to the Board that in respect of goods of any class or description manufactured in Pakistan and exported to any place outside Pakistan, a drawback of customs-duties should be allowed on any imported goods of a class or description used in the manufacture of such exported goods, the Board may, by notification in the official Gazette, direct that drawback shall be allowed in respect of such imported goods to such extent and subject to such condition as may be provided in the rules.

Section 38: Power to declare what goods are identifiable and to prohibit draw-back in case of specified foreign territory

(1) The Board may, from time to time, by notification in the official Gazette, declare what goods shall, for the purposes of this Chapter, be deemed to be not capable of being easily identified.

(2) The 5[Federal Government ] may, from time to time, by notification in the official Gazette, prohibit the payment of drawback upon the exportation of goods or any specified goods or class of goods to any specified foreign port or territory.

Section 39: When no drawback allowed

Notwithstanding anything hereinbefore contained, no drawback shall be allowed-

(a) upon goods which are required to be included in the export manifest and are not so included, or

(b) when the claim is for drawback amounting, in respect of any single shipment, to less than or equal to hundred rupees, or

(c) unless the claim for drawback has been made and established at the time of export.

Section 40: Time of payment of drawback

No such payment of drawback shall be made until the vessel carrying the goods has put out to sea or other conveyance has left Pakistan.

Section 41: Declaration by parties claiming drawback

Every person, or his duly authorized agent, claiming drawback on any goods duly exported, shall make and subscribe a declaration that such goods have been actually exported and have not been relanded and are not intended to be relanded at any place in Pakistan and that such person was at the time of entry outwards and export and continues to be entitled to drawback thereon.

October 10, 2019

FBR updates sales tax rates on mobile phones on import, local supply

KARACHI: Federal Board of Revenue (FBR) has updated sales tax rates on import or local supply of mobile phones to be applicable for Tax Year 2020 (July 01, 2019 to June 30, 2020).

The FBR issued Sales Tax Act, 1990 updated up to June 30, 2019 incorporating changes brought through Finance Act, 2019.

The FBR updated NINTH SCHEDULE of the Sales Tax Act, 1990 to prescribe sales tax rates on mobile phones.

The Table:

S.No.	Description/ Specification of goods	Sales Tax on import or local supply	Sales tax chargeable at the time of registration (IMEI number by CMOs)	Sales tax on supply (payable at the time of supply by CMOs)
1.	Subscriber Identification Module (SIM) Cards			Rs250
2	Cellular mobile phones or satellite phones to be charged on the basis of import value per set, or equivalent value in rupees in case of supply by the manufacturer, at the rate as indicated against each category:–
	A. Not exceeding US$ 30	Rs135	Rs135
	B. Exceeding US$ 30 but not exceeding US$ 100	Rs1,320	Rs1,320
	C. Exceeding US$ 100 but not exceeding US$ 200	Rs1,680	Rs1,680
	D. Exceeding US$ 200 but not exceeding US$ 350	Rs1,740	Rs1,740
	E. Exceeding US$ 350 but not exceeding US$ 500	Rs5,400	Rs5,400
	F. Exceeding US$ 500	Rs9,270	Rs9,270

LIABILITY, PROCEDURE AND CONDITIONS

(i) In case of the goods specified against S.No 1of the Table, the liability to charge, collect and pay tax shall be on the Cellular Mobile Operator (CMO) at the time of supply. In case of the goods specified against S.No 2, the liability to pay sales tax at the time of import shall be on the importer, and the liability to charge, collect and pay sales tax payable on supplies shall be on the Cellular Mobile Operator at the time of registering International Mobile Equipment Identity (IMEI) number in his system.

(ii) The Cellular Mobile Operators shall, if not already registered, obtain registration under the Sales Tax Act, 1990.

(iii) No IMEI shall be registered in his system by a Cellular mobile Operator without charging and collecting the sales tax as specified in the Table.
(iv) The Cellular Mobile Operator shall deposit the sales tax so collected through his monthly tax return in the manner prescribed in section 26 of the Sales Tax Act, 1990, and rules made thereunder.

(v) The Cellular Mobile Operator shall maintain proper records of all IMEI numbers registered for a period of six years, and such records shall be produced for inspection, audit or verification, as and when required, by an authorized officer of Inland Revenue.

(vi) The Pakistan Telecommunication Authority shall provide data regarding IMEI numbers registered with other Cellular Mobile Operators to prevent double taxation on the same IMEI number in case of switching by a subscriber from one operator to another, and to provide data regarding registration of IMEI numbers to the Board on monthly basis.

(via) The sales tax as indicated in column (3) of the Table above shall be paid by the importer, in case of imports and by the manufacturer, in case of locally manufactured cellular mobile phones.

(vii) No adjustment of input tax shall be admissible to the Cellular Mobile Operator or any purchaser of cellular mobile phone against the sales tax charged and paid in terms of this Schedule.

(viii) The tax specified in column (4) of the Table shall be charged, collected and paid with effect from such date as may be specified by the Board and the sales tax specified in column(3) shall stand withdrawn from the date so specified.

The FBR said that notwithstanding anything contained in any other law for the time being in force, the levy, collection and payment of sales tax under Notification No. S.R.O. 460(I)/2013, dated the 30th May, 2013, shall be deemed to always have been lawfully and validly, levied, collected and paid.

October 10, 2019

RTO-II Karachi to assess incomes of lawyers, doctors, CAs, other professionals

KARACHI: Regional Tax Office (RTO) – II Karachi has been authorized to assess incomes of professionals including lawyers, doctors, chartered accountants etc. for assessment of their incomes and enforce income tax returns.

The Federal Board of Revenue (FBR) has revised jurisdiction of Chief Commissioner and Commissioners of Inland Revenue, RTO-II Karachi.

The Zone-I of the RTO-II, Karachi has been assigned jurisdiction over: (i) lawyers, advocates, auditors and chartered accountants, legal consultants, architects and engineers; (ii) doctors, hakeems, homeopathic, doctors, hospitals, clinics, laboratories, diagnostic centers, X-Ray centers, CT-Scans centers, MRI centers, ultrasound centers, nursing homes etc.

Under Section 114 of Income Tax Ordinance, 2001 the filing of income tax returns is mandatory for persons registered with any chamber of commerce and industry or any trade or business association or any market committee or any professional body including Pakistan Engineering Council, Pakistan Medical and Dental Council, Pakistan Bar Council or any Provincial Bar Council, Institute of Chartered Accountants of Pakistan or Institute of Cost and Management Accountants of Pakistan.

The zone has also been assigned jurisdiction over: (iii) chemicals and dyes manufacturers, importers, exporters, distributors and wholesalers; (iv) pharmaceutical manufacturers, importers, distributors/wholesalers including drug stores and chemists.

The FBR said that the commissioner of Zone I of RTO-II Karachi would have jurisdiction over all cases or classes of cases, persons or classes of persons of non-corporate sector including individuals and association of persons (AOPs) of mentioned above sectors other than those specifically assigned to Large Taxpayers Unit (LTU)/LTU-II Karachi, Corporate RTO Karachi or RTO-III or any other zone of RTO-II Karachi whose place of business is situated in the areas falling within the limits of former Baldia Town, Jamshed Town, Liaquatabad Town, Orangi Town, Saddar Town, SITE Town and within the limits of Clifton Cantonment, Karachi Cantonment, Kimari Cantonment and Manora Cantonment.

The Zone-III of the RTO-II, Karachi has been assigned jurisdiction over falling under: education/training/vocational institutions; real estate developers, contractors, dealers builders and cooperative housing societies; travel agents, hajj and umrah operators and visa and immigration consultants.

The FBR has also assigned jurisdictions on various sectors to remaining zones of the RTO-II Karachi.

October 9, 2019
Tax rate on interest income for Tax Year 2020

KARACHI: Federal Board of Revenue (FBR) issued tax rate to be imposed on interest income during Tax Year 2020.

The FBR issued Income Tax Ordinance, 2001 updated up to June 30, 2019 incorporating changes brought through Finance Act, 2019.

The Section 7B of the Income Tax Ordinance, 2001 explained the application of income tax on profit on debt derived by a person during a tax year.

Section 7B: Tax on profit on debt

Sub-Section (1): Subject to this Ordinance, a tax shall be imposed, at the rate specified in Division IIIA of Part I of the First Schedule, on every person, other than a company, who receives a profit on debt from any person mentioned in clauses (a) to (d) of sub-section (1)of section 151.

Sub-Section (2): The tax imposed under sub-section (1) on a person, other than a company, who receives a profit on debt shall be computed by applying the relevant rate of tax to the gross amount of the profit on debt.

Sub-Section (3): This section shall not apply to a profit on debt that –

(a) is exempt from tax under this Ordinance; or

(b) exceeds thirty six million Rupees.

Division IIIA of Part I of the First Schedule for the rate of tax for profit on debt imposed under section 7B shall be—

1. Where profit on debt does not exceed Rs.5,000,000: the tax rate shall be 15 percent

2. Where profit on debt exceeds Rs.5,000,000 but does not exceed Rs.25,000,000: the tax rate shall be 17.5 percent

3. Where profit on debt exceeds Rs.25,000,000 but does not exceed Rs. 36,000,000: the tax rate shall be 20 percent

Section 151 explains persons receiving profit on debt

Section 151: Profit on debt:

Sub-Section (1) Where –

(a) a person pays yield on an account, deposit or a certificate under the National Savings Scheme or Post Office Savings Account;

(b) a banking company or financial institution pays any profit on a debt, being an account or deposit maintained with the company or institution;

(c) the Federal Government, a Provincial Government or a Local Government pays to any person profit on any security other than that referred to in clause (a) issued by such Government or authority; or

(d) a banking company, a financial institution, a company referred

to in sub-clauses (i) and (ii) of clause (b) of sub-section (2) of section 80, or a finance society pays any profit on any bond, certificate, debenture, security or instrument of any kind (other than a loan agreement between a borrower and a banking company or a development finance institution) to any person other than financial institution.

October 9, 2019
Refunds of customs duties to be claimed within one year

KARACHI: Federal Board of Revenue (FBR) has said that the refunds against customs duties would be paid if claims have been made within one year.

The FBR issued Customs Act, 1969 updated till June 30, 2019 incorporating changes brought through Finance Act, 2019.

The FBR explained through Section 33 of the Act that refunds f customs duties would be paid if claims had been made within one year.

Section 33: Refund to be claimed within one year.

Sub-Section (1): No refund of any customs-duties or charges claimed to have been paid or over-paid through inadvertence, error or misconstruction shall be allowed, unless such claim is made within one year of the date of payment.

Sub-Section (2): In the case of provisional payments made under section 81, the said period of one year shall be reckoned from the date of the adjustment of duty after its final assessment.

Sub-Section (3): In the case where refund has become due in consequence of any decision or judgment by any appropriate officer of Customs or the Board or the Appellate Tribunal or the Court, the said period of one year shall be reckoned from the date of such decision or judgment, as the case may be.

Sub-Section (3A): The claim filed under this section shall be disposed of subject to pre-audit within a period not exceeding one hundred and twenty days from the date of filing of such claim:

Provided that the said period may, for reasons to be recorded in writing, be extended by the Collector of Customs for a period not exceeding ninety days.

Sub-Section (4): No refund shall be allowed under this section, if the sanctioning authority is satisfied that the incidence of customs duty and other levies has been passed on to the buyer or consumer.

Sub-Section (5): For the purpose of this section, the Board may, by notification in the official Gazette, specify the jurisdiction and powers of the officers of Customs to sanction refund in terms of amount of Customs duty and other taxes involved.

Section 34: Power to give credit for, and keep account-current of duties and charges.

An officer of customs, not below the rank of Assistant Collector of customs may, in the case of any mercantile firm or public body, if he so thinks fit, instead of requiring payment of customs duties or charges as and when they become due, keep with such firm or body an account-current of such duties and charges, which account shall be settled at intervals of not exceeding one month, and such firm or body shall make a deposit or furnish a security sufficient in the opinion of that officer to cover the amount which may at any time be payable by it in respect of such duties or charges.

October 9, 2019