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 to update major initiatives under agreement with traders associations

ISLAMABAD: Federal Board of Revenue (FBR) to update major initiatives regarding small shopkeepers and traders on January 22, 2020.

A meeting of traders associations with FBR officials was held on Thursday at FBR House, Islamabad. Both the sides agreed on completing formation market committees within next two days.

It is also decided to hold a joint meeting on January 22, 2020 in which the FBR will announce major initiatives taken as per agreement signed on October 30, 2019.

Following is the 11-point agreement between the tax authorities and traders associations signed on October 30, 2019:

01. The tax rate shall be lowered to 0.5 percent from 1.5 percent for traders having turnover up to Rs100 million.

02. No liability on a trader having up to Rs100 million to collect / deposit withholding tax on transactions.

03. Threshold of annual electricity bill of Rs600,000 for mandatory sales tax registration has been increased to Rs1.2 million.

04. Turnover tax for sectors having lower returns will be revisted with consultation with traders associations.

05. Tax issues of jewelers will be resolved in consultation with jewelers associations.

06. The renewal license fees on middlemen will be revisited.

07. To resolve traders taxation issues a desk at FBR headquarters will be set up with immediate effect. A BS-20/21 officer will be designated to resolve the traders’ problems.

08. For new registration of traders a simple income tax return form in Urdu Language will be introduced. Trade associations will cooperation in FBR’s registration drive.

09. Which trader will be exempted from registration having 1000 square feet shop will be decided by traders committees.

10. The registration of those retailers engaged in wholesale business will be decided in consultation with traders community.

11. The FBR will take no action on sales transactions without CNIC information till January 31, 2020.

January 9, 2020
Sale integration mandatory for retailer consuming electricity above Rs1.2 million

KARACHI: A retailer, who is consuming electricity above Rs1.2 million in a year, the online integration through point of sale has been made mandatory.

Definition of the term Tier I retailer has been elaborated to include a retailer falling in any one or more of the categories contained in said definition.

A retailer whose cumulative electricity bill for last 12 consecutive months exceeded Rs 600,000 was included in definition of Tier I retailer.

The said limit of Rs 600,000 has been enhanced to Rs 1,200,000 through Tax Laws (Second Amendment) Ordinance, 2019.

Further, Federal Board of Revenue (FBR) has been empowered to prescribe any person or class of persons to be considered a Tier-I Retailer.

The amended definition of Tier-I Retailer is as under:

“Tier-1 retailer” means a retailer falling in any one or more of the following categories, namely:–

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 center, excluding kiosks;

c) a retailer whose cumulative electricity bill during the immediately preceding twelve consecutive months exceeds Rupees twelve hundred thousand;

d) a wholesaler-cum-retailer, engaged in bulk import and supply of consumer goods on wholesale basis to the retailers as well as on retail basis to the general body of the consumers;

e) a retailer, whose shop measures one thousand square feet in area or more; and

f) any other person or class of persons as prescribed by the Board.

January 9, 2020
FBR allows filing Annexure H for July-August 2019 to claim sales tax refund

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

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

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

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

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

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

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

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

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

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

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

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

January 9, 2020
Committee working on providing protection to smart phone manufacturers: FBR

In a significant move towards fostering the digital landscape and supporting local smartphone manufacturing, the Federal Board of Revenue (FBR) announced on Thursday a drastic reduction in taxes on imported smartphones.
(more…)

January 9, 2020
Provincial registered taxpayers require to pay advance income tax

KARACHI: Persons registered for sales tax with the provincial revenue authorities are required to pay advance income tax to Federal Board of Revenue (FBR) on the basis turnover declared before the provincial revenue authorities.

According to Section 147A of Income Tax Ordinance, 2001, every provincial sales tax registered person shall be liable to pay adjustable advance tax at the rate of three per cent of the turnover declared before the provincial revenue authority.

The Section 147A is read as:

Advance tax from provincial sales tax registered person.-

Sub-Section (1): Every provincial sales tax registered person shall be liable to pay adjustable advance tax at the rate of three per cent of the turnover declared before the provincial revenue authority.

Sub-Section (2): The advance tax under sub-section (1) shall be paid monthly at the time when sales tax return is to be filed with the provincial revenue authority.

Sub-Section (3): Advance tax paid under this section may be taken into account while working out advance tax payable under section 147.

Sub-Section (4): The provisions of this Ordinance shall apply to any advance tax due under this section as if the amount due were tax due under an assessment order.

Sub-Section (5): A taxpayer who has paid advance tax under this section for a tax year shall be allowed a tax credit for that tax in computing the tax due by the taxpayer on the taxable income of the taxpayer for that year.

Sub-Section (6): A tax credit allowed for advance tax paid under this section shall be applied in accordance with sub-section (3) of section 4.

Sub-Section (7): A tax credit or part of a tax credit allowed under this section for a tax year that is not able to be credited under sub-section (3) of section 4 for the year shall be refunded to the taxpayer in accordance with section 170.

Sub-Section (8): This section shall not apply to a person whose name was appearing in the active taxpayers’ list on the thirtieth day of June of the previous tax year.

January 8, 2020
FBR establishes help desks for resolving issues in automated sales tax refunds

ISLAMABAD: Federal Board of Revenue (FBR) on Wednesday established help desks at various Regional Tax Offices (RTOs) and Large Taxpayers Units (LTUs) in order to facilitate taxpayers regarding resolving issues pertaining to Fully Automated Sales Tax e-Refund (FASTER).

The FBR nominated officers at RTOs and LTUs in order to resolves queries and issues regarding filing of Annexure-H and issuance of refunds under FASTER system.

The FBR nominated following officers for help desks:

01. Bilal Zamir, Deputy Commissioner – IR, LTU Lahore.

02. Ahmed Faiz, Assistant Commissioner-IR, RTO Faisalabad.

03. Najam- ul -Hassan Sial, Assistant Commissioner –IR, RTO Faisalabad.

04. Hafiz Muhammad Waris, IRAO, RTO-II Lahore.

05. Muhammad Suleman, Senior Auditor, RTO-II Lahore.

06. Malik M Javed Iqbal, Assistant Commissioner-IR, CRTO Lahore.

07. Ms. Sharmeen Qamar, Assistant Commissioner – IR, CRTO Lahore.

08. Aminullah Kakar, Deputy Commissioner-IR, CRTO Karachi.

09. Shahid Rehan, Senior Auditor, CRTO Karachi.

10. Sana Baluch, Deputy Commissioner-IR, RTO-III Karachi.

11. Abdul Sattar Palh, Assistant Director Audit, RTO-III Karachi.

12. Muhammad Imran Ali, Deputy Commissioner-IR, RTO Sialkot.

13. Muhammad Qamar Minhas, Deputy Commissioner-IR, RTO Multan.

14. Nadeem Ahmed, Deputy Commissioner-IR, RTO Multan.

15. Fayyaz Ahmed, Deputy Commissioner-IR, RTO Multan.

16. Ms. Riffat Aziz, Deputy Commissioner-IR, RTO Gujranwala.

17. Muhammad Ali, Assistant Commissioner-IR, RTO Gujranwala.

18. Amjad Ali Moroojo, Inland Revenue Audit Officer, LTU Karachi.

January 8, 2020
FBR chairman on 14 days leave

The Chairman of the Federal Board of Revenue (FBR), Syed Muhammad Shabbar Zaidi, is set to take a 14-day leave, according to an official notification issued on Tuesday. The leave is effective from January 6, 2020, to January 19, 2020.
(more…)

January 7, 2020
FBR to launch simplified tax return form for small traders

ISLAMABAD: Federal Board of Revenue (FBR) is set to launch simplified income tax return form for small retailers, sources said on Tuesday.

“The FBR is likely to issue the return form for small return forms in pursuance to the agreement between the tax authorities and traders associations signed on October 30, 2019,” a senior tax official said.

The official said that the FBR had finalized all the formalities to facilitate the small traders as envisaged in the agreement.

The FBR has already extended the last date for filing income tax returns for tax year 2019 up to January 31, 2020.

Certain relaxation to traders have already been announced through Tax Laws (Second Amendment) Ordinance, 2019.

The term “trader” has been defined to mean an individual engaged in business of buying and selling of goods in the same state, including a retailer and a wholesaler but excluding a distributor.

According to PwC A F Ferguson Chartered Accountants the concessions provided to traders are as under:

(i)The general rate of minimum tax payable (under section 113 of the ITO 2001) has been reduced from 1.5 percent to 0.5 percent for tax year 2020 for traders having turnover up to Rs. 100 million. However, for traders who have filed income tax returns for tax year 2018, the tax liability for tax years 2019 and 2020 should not be less than the tax liability for tax year 2018, to become eligible for reduced rate of Minimum Tax of 0.5 percent.

(ii)Individual having turnover of Rs. 50 million or more in any of the preceding tax years is liable to deduct tax under section 153 while making payments against supply of goods, services and contracts.

Through the Second Amendment Ordinance, traders being individuals having turnover upto Rs. 100 million have been exempted from deducting tax under section 153 while making payment against supply of goods, services and contracts. The Board is expected to clarify the year with respect to which turnover of Rs100 million will be calculated by the trader.

January 7, 2020
Higher inflation jacks FBR’s revenue collection up: SBP

KARACHI: Higher inflation has jacked up the revenue collection for Federal Board of Revenue (FBR) besides other factors including increase in tax rates and reinstatement of tax on telecom services, State Bank of Pakistan (SBP) said on Monday.

The SBP in its quarterly report on state of economy for July – September 2019/2020 said that the overall FBR taxes grew 15.2 percent in first quarter of 2019/2020, compared to the 8.8 percent rise noted in the same quarter of the last fiscal year.

This higher growth can be attributed to: (i) an increase in sales tax rates; (ii) reinstatement of taxes on telecom services; (iii) an upward revision of tax rates on various salary slabs; (iv) increase in interest rates and higher tax on profit on debt;3 (v) upward revision in the federal excise duty (FED) rates; and (vi) the abolishment of the zero rating regime on five export-oriented sectors.

“In addition to these measures, the impact of higher inflation also boosted revenue mobilization.”

For 2019/2020, the SBP’s projections at the start of the year (July 2019) clocked in at an elevated range of 11-12 percent. Not only was this range higher than previously projected, but it was also in excess of the medium-term target of 5-7 percent.

Despite this improvement, the FBR managed to achieve only 17.3 percent of the annual target of Rs 5,555.0 billion for 2019/2020. “This means that tax revenues would require a substantially higher growth in the remaining 9 months of the year to achieve the full year target.”

Moreover, import-related taxes, representing nearly half of FBR taxes, would remain under stress due to the ongoing declining trend in imports. Dutiable imports, in particular, declined sharply in the first quarter of 2019/2020.

Encouragingly, the fiscal authorities have introduced some initiatives to facilitate business and individual tax payers and to broaden the tax base.

For instance, in order to provide hassle-free refunds to exporters, the FBR has introduced the Fully Automated Sales Tax e-Refund (FASTER) system for tackling refund claims within 72 hours.

The FBR has also launched a mobile application, “FBR Tax Asaan,” to facilitate taxpayers in paying sales tax and claiming refunds.

In addition, video tutorials are prepared and uploaded online to guide taxpayers in filing their income tax returns.

These efforts to simplify and streamline the taxation mechanism have also contributed to the improvement in Pakistan’s ranking in the World Bank’s Ease of Doing Business: the digitization of tax collecting procedures was cited as one of the drivers of the improvement in the country’s ranking. In addition, the government has continued its drive to increase documentation in the economy.

However, businesses are resisting some of these documentation measures, such as the CNIC condition on business-to-business (B2B) and business-to-consumer (B2C) transactions.

January 7, 2020
KTBA seeks FBR clarification on tax ordinance

KARACHI: Karachi Tax Bar Association (KTBA) on Monday urged Federal Board of Revenue (FBR) to issue necessary clarification related to issues in recently promulgated tax ordinance.

The KTBA sent a letter to Syed Shabbar Zaidi, Chairman, FBR and pointed out anomalies in the Tax Laws (Second Amendment) Ordinance, 2019 for clarification.

The KTBA highlighted that Sub-section 4 has been added to section 73 of Sales Tax Act, 1990, under which sales to an unregistered person by a registered manufacture cannot be made for more than Rs10 million in a month and Rs100 million in a year, failing which input tax will be disallowed proportionately.

Considering the implication of the phrase of unregistered person [i.e. singular term] used in drafting of the law, instead of the phrase unregistered persons [plural term], it implies that the restriction is applicable on sales to a single unregistered person instead of cumulative sales to all unregistered person(s).

In order to ensure that intent of law is not suffered by any legal infirmity due to any unintended or inadvertent drafting, the clarification must be issued in this respect on urgent note, it added.

It further pointed out that in addition to the above, it should also be clarified as to whether the all unregistered person will be effected or only those unregistered person who actually were required to be registered in Sale Tax but didn’t ?

In the event, the law is intended to cover all unregistered persons, without any discrimination, certain serious ramification would follow because of the fact that Manufacturers won’t be able to make sale to various Government/other authorities, armed forces hospitals, Universities, Charities & EPZ entities, which by law, are not required to be registered at all, in the first place.

The KTBA said that it is important to define the category of unregistered person who should not suffer due to any adverse implication of the law. Hence, a clarification is necessitated in this context.

The tax bar further highlighted the amendments introduced related to business license.
Through the Tax Laws (Second Amendment) Ordinance, 2019, various penalties have been prescribed for person who has not obtained business license, while the procedure to obtain business license has not been prescribed as yet.

It is not possible to get a Business License either for any person or for any tax commissioner to issue one.

An unnumbered and undated draft SRO was issued by the FBR in July 2019, whereby Draft rules 83A to 83E were proposed in the Income Tax Rules, 2002 for the purpose, which were not finalized yet.

January 6, 2020