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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 launch crackdown against non-compliant professionals

    FBR to launch crackdown against non-compliant professionals

    KARACHI: Federal Board of Revenue (FBR) will initiate action against professionals including lawyers, doctors and chartered accountants, who are not on the Active Taxpayers List (ATL).

    Sources in FBR told PkRevenue.com that Section 114 of Income Tax Ordinance, 2001 explained persons or companies required to file their income tax returns.

    The FBR sources said that on the directives of the government the tax machinery had launched massive drive against undocumented economy and tax evasion.

    The sources said that professionals had also come under the FBR radar under the ongoing drive.

    They said that return filing is a mandatory for a resident person 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 sources said that many professionals are working in the undocumented economy and receiving fees without issuing invoices.

    Sources in Regional Tax Office (RTO)-II Karachi told that recently survey teams had pointed out many businessmen, doctors, chartered accountants, cost accountants, lawyers and other professionals were not paying taxes as per their income.

    The sources said that in some cases investigation had been conducted where professionals were taking huge sum of amount from companies as benefits, besides frequently going abroad.

    Some FBR officials told that they had filed suits regarding against decisions of the board and lawyers hired for the cases demanded payment in cash instead banking transactions.

    The sources said that the filing of income tax returns has been extended up to August 02, 2019 for all the categories of individuals and companies.

    After the expiry of date the FBR will launch mega drive against the non-compliant professionals, the sources added.

  • FBR not to reduce GST below 17 percent on petroleum products

    FBR not to reduce GST below 17 percent on petroleum products

    KARACHI: Federal Board of Revenue (FBR) to maintain general sales tax at 17 percent on all petroleum products in coming months as agreed by the Pakistani authorities with the International Monetary Fund (IMF).

    Pakistan has committed with the IMF for taking many steps for curbing powers of authorities in issuing statutory regulatory orders (SROs), eliminating exemptions and maintaining GST on petroleum products at 17 percent.

    Through SRO 700(I)/2019 dated June 30, 2019, the FBR notified sales tax at 17 percent on supply of all petroleum products for the month of July 2019. The petroleum products are included: petrol, high speed diesel, kerosene oil and light speed diesel oil.

    The Letter of Intent (LoI) presented by Pakistan for IMF loan program, the country assured the fund of eliminate the legal authorization for the executive to grant tax exemptions/concessions through Statutory Regulatory Orders (SROs) without prior National Assembly approval.

    “We understand that the use of SRO needs to be subject to greater scrutiny and limited discretion. To that end, we have adopted the necessary revisions and amendments to the various relevant tax ordinances to further limit or eliminate the use of SROs to genuine emergencies, in line with best international practices,” according to the LoI.

    The authorities have also assured the Fund of refraining from issuing any SRO reducing the GST rate below 17 percent on petroleum products.

    For Modernize the Public Finance Management Framework, Pakistan has adopted an organic budget law that will minimize variance in budget authorizations during the year, which shall also require ex-post parliamentary approval, restrict virements, expand the content of annual budget statements, define accounting standards, and provide the legal basis for a well-defined cash management system and establishment of a treasury single account (TSA).

    For Enforcing fiscal discipline, this will include strengthening the enforcement mechanism of the FRDLA through aligning the annual report presented by the Minister of Finance (MoF) to the National Assembly with the content and analysis prescribed in the Act. “Also, we will expand the capacity of the MoF for macro-fiscal work. Moreover, proper identification and monitoring of fiscal risks from SOEs, PPPs, IPPs and development projects will be strengthened through the establishment of a fiscal risk unit in the MoF, which will work in coordination with the PPP Authority.

    “We are aware that PPP projects, while bringing great benefits, can also be the source of important risks. Thus, we are committed to strengthening the PPP legal framework. To this end, we are conducting a legal analysis of the current system to determine if amendments to the PPP law are required or, alternatively, whether enacting secondary legislation is sufficient, drawing on the expertise of our development partners.

    “We will also make sure that proposed financial vehicles such as the Pakistan Infrastructure Bank is created in line with best international governance standards.”

    Pakistani authorities informed the Fund about creating a Treasury office that would conduct sound commitment controls and cash management, closely coordinating with the debt management unit.

    “We will strengthen the debt management office and will ensure greater coordination across the different relevant units. Elements of this strategy will include centralizing the issuance and management of public debt and developing a new Medium-Term Debt Strategy. To support our consolidation efforts and reduce our financing requirements, we will lengthen the maturity profile of public debt and will introduce new market instruments to widen the investors’ base, also transparently accounting for all borrowing and contingent liabilities.

    “We will ensure that any collateralized public external debt or external arrears would be properly accounted.”

  • Elimination of zero rating, other policy and administrative measures to generate Rs733.47 billion

    Elimination of zero rating, other policy and administrative measures to generate Rs733.47 billion

    KARACHI: Federal Board of Revenue (FBR) to generate additional revenue of Rs733.47 billion during current fiscal year after abolishing zero-rating of sales tax and other policy and administrative measures.

    Pakistan has outlined its strategy for enhancing revenue collection before the International Monetary Fund (IMF) through eliminating exemptions, distortion and other policy and administrative measures.

    These budgetary measures likely enhance tax to GDP ratio by 1.7 in the fiscal year 2019/2020.

    The FBR will generate additional revenue of Rs222.77 billion from measures taken through budget 2019/2020 in the sales tax, which included:

    Petroleum products levy increase to 15 PRs (and set as a floor) and

    GST rate at 17 percent (set as a floor)

    Cancel SRO # 480 and bring steel sector, edible oil and medium to large retailers to 17 percent GST regime

    Extend the list of products under the retail price taxation – Third Schedule (home appliances, paint.., currently under SRO # 480)

    Cancel SRO#1125 and bring exportable sectors to standard GST regime at 17 percent rate, with immediate cash refund for exported goods only

    Remove certain items from exemptions (packaged food), and apply GST tax at 17 percent.

    Increase GST on sugar from 8 percent to 17 percent

    Redefine the exemption available to Cottage Industry

    An additional amount of Rs90.114 billion estimated under Federal Excise Duty (FED) through following measures:

    0.2 Increase of FED on cigarettes and remove the third tier.

    Introduce FED on cigarettes coming from non tariff areas

    Increase/introduce FED on sugary drinks to 13 percent

    Increase FED on cement from 1.5 Rs per kg to 2 Rs

    Additional amount of Rs324.98 billion estimated through eliminating exemptions and other distortions in Income Tax, such as

    Personal Income Tax (PIT): lower the threshold to Rs400,00 and Rs600,000 for non-salaried and salaried individuals respectively, increase tax rates Increase in rate of minimum tax u/s 113 from 1.25 to 1.5 percent

    Extend the regime of higher withholding tax rates for non-filers

    Resume Telecom withholding rate

    Change in income tax regime of Services sector (banks and insurance companies)

    Abolish BMR credit incentives

    Increase the holding period liable to tax for capital gain tax on immovable properties and securities

    Taxation of gifts from unrelated person at standard PIT rate

    Aligning value of immovable properties with the market rates

    Reduction of number of withholdings and simplification of procedures

    Amortization of expenditure in BOT projects over useful life of the project instead of current 10 year amortization

    Long term lease hold right may be considered as purchase of property

    Taxation of formal agricultural sector within the scope of federal government

    Rationalization of tax credit available to Non-profit organizations (NPOs)

    An amount of Rs60 billion has been estimated to be generated through measures taken under Customs duty:

    Increase in Additional Customs Duty Rate on finished and luxury goods

    Withdrawal of exemption on import of LNG and subjected to 5 percent duty

    Revenue administrative measures to generate Rs 35.6 billion through following steps:

    Implement Track and Trace system for Tobacco Products

    Automated monitoring of GST and income at retail (point of sale)

    Changes in ADCIR mechanism

    Separation of audit & adjudication functions

    Making procedure for prosecution easier

    Enabling and strengthening FBR field formations

    Cleansing of databases and integration to enable effective data mining

    Enabling efficient enforcement through investment in FBR

    Infrastructure and process reengineering

    Taxpayer education and facilitation

  • FBR urged to allow filing amnesty scheme declarations

    FBR urged to allow filing amnesty scheme declarations

    KARACHI: Federal Board of Revenue (FBR) has been urged to allow those persons to file their declarations who have paid duty and taxes under amnesty scheme 2019 by due date.

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  • FBR rescinds 42 non-operational sales tax general orders

    FBR rescinds 42 non-operational sales tax general orders

    ISLAMABAD: Federal Board of Revenue (FBR) on Monday rescinded 42 non-operational Sales Tax General Orders (STGOs).

    The FBR issued STGO 101/2019 and rescinded the following STGOs being non-operational, transposed to Sales tax Act, 1990 or Sales Tax Rules, 2006, with immediate effect:

    01. STGO No. 03/2004, Dated 12th June, 2004 related to consolidation of STGOs; desirable provisions being transposed to the Sales Tax Rules, 2006.

    02. STGO No. 04/2004, Dated 4th September, 2004, Amendment in STGO 3/2004

    03. STGO No. 01/2005, Dated 2ist April, 2005, e-filing of Sales Tax return at LTU, Karachi and Lahore – Redundant STGO

    04. STGO No. 02/2005, Dated 15th August, 2005, Amendment in STGO 1/2005.

    05. STGO No. 03/2005, Dated 1st September, 2005, Repayment of Sales Tax to Duty Free Shops on locally manufactured goods.

    6 STGO No. 04/2005, Dated 29th September, 2005, Special Procedure for collection and payment of S.T. on vehicles.

    07. STGO No. 01/2006 Dated 5th June, 2006, procedure for payment of S.T. against advance receipt.

    08. STGO No. 03/2006 Dated 28th July, 2006, issues relating to steel sector

    09. STGO No. 06/2006 Dated 8th September, 2006, Amendment in STGO 3/2006.

    10 STGO No. 01/2007 Dated 10th January, 2007, Mitigating the hardships of Islamabad based taxpayers.

    11. STGO No. 02/2007 Dated 6th February, 2007 Refund claims relating to local supply made by the five export oriented zero-rated sectors.

    12. STGO No. 03/2007 Dated 30th July, 2007 issues relating to Commercial Importers.

    13. STGO No. 04/2007 Dated 21st August, 2007 procedure for e-filing of ST returns.

    14. STGO No. 05/2007 Dated 25th August, 2007, payment of S.T. by Steel Melters and re-rolling mills operating on self-generation basis.

    15. STGO No. 06/2007 Dated 28th August, 2007, transfer of jurisdiction of collectorate of S.T. & FE now RTO, Rawalpindi to RTO, Islamabad.

    16. STGO No. 22/2008 Dated 26th June, 2008, revision of S.T. Rate, printing of retail price.

    17. STGO No. 32/2008 Dated 8th July, 2008 issues relating to solvent extraction units.

    18. STGO No. 1/2010 Dated 20th January, 2010 Fiscal relief to rehabilitate the economic life in NWFP, FATA, installment in arrears.

    19. STGO No.3/2010 Dated 27th January, 2010 Refund of Sales Tax by Customs Collectorate.

    20. STGO No. 11/2010 Dated 30th March, 2010, Delivery of sales tax registration certificates to registered persons of Gilgit Baltistan.

    21. STGO No. 18/2010 Dated 10th May, 2010, Input tax adjustment to Pakistani registered person against their purchases from AJK registered persons.

    22. STGO No. 19/2010 Dated 13th May, 2010 Filing and processing of expeditious refunds by IT system of FBR.

    23. STGO No.20/2010 Dated 1st July, 2010 Revision of Sales Tax rates w.e.f. 1st July, 2010 printing of retail price.

    24. STGO No.35/2010 Dated 23rd September, 2010 revision of Sales Tax rates w.e.f. 1st July, 2010 printing of retail price.

    25. STGO No.37/2010 Dated 24th September, 2010 Establishment of CSTRO.

    26. 26 STGO No.49/2010 Dated 30th November, 2010 revision of Sales Tax rates w.e.f. 1st July, 2010 printing of retail price.

    27. STGO No.50/2010 Dated 23rd December, 2010 revision of Sales Tax rates w.e.f. 1st July, 2010 printing of retail price.

    28. STGO No. 1/2011 Dated 8th January, 2011 filing and processing of expeditious refund by IT system of FBR.

    29. STGO No.3/2011 Dated 24th June, 2011 Revision of Sales Tax rates w.e.f. 1st July, 2011 printing of retail price.

    30. STGO No.4/2011 Dated 27th June, 2011, monitoring committee for the steel sector.

    31. STGO No.9/2011 Dated 26th August, 2011 Monitoring committee for the steel sector.

    32. STGO No. 10/2011 Dated 26th August, 2011 Monitoring committee for the steel sector.

    33. STGO No.28/2013 Dated 5th July, 2013 Revision of Sales Tax rates w.e.f. 13th June, 2013 Printing of retail price.

    34. STGO No.34/2013 Dated 16th August, 2013 Uniform procedure for action under sub-section (4) of Section 21 of the Act.

    35. STGO No.27/2014 Dated 18th March, 2014 Levy of 2 percent extra tax on the supply of auto parts and accessories, tyres and tubes etc.

    36. STGO No.66/2014 Dated 21st July, 2014 Collection of Sales Tax from retailers in terms of sub-section (9) of section 3 of the Act, read with SRO 608(I)/2014.

    37. STGO No.68/2014 Dated 11th August, 2014 Clarification regarding persons liable to be registered but not actually registered in terms of rule-2(3)(ii) of the Sales Tax Special Procedure (Withholding) Rules, 2007.

    38. STGO No. 117/2015 Dated 14th July, 2015 Procedure for issuance of STGOs for grant / withdrawal and rejection of zero-rating on electricity and gas to RPs falling under SRO 1125(I)/2011.

    39. STGO No. 18/2016 Dated 9th February, 2016 Procedure for adjustment of S.T. by Steel melters under sub-rule-2C of rule-58H.

    40. STGO No. 107/2016 Dated 20th September, 2016 Procedure for issuance of STGOs for grant / withdrawal and rejection of zero-rating on furnace oil, diesel oils and coal to RPs falling under SRO 1125(I)/2011.

    41. STGO No. 130/2016 Dated 2nd November, 2016 Processing of application of exemption under sr.no. 48 of table-1 of 6th schedule of the Act.(Grant in aid).

    42. STGO No. 144/2018 Dated 12th July, 2018 Procedure for adjustment of S.T. by Steel melters under sub-rule-2C of rule-58H.

  • Reduced sales tax rates on supply of gold, jewelry imposed

    Reduced sales tax rates on supply of gold, jewelry imposed

    The Federal Board of Revenue (FBR) has introduced significant amendments through the Finance Act, 2019, bringing gold, jewelry, and other precious articles into the sales tax ambit by implementing reduced rates on supplies.

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  • Immovable property cannot be purchased without bank account: FBR

    Immovable property cannot be purchased without bank account: FBR

    ISLAMABAD: Federal Board of Revenue (FBR) has barred purchase of immovable property by any persons making payment without banking channels.

    FBR sources told PkRevenue.com that in this regard amendment had been made to Income Tax Ordinance, 2001 in this regard.

    The sources said that amendment had been made to Income Tax Ordinance, 2001 which explained that immovable property valuing more than Rs5 million and other assets more than Rs1 million cannot be transferred without a bank accounts.

    The new section introduced through Finance Act, 2019 is reproduced as under:

    “75A. Purchase of assets through banking channel.

    (1) Notwithstanding anything contained in any other law, for the time being in force, no person shall purchase—

    (a) immovable property having fair market value greater than five million Rupees; or

    (b) any other asset having fair market value more than one million Rupees, otherwise than by a crossed cheque drawn on a bank or through crossed demand draft or crossed pay order or any other crossed banking instrument showing transfer of amount from one bank account to another bank account.

    (2) For the purposes of this section in case of immoveable property, fair market value means value notified by the Board under sub-section (4) of section 68 or value fixed by the provincial authority for the purposes of stamp duty, whichever is higher.

    (3) In case the transaction is not undertaken in the manner specified in sub-section (1),—

    (a) such asset shall not be eligible for any allowance under sections 22, 23, 24 and 25 of this Ordinance; and

    (b) such amount shall not be treated as cost in terms of section 76 of this Ordinance for computation of any gain on sale of such asset.”

  • FBR postpones implementation of new immovable property valuations

    FBR postpones implementation of new immovable property valuations

    ISLAMABAD: Federal Board of Revenue (FBR) has postponed the implementation of new valuation of immovable properties for major cities of the country for calculation of tax.

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  • FBR allows reduced duty rates for import of certain CBU vehicles

    FBR allows reduced duty rates for import of certain CBU vehicles

    KARACHI: Federal Board of Revenue (FBR) has allowed reduced rate of customs duty on import of certain automotive vehicles in Completely Built Units (CBUs) under Automotive Development Policy 2016-2020.

    Following are the automotive vehicles, which are granted reduced customs duty rates on import:

    1. Agricultural Tractors, having an engine capacity exceeding 26 kW but not exceeding 75kW (PCT code 8701.9220, 8701.9320) at 15 percent.

    2. Agricultural Tractors (other than mentioned at S. No. 1 above) (PCT Code 8701.9100, 8701.9400, 8701.9500) at 10 percent.

    3. Fully dedicated LNG buses (CBU) (PCT Code 8702.9030) at one percent

    4. Fully dedicated LPG buses (CBU) (PCT Code 8702.9040) at one percent

    5. Fully dedicated CNG buses (CBU) (PCT Code 8702.9050) one percent.

    6. Hybrid Electric Vehicle (HEV) (CBU) (PCT code 8702.2090, 8702.3090) at one percent.

    7. Hybrid Electric Vehicle (HEV) (CBU) (PCT code 8704.2214, 8704.2294, 8704.2340, 8704.3240) at one percent.

    8. Trailers (PCT code 87.16) at 15 percent

  • Aviation industry allowed duty free import of aircraft, spare parts

    Aviation industry allowed duty free import of aircraft, spare parts

    KARACHI: Federal Board of Revenue (FBR) has allowed duty free import of aviation related goods including aircraft and spare parts under National Aviation Policy 2015.

    According to Finance Act, 2019 following goods related to aviation have been allowed duty free import:

    1. Aircraft HS Code 8802.4000 at zero percent customs duty under condition whether imported or acquired on wet or dry lease. In case of M/s Pakistan International Airlines (PIA) Corporation this exemption shall be admissible on and from the 19th March, 2015.

    2. Spare parts Respective headings at zero percent for use in aircraft, trainer aircraft and simulators.

    3. Maintenance Kits Respective headings at zero percent for use in trainer aircraft (8802.2000 & 8802.3000).

    4. Machinery, equipment & tools respective headings at zero percent for setting up Maintenance, Repair & Overall (MRO) workshop by MRO company recognized by Aviation Division.

    5. Machinery, equipment, operational tools, furniture& fixture respective headings at zero percent on one time basis for exclusive use of New/Greenfield airports by company authorized by Aviation Division.

    6. Aviation simulators Respective headings zero percent on one time basis for aircrafts by airline company recognized by Aviation Division.

    The FBR said that for the purposes of this Part, the following conditions shall apply besides the conditions as specified in column (5) of the Table below:—

    (i) the Chief Executive, or the person next in hierarchy duly authorized by the Chief Executive or Head of the importing company shall certify that the imported goods/items are the company’s bonafide requirement. He shall furnish all relevant information online to Pakistan Customs Computerized System against a specific user ID and password obtained under section 155D of the Customs Act, 1969 (IV of 1969). In already computerized Collectorates or Customs stations where the Pakistan Customs Computerized System is not operational, the Director Reforms and Automation or any other person authorized by the Collector in this behalf shall enter the requisite information in the Pakistan Customs Computerized System on daily basis, whereas entry of the data obtained from the customs stations which have not yet been computerized shall be made on weekly basis;

    (ii) the exemption shall be admissible on production of certificate by the Aviation Division, Government of Pakistan to the effect that the intending importer is operating in the country or intends to operate in the county in the airline sector;

    (iii) the list of imported items is duly approved by the Aviation Division, Government of Pakistan in line with Policy Framework approved by the Government of Pakistan;

    (iv) the Chief Executive, or the person next in hierarchy duly authorized by the Chief Executive or Head of the importing company shall furnish an undertaking to the customs authority at the time of import that the goods imported shall be used for the purpose as defined/notified by the Aviation Division, Government of Pakistan under the Aviation Policy; and

    (v) in case of deviation from the above stipulations, the Collector of Customs shall initiate proceedings for recovery of duty and taxes under the relevant laws.