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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 needs to collect Rs2,198 billion in first half of current fiscal year

    FBR needs to collect Rs2,198 billion in first half of current fiscal year

    KARACHI: Federal Board of Revenue (FBR) is required to collect Rs2,198 billion during first half of the current fiscal year as per revised performance criteria of International Monetary Fund (IMF).

    The revenue collecting agency has failed to achieve the first quarter performance criteria.

    According to Country Report Pakistan released by IMF on Monday the actual performance criteria for revenue collection was Rs2,367 billion during first half (July – December) of current fiscal year, which has been revised downward by Rs169 billion to Rs2,198 billion.

    This shows that the FBR will need to collect Rs590 billion in the month of December 2019 to achieve the revised performance criteria.

    The FBR’s provisional collection during first five months (July – November) 2019/2020 was Rs1,608 billion.

    As per IMF documents the FBR failed to achieve the first quarter (July – September) 2019/2020 target of Rs1,071 billion and its collection was at Rs964 billion.

    The actual revenue collection target for current fiscal year was Rs5,550 billion. However, the indicative target as per IMF documents has also been revised downward to Rs5,238 billion.

    The FBR has to raise revenue collection to Rs3,520 billion by March 2020 in order to ensure the desired target for current fiscal year.

    As per IMF documents: “Tax revenue is now expected to be 0.5 percent of GDP lower than originally expected: while domestic collection is envisaged to remain strong, growing by over 25 percent y-o-y over FY 2020, growth in trade-related tax revenues is expected to remain subdued as declining imports continue to weigh on collections—more than 40 percent of total tax revenue in Pakistan is collected at the import stage.”

    The FBR has been given revised Indicative Targets for end December 2019 including net tax collection to recognize the faster than expected external adjustment negatively impacting customs revenue, besides net accumulation of tax refund arrears to capture the authorities plan to reflect the end-June stock of tax refund arrears.

  • Tax return filing hits new record at 2.73 million

    Tax return filing hits new record at 2.73 million

    KARACHI: The income tax return filing touches to a new record high of 2.73 million as people making compliance to avoid 100 percent additional tax on persons not appearing on Active Taxpayers List (ATL).

    The income tax return filing increased to 2.73 million on the basis of returns filed till December 22, 2019 for tax year 2018.

    Sources in Federal Board of Revenue (FBR) attributed the record increase in return filing to the amendment to Income Tax Ordinance, 2001 through Finance Act, 2019.

    In the last budget 2019/2020 a new Tenth Schedule was inserted to Income Tax Ordinance, 2001 under which persons not appearing on ATL would liable to pay 100 percent more withholding tax on certain transactions.

    The ATL for tax year 2018 issued on March 01, 2019 in which 1.59 million names were appeared of those taxpayer, who filed their returns by due date.

    However, later the FBR granted extension in date for filing returns due to introduction of a tax amnesty scheme.

    The extension for filing income tax returns for tax year 2018 was granted up to August 09, 2019.

    The return filing up to August 09, 2019 for tax year 2018 jumped up to 2.5 million from 1.59 million returns, which were part of the first ATL issued March 01, 2019.

    The insertion of Tenth Schedule to Income Tax Ordinance, 2001 speed up the return filing by taxpayers in order to avoid higher tax rate on certain transactions.

    Previously, people filing their annual income tax returns after due date were not allowed to appear on the ATL. However, another provision was added to the main statute under which persons by paying penalty can include their name to ATL.

    Therefore, since August 09, 2019 the FBR received around 230,000 tax returns for tax year 2018 till December 22, 2019.

    The FBR will issue ATL for tax year 2019 on March 01, 2020 and till then the prevailing ATL will be applicable for the purpose of withholding tax rates on certain transactions.

  • Benami properties with known sources not to attract penal action

    Benami properties with known sources not to attract penal action

    KARACHI: A person having known source of income for a property and keeps in someone else name will not attract penal action under Benami Transaction laws, sources in Federal Board of Revenue (FBR) said.

    (more…)
  • Final tax regime for certain amount under Income Tax Ordinance

    Final tax regime for certain amount under Income Tax Ordinance

    KARACHI: Federal Board of Revenue (FBR) has defined final tax regime for certain income with certain conditions explained under Income Tax Ordinance, 2001.

    Following are the income falling under Final Tax Regime under the Ordinance:

    Section 5: Tax on dividends

    Section 6: Tax on certain payments to non-residents.—

    Section 7: Tax on shipping and air transport income of a non-resident person.

    Section 5AA: Tax on return on investments in sukuks.

    Section 7A: Tax on shipping of a resident person.

    Section 7B: Tax on profit on debt.

    The Section 8 of the Ordinance explained the scheme and terms and conditions
    General provisions relating to taxes imposed under sections 5, 6 and 7
    (1)-Subject to this Ordinance, the tax imposed under Sections 5, 5AA, 6, 7, 7A and 7B shall be a final tax on the amount in respect of which the tax is imposed and—

    (a) such amount shall not be chargeable to tax under any head of income in computing the taxable income of the person who derives it for any tax year;

    (b) no deduction shall be allowable under this Ordinance for any expenditure incurred in deriving the amount;

    (c) the amount shall not be reduced by —

    (i) any deductible allowance; or

    (ii) the set off of any loss;

    (d) the tax payable by a person under section 5, 5A, 5AA, 6, 7, 7A and 7B shall not be reduced by any tax credits allowed under this Ordinance; and

    (e) the liability of a person under section 5, 6 or 7 shall be discharged to the extent that —

    (i) in the case of shipping and air transport income, the tax has been paid in accordance with section 143 or 144, as the case may be; or

    (ii) in any other case, the tax payable has been deducted at source under Division III of Part V of Chapter X.

  • IR barred from arresting women on tax default

    IR barred from arresting women on tax default

    KARACHI: The offices of Inland Revenue are prohibited for arresting women on charge of tax default. Besides, the offices also cannot arrest a minor.

    According to Income Tax Rules, 2002 there is prohibition against arrest of woman or minor.

    The commissioner of Inland Revenue shall not order the arrest or detention in the civil prison of: a woman; or any person who, in his opinion, is a minor or of unsound mind.

    The rules also envisaged certain conditions on IR officers regarding entry into dwelling house for arresting tax defaulter.

    For the purpose of making an arrest under these rules,-

    (a) no dwelling house shall be entered after sunset and before sunrise;

    (b) no outer door of a dwelling house shall be broken open unless such dwelling house or a portion thereof is in the occupancy of the defaulter and he or any other occupant of the house refuses or in any way prevents access thereto; but, when the person executing any such warrant has duly gained access to any dwelling house, he may break open the door or any room or apartment if he has reason to believe that the defaulter is likely to be found there; and

    (c) no room, which is in the actual occupancy of a woman who, according to the custom of the country, does not appear in public shall be entered into unless the officer authorized to make the arrest has given notice to her that she is at liberty to withdraw and has given her reasonable time and facility for withdrawing.

    In case of illness of a tax defaulter the commissioner can release by cancelling the warrant for the arrest.

    Release on ground of illness.-

    (1) At any time after a warrant for the arrest of a defaulter has been issued, the Commissioner may cancel it on ground of the serious illness of the defaulter.

    (2) Where a defaulter has been arrested, the Commissioner may release him if, in the opinion of the Commissioner of Tax, he is not in a fit state of mind to be detained in the civil prison.

    (3) Where a defaulter has been committed to the civil prison, he may be, released therefrom by the Commissioner on the ground of the existence of any infectious or contagious disease or on the ground of his suffering from any illness.

    (4) A defaulter released under this rule may be re-arrested, but the period of his detention in the civil prison shall not in the aggregate exceed that authorized by rule 164.

  • Valuation to be issued to plug loopholes in sales tax collection on imported consumer goods

    Valuation to be issued to plug loopholes in sales tax collection on imported consumer goods

    KARACHI: Federal Board of Revenue (FBR) to issued sales tax valuation in order to plug revenue leakages on imported consumer items, sources said.

    The sources said that the FBR had identified massive misdeclaration and under invoicing on imported consumer items falling under Third Schedule of Sales Tax Act, 1990.

    In the latest budget 2019/2020, an amendment was introduced to Sales Tax Act, 1990 under which printing of retail price was made mandatory on imported consumer goods.

    The measure was introduced to end the assumed prices in order to recover sales tax on fixed retail prices on imported items.

    The law has been applicable since July 01, 2019 but due to difficulties faced by importers of such goods the FBR allowed relief in declaration without printing of retail prices subject to some conditions.

    The FBR issued Sales Tax General Order (STGO) on August 07, 2019 that the retail price, if not printed at import stage, can be printed at the port of import.

    According to the STGO: “If that is also not possible, the importer shall undertake to print the retail price after clearance of goods and shall pay sales tax on retail price which shall not be less than 130 percent of the customs value increased by assessed customs duties, excise duty and other applicable taxes and charges excluding sales tax.”

    The sources said that tax offices in Karachi conducted survey and found the selling price of imported consumer items was much higher than the declared value at customs clearance stage.

    They said that the finding of the survey had been sent to the FBR headquarters for taking further action.

    The printing of retail prices is mandatory for importers on items such as tea, juices, perfumes, household electrical goods, including air conditioners, refrigerators, deep freezers, televisions, recorders and players, electric bulbs, tube-lights, electric fans, electric irons, washing machines and telephone sets. These items shall also include house hold gas appliance, including cooking range, ovens, geysers and gas heaters.

    Besides items such as foam mattresses, paints, lubricating oils, storage batteries, tyers, motor cycles and auto rickshaws have also been included in the regime of printed retail prices.

    The sources said that as per latest development the FBR had decided to issue valuation of such imported consumer goods in order to realize correct sales tax at import stage.

  • Procedure to make application for income tax refund payment

    Procedure to make application for income tax refund payment

    KARACHI: A taxpayer is allowed to claim refund against excess payment of income tax against total liability during a tax year.

    Federal Board of Revenue (FBR) has notified procedure to apply for income tax refunds.

    The taxpayer should follow the procedure in order to file an application for availing income tax refund:

    Prescribed application for refund of tax.- An application for refund of tax under section 170 shall be made in the following form, namely:-

    The Commissioner,

    ______________ Zone,

    ______________ (City).

    Dear Sir,

    I _________________________________________________ of _________________________________ hereby declare:-

    (a) that my total income computed in accordance with the provisions of Income Tax Ordinance, 2001 (XLIV of 2001), during the year ending on being the income year for the assessment for the year ending on the _______________ amounted to Rs._______________.

    (b) that the total tax chargeable in respect of such total income is Rs._______________.

    (c) that the total amount of tax paid is Rs._______________.

    (d) that I have already filed evidence of payment of tax along with my return of income for the year or I enclose herewith evidence of tax already paid during the tax year for taking credit.

    I, therefore, request that a refund of Rs._______________ may be allowed to me.

    Yours faithfully_________________________

    Signature ____________________________

    NTN_________________________________

    Address_______________________________

    I hereby declare that I am resident/ non-resident and that what is in this application is correct.

    Date ____________________ Signature________________

  • FBR asks professionals to declare annual income, assets

    FBR asks professionals to declare annual income, assets

    ISLAMABAD: Federal Board of Revenue (FBR) has asked professional bodies of doctors, lawyers, engineers etc. to pursue their members for file mandatory declarations of income and assets.

    In a tweet message the FBR said that members of all professional bodies are liable to declare their income and assets during a year through electronic return filing.

    Sources in the FBR said that the authorities had decided to take harsh action against unreported income. They said that professionals of certain bodies were engaged in cash based transactions and avoid declaring true income or file declaration with nominal income.

    The last date for filing income tax returns is December 31, 2019, which was already extended four times as the actual last date for filing income tax returns was September 30, 2019.

    The sources said that the professionals were taking huge amount in term of fee from their clients / patients but mostly in cash bases.

    The sources further said that the FBR would obtain third-party information of such unreported incomes besides assistance would be taken from withholding statements and returns filed by other taxpayers, who made payments.

    They said that Income Tax Rules, 2002 prescribed record keeping by professional in order to verify their declarations.

    The professionals (like medical practitioners, legal practitioners, accountants, auditors, architects, engineers etc.) are required to keep following records:-

    (a) Serially numbered and dated patient-slip/ invoice/ receipt for each transaction of sale or receipt containing the following:-

    (i) taxpayer’s name or the name of his business or profession, address national tax number or CNIC and sales tax registration number, if any;

    (ii) the description, quantity and value of medicines supplied or details of treatment /case/ services rendered (confidential details are not required) and amount charged; and

    (iii) the name and address of the patient/client:

    Provided that the condition of recording address of the patient on the patient slip under this clause shall not apply to general medical practitioners;

    (b) Daily appointment and engagement diary in respect of clients and patients:

    Provided that this clause-shall not apply to general medical practitioners;

    (c) Daily record of receipts, sales, payments, purchases and expenses; a single entry in respect of daily receipts, sales, purchases and different heads of expenses will suffice; and

    (d) Vouchers of purchases and expenses.

  • FBR launches sales tax invoice verification system

    FBR launches sales tax invoice verification system

    ISLAMABAD: Federal Board of Revenue (FBR) has launched online system for verification of invoices, which issued against purchases from retail outlets.

    The FBR launched the integration of sales and purchases by Tier-1 retailers with aim to encourage 100 percent invoice submission to the revenue body.

    The FBR has given deadline of December 15, 2019 to all Tier-1 retailers, who are required to integrate their Point of Sale (POS) with the FBR system for submission of sale invoice on real-time basis.

    The FBR issued following procedure for reduced sales tax on invoices issued through online system:

    • Customers visit the counter to pay for his/her shopping

    • Customer visit the counter to pay for his/her shopping

    • Counter Boy Prepare the Invoice

    • Invoice is forwarded to FBR system for invoice number

    • Fiscal Invoice is generated, encrypted and stored in FBR Sale Data Controller and returns a fiscal invoice number to POS.

    • FBR Sale Data Controller Synch. the data with FBR central server on periodic basis.

    • POS generate the QR Code for fiscal invoice.

    • The receipt is printed out from the POS and physically delivered to the customer

    • Customer receive the printed fiscal invoice and verify it from FBR System using any of proposed mode.

    • On verification of invoice, FBR system mark this invoice for 6 percent tax collection. In case of non-verification of invoice, Bill will be changed as 9 percent tax collection.

    • Customer pay the bill according to the applied tax.

  • IR commissioners empowered to issue trial registration number

    IR commissioners empowered to issue trial registration number

    KARACHI: Commissioners of Inland Revenue have been empowered to issue trial registration number to taxpayers, who failed to comply with notices issued in this regard.

    Officials in Federal Board of Revenue (FBR) said that tax laws empowered IR commissioners to enforce income tax registration.

    They said that a commissioner having jurisdiction over a case may register a person as a taxpayer where he is satisfied that the income of the person is taxable and is required to file a return of income under section 114 of Income Tax Ordinance, 2001.

    The Commissioner shall issue to the taxpayer a letter under sub-section(2) of section 181 to submit an application for registration prescribed under rule 80 along with documents specified therein within a reasonable time given in the said letter.

    In case of compliance NTN certificate shall be issued accordingly.

    “In case of failure of the taxpayer to comply with the letter issued under sub-section (2) of section 181, the Commissioner shall register the taxpayer on a Trial Registration Number (TRN) for which a serially numbered Trial Register shall be maintained by the Commissioner.”

    The Trial Register shall contain the basic information of the taxpayer like name of the person or business, available address, CNIC “if provided”, nature of income generating activity and any other information regarded useful by the Commissioner. In such case, statutory notices shall be issued for assessment of income or other legal obligation of the taxpayer under the Ordinance on TR Number:

    Provided that before allotment of Trial Registration Number the Commissioner shall verify and match the particulars of the taxpayer from the NTN Master Index to avoid duplication of registration.

    In case any assessment is made or any liability is created by the Commissioner under the Income Tax Ordinance, 2001 against the taxpayer, the Commissioner on the basis of information as contained in Trial Register, allot an NTN to the taxpayer within fifteen days of the date of completion of assessment or creation of a liability under the Ordinance.