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ISLAMABAD: Federal Board of Revenue (FBR) has explained levy of withholding tax on profit on debt for tax year 2019/2020 applicable from July 01, 2019.
The FBR said that every person, other than a company, receiving profit on debt from persons mentioned in clause (a) to (d) of sub-section (1) of Section 151 are separately taxed at the rates provided in Division IIIA of Part I of the First Schedule.
The section 151 explains:
151. Profit on debt. — (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.
The FBR said that prior to the Finance Act, 2019, the rates were 10 percent where profit on debt was up to Rs5 million, 15 percent where profit on debt was more than Rs5 million but not more than Rs25 million and 15 percent where profit of debt exceeding Rs25 million.
Through Finance Act, 2019, the rates of imposition of tax under Section 7B mentioned in Division IIIA, Part I of the First Schedule have been enhanced as:
01. Where profit on debt does not exceed Rs5 million, the tax rate shall be 15 percent;
02. Where profit on debt exceeds Rs5 million but does not exceed Rs25 million, the tax rate shall be 17.5 percent; and
03. Where profit on debt exceeds Rs25 million but does not exceed Rs36 million, the tax rate shall be 20 percent.
The FBR said that where the profit on debt exceeds Rs36 million in a tax year, section 7B will not be applicable and the profit on debt will not be separately taxed for persons other than companies.
In such cases, profit on debt will be chargeable to tax under the head ‘income from other sources’ under section 39 and tax shall be imposed at the rates specified in paragraph (1) or (2), as the case may be, of Division I, Part I of the First Schedule.
ISLAMABAD: Federal Board of Revenue (FBR) has estimated around Rs20 billion as revenue loss due to illicit trade of tobacco products.
The FBR on Tuesday said that the tobacco sector in Pakistan contributed significant revenue in 2018-2019 amounting to Rs 117 Billion (Rs 90.854 billion FED and Rs. 26.147 Billion sales tax).
However, Pakistan is also facing problem with the illicit trade in tobacco products, which includes undeclared local production, smuggling of tobacco products of foreign brands and counterfeit production. “The illicit trade in tobacco products costs Pakistan more than Rs. 20 billion a year,” the FBR said.
In order to prevent leakage of revenue, under-reporting of production and sales of tobacco products and to ensure proper payment of FED and Sales Tax on the manufacture and sale of tobacco products, the FBR is mandated to licence the implementation of a track and trace system; which is to be developed, operated and maintained by the licensee for tobacco products manufactured in and imported into Pakistan.
To this end, the FBR is inviting applications for grant of licence to be issued under the Sales Tax Rules of 2006 for the development, maintenance and operation of track and trace system in accordance with the provisions of the rules and the instructions specified herein below.
The successful applicant in compliance with SRO 250(I)/2019 dated 26.02.2019 shall implement a track and trace system, including high security tax Stamps/Markers/Codes which includes unique, secure and non-removable identification markings (hereafter referred to as unique identification markings) combined with state-of-the-art electronic monitoring and tracking systems, for the purpose of protecting existing revenue and to facilitate the generation of further revenue streams through the effective reduction of the illicit trade of tobacco products in Pakistan.
The FBR said that Pakistan ratified the Framework Convention on Tobacco Control (FCTC) on 3rd November 2004 and acceded to the FCTC Protocol to Eliminate Illicit Trade in Tobacco Products on 29th June 2018. Article 8.2of the FCTC Protocol requires Pakistan to establish a tracking and tracing system, to be controlled by Pakistan, for all tobacco products that are manufactured in, imported into or transiting through its territory.
Pakistan has to embark on a project to implement a track and trace system for tobacco products to meet its national need to monitor and protect its revenues and address the high level of illicit trade within its borders, and to meet its international obligations under FCTC to implement a track and trace system that can form part of a regional and/or global international track and trace regime for tobacco products.
KARACHI: Federal Board of Revenue (FBR) has imposed major penalty on four customs officials for misconduct and inefficiency.
The FBR on Monday issued four different office orders to imposed major penalty including demotion to lower grade and compulsory retirement.
The FBR imposed the major penalty of “Reduction to the lower post of UDC” upon Qamar Jamal, Appraising Officer (BS-16), Model Customs Collectorate of Port Muhammad Bin Qasim. The FBR found the official guilty of misconduct and inefficiency.
The FBR imposed the major penalty of “Reduction to the lower post of Appraising Officer” upon Amir Ahmad Samoo, Principal Appraiser (BS-16), Model Customs Collectorate of Appraisement-West, Karachi. The FBR found the official guilty of misconduct and inefficiency.
The FBR imposed the major penalty of “Compulsory Retirement” upon Rao Muhammad Aslam, Appraising Officer/ (Examiner) (BS-16), Model Customs Collectorate of Appraisement-East, Karachi. The FBR found the official guilty of misconduct and inefficiency.
The FBR imposed the major penalty of “Reduction to a lower post of UDC” upon Nasir Iqbal, Inspector (BS-16) (Posted as Examining Officer) in Model Customs Collectorate (Appraisement-West), Karachi. The FBR found the official guilty of misconduct and inefficiency.
KARACHI: Federal Board of Revenue (FBR) has issued withholding tax rates on payment for goods and services during tax year 2019/2020 under Section 153 of Income Tax Ordinance, 2001.
The FBR said that every prescribed person shall collect withholding tax under Section 153 of Income Tax Ordinance, 2001 from resident persons and permanent establishment in Pakistan of non-resident at the time the amount is actually paid.
Under Section 153(1)(a) for sale of rice, cotton seed oil and edible oil, the tax rate shall be 1.5 percent of the gross amount.
Persons not appearing in the Active Taxpayers’ List : The applicable tax rate is to be increased by 100% (Rule-1 of Tenth Schedule to the Ordinance), i.e. 3 percent of the gross amount
Tax should be collected on supply made by distributors of fast moving consumer goods: two percent of gross amount in case of company; 2.5 percent of gross amount in case of other than company.
Persons not appearing in the Active Taxpayers’ List The applicable tax rate is to be increased by 100% (Rule-1 of Tenth Schedule to the Ordinance), i.e.: 4 percent of the gross amount in case of company; 5 percent of the gross amount in case of other than company.
For sale of any other goods: 4 percent of the gross amount in case of company; 4.5 percent of the gross amount in case of other than company.
Persons not appearing in the Active Taxpayers’ List: The applicable tax rate is to be increased by 100% (Rule-1 of Tenth Schedule to the Ordinance), i.e.: 8 percent of the gross amount in case of a company; 9 percent of the gross amount in case of other than a company.
Goods: No deduction of tax where payment is less than Rs. 75,000/- in aggregate during a financial year [S.153(1)(a)].
The FBR said that it shall be minimum tax for all except in the following cases where it shall not be minimum tax on sale or supply of goods, by:
(i) a company being manufacturers of such goods or
(ii) Public company listed on registered Stock Exchange in Pakistan.
The FBR said that under Section 153(1)(b) the tax rate should be collected at 3 percent in case:
(i) i. Transport services, freight forwarding services, air cargo services, courier services, man power outsourcing services, hotel services, security guard services, software development services, IT Services and IT enabled services as defined in clause (133) of Part I of the Second Schedule, tracking services, advertising services (other than by print or electronic media), share registrar services, engineering services, car rental services, building maintenance services, services rendered by Pakistan Stock Exchange Ltd. & Pakistan Mercantile Exchange Ltd. , inspection, certification, testing & training services.;
Persons not appearing in the Active Taxpayers’ List :The applicable tax rate is to be increased by 100% (Rule-1 of Tenth Schedule to the Ordinance), i.e. 6 percent of the gross amount.
ii. In case of rendering or providing of services other than as mentioned at (i) above;
a) In case of company: 8 percent of the gross amount
b) In any other case: 10 percent of the gross amount
c) In respect of persons making payment to electronic & print media for advertising services: 1.5 percent of the gross amount.
Persons not appearing in the Active Taxpayers’ List : The applicable tax rate is to be increased by 100% (Rule-1 of Tenth Schedule to the Ordinance), i.e.:
a) In case of company: 16 percent of the gross amount.
b) In any other case: 20 percent of the gross amount.
c) In respect of persons making payment to electronic & print media for advertising services: 3 percent of the gross amount.
Services : No deduction of tax where payment is less than Rs. 30,000/- in aggregate during a financial year [S.153(1)(b)].
It shall be minimum cases in mentioned above cases.
Under Section 153(1)(c), the tax rates shall be:
Execution of Contracts
i) In case of sportsperson: 10 percent
ii) In the case of Companies: 7 percent
iii) In the case of persons other than companies: 7.5 percent
Persons not appearing in the Active Taxpayers’ List: The applicable tax rate is to be increased by 100% (Rule-1 of Tenth Schedule to the Ordinance), i.e.:
i) In case of sportsperson: 20 percent
ii) In the case of Companies: 14 percent
iii) In the case of persons other than companies: 15 percent
Minimum Tax for all whereas it will remain adjustable where payments are received on account of execution of contracts by Public Company listed on registered Stock Exchange in Pakistan.
KARACHI: Federal Board of Revenue (FBR) has issued withholding tax card for tax year 2019/2020 and prescribed the rate of withholding income tax to be deducted/collected on transactions made through banking system either by cash or online transfers.
KARACHI: Regional Tax Office (RTO)-II Karachi has launched crackdown against tax evaders engaged in business of car sale, purchase and service.
The Broadening of Tax Base (BTB) Zone of RTO-II Karachi has launched action against tax evaders in automobile industry including persons own automobile showrooms, auto parts dealers, sellers, automobile workshops, car service center, sources said on Saturday.
The sources said that the BTB zone conducted field survey and collected information from various survey already conducted. It was discovered that automobile showrooms, auto part dealers, sellers, automobile workshops and car service center having booming business activities but large number of them are not registered or not filing their tax returns.
The BTB unit issued notices to 312 automobile showrooms, auto parts dealers, sellers automobile workshops and car service centers doing business activity in the various areas of Karachi and they are not on tax net.
Notices under Section 176 of the Income Tax Ordinance, 2001 have been issued to bring them into the tax net.
The Federal Board of Revenue (FBR) has released detailed explanations regarding the revised implementation of the federal excise duty (FED) on ghee and cooking/edible oils, as introduced through the Finance Act, 2019.
ISLAMABAD: Federal Board of Revenue (FBR) has extended the last date for filing income tax returns for tax year 218 up to August 09, 2019.
The FBR on Friday issued Circular No. 09 for extension in date of filing of income tax returns/statements for tax year 2018.
The FBR announced to further extend the last date for filing income tax returns and statements for tax year 2018 for salaried persons, business individuals, Association of Persons and Companies up to August 09, 2019.
The previous extended date for filing income tax returns was August 02, 2019.
ISLAMABAD: Federal Board of Revenue (FBR) has issued withholding tax rate on rental income of immovable properties, which are applicable from July 01, 2019.
The FBR issued withholding tax card for tax year starting July 01, 2019, and said that every prescribed persons (withholding agents) shall collect withholding tax under Section 155 of Income Tax Ordinance, 2001 at the time of receipt of rent of immovable property at the time the rent is actually paid.
The FBR said that the tax shall be adjustable. The withholding tax shall be deducted at the following rates:
A. In case of individual or Association of Persons (AOPs)
1. Where the gross amount of rent does not exceed Rs, 200,000: No tax shall be deducted.
2. Where the gross amount of rent exceeds Rs, 200,000 but does not exceed Rs, 600,000: 5% of the gross amount exceeding Rs, 200,000
3. Where the gross amount of rent exceeds Rs, 600,000 but does not exceed Rs, 1,000,000: Rs, 20,000+10% of the gross amount exceeding Rs, 600,000.
4. Where the gross amount of rent exceeds Rs, 1,000,000 but does not exceed Rs, 2,000,000: Rs,60,000+15% of the gross amount exceeding Rs, 1,000,000.
5. Where the gross amount of rent exceeds Rs, 2,000,000 but does not exceed Rs. 4,000,000: Rs, 210,000+20% of the gross amount exceeding Rs, 2,000,000.
6. Where the gross amount of rent exceeds Rs.4,000,000 but does not exceeds Rs. 6,000,000: Rs.610,000 plus 25 per cent of the gross amount exceeding Rs.4,000,000.
7. Where the gross amount of rent exceeds Rs.6,000,000 but does not exceeds Rs. 8,000,000: Rs.1,110,000 plus 30 percent of the gross amount exceeding Rs.6,000,000.
8. Where the gross amount of rent exceeds Rs.8,000,000: Rs.1,710,000 plus 35 percent of the gross amount exceeding Rs.8,000,000.
B. The FBR said that in case of company the tax rate shall be 15 percent.
The FBR further explained that as per Finance Act, 2019, the provisions of newly inserted 10th schedule of the Income Tax Ordinance, 2001 shall not apply on tax rental income deducted under section 155.
ISLAMABAD: Federal Board of Revenue (FBR) has issued simplified tax return and wealth statement forms for traders in order to resolve problems of traders regarding tax compliance.
The FBR on Thursday issued draft simplified scheme for traders and stated that the scheme has been prepared after having practical research and discussion on the subject and exclusive interaction with the trade bodies.
It has been observed that traders’ genuine problems regarding tax compliance have to be addressed. The issues which are considered compelling by all the stakeholders are:-
(i) Complicated tax regime and equally complicated requirement of record keeping;
(ii) Complicated return form and wealth statement;
(iii) Personal interaction and personalized jurisdiction that has high probability of abuse of discretion even leading to corruption and harassment;
(iv) Complicated requirements for compliance such as withholding etc
In the proposed scheme all the four major concerns have been addressed.
Proposals from stakeholders as well as general public are invited for any modification in the above scheme. After public review the scheme will be put before the Federal Cabinet for final approval. It is expected that this reformed simplified procedure will be a new beginning on this subject.
INCOME TAX SPECIAL PROCEDURE FOR TRADERS
1. Scope and commencement.—(1) Subject to Rule 2 and 4, this procedure shall apply to traders including retailers and wholesalers who may opt to file Return under scheme. The procedure shall come into force with effect from Tax Year 2019
2. Persons covered.- For the purposes of this scheme a trader including retailer and wholesaler shall be an individual or association of persons carrying on business of buying and supplying goods to the general public or other businesses for the purpose of consumption, and has (a) turnover less than Rs 50 million;
(b) self-invested equity less than Rs 50 million;
(c ) cost of fixed assets less than Rs 100 million;
(d) number of employees less than or equal to five;
but does not include persons covered under small shopkeepers scheme under section 99B of the Ordinance.
The thresholds as prescribed shall be increased by ten percent each year to account for economic progression in business. The Federal Government shall prescribe the maximum limit when a person under this scheme shall be required to observe general provisions of the Ordinance.
This scheme shall only be applicable for persons resident in Pakistan.
Accounting Method and Computation of Income.- (1) A person accounting for income under the head business opting under this scheme shall derive income when it is received and shall incur expenditure when it is paid on cash basis connected with business. The excess of receipts over expenditure shall be considered as income liable to tax except for the adjustment of opening and closing stocks on a consistent basis if the taxpayer so desires for such an adjustment.
(2) Section 21 shall not apply in such cases except clause (n).
Registration and Filing of Return.- (1) All persons who are not already registered with FBR will be registered under this scheme shall submit the registration form on IRIS through FBR website.
(2) Person who holds NTN but has not filed Return in preceding five tax years may also submit registration form.
(3) Each person falling under this scheme shall electronically file a simplified Return of income accompanied with evidence of payment of due tax and simplified wealth statement. Such return filed shall be treated as assessment order under section 120 for the purposes of the Ordinance.
(4) All persons opting for under this scheme shall be required to file Return by September 30, 2019.
(5) Return and Wealth Statement filed may be revised without approval of CIR within sixty days.
Automated and Non-Jurisdictional system.- (1) There shall be national (central) jurisdiction in respect of persons falling under this scheme.
(2) All persons falling under this scheme shall be communicated through prescribed automated system.
Tax Rate and Payment of Tax.- (1) Income computed under Rule 3 shall be chargeable to under the head ‘Income from Business’ and tax payable thereon shall be computed at the rate prescribed under Division I, Part I of the First Schedule to the Ordinance.
(2) In case of loss for the year or tax liability less than one and half percent of turnover, minimum tax equal to one and half percent of receipts shall be payable.
(3) Tax paid under any provision of the Ordinance shall be minimum tax.
(4) An association of persons shall be liable to tax separately from the members of the association. The amount received by a member of the association in the capacity as member out of the income of the association shall be exempt from tax.
Examination of Return.- (1) Examination of assessment under this scheme shall be limited to activities and purposes within this scheme. The process, procedure and reporting of examination shall be prescribed.
(2) Where a person in respect of income is selected for examination under this scheme, the process of examination shall be undertaken not allowing any personal visit by any tax authority to the premises of the taxpayer, except with the approval of Federal Board of Revenue.
(3) No examination shall be undertaken after the expiry of five years from the date of filing the Return for that tax year.
(4) Definite Information: Where definite information regarding concealment of income or evasion of tax is available as defined under sub section (8) of Section 122 of the Ordinance, particular examination of the taxpayer may be undertaken, notwithstanding the provisions of this scheme. 5) No action under this Section will be undertaken prior to the approval of a Committee constituted by FBR consisting of three persons including a member of trade body not being the employee of the Government.
Dispute Resolution and Appeals.- (1) Where a person is dissatisfied with examination conducted, the matter shall be referred to dispute resolution committee to be formed under this scheme.
(2) The decision of dispute resolution Committee shall be binding on Federal Board of Revenue and not on the taxpayer;
(3) Person dissatisfied with examination conducted or decision of the DRC can file appeal under section 127 of the Income Tax Ordinance, 2001 after payment of 25 percent of tax payable.
(4) Provisions of Par III of Chapter VIII shall remain applicable on cases where there is a dispute on account of examination as undertaken under this scheme.
Withholding Agent.- (1) Person falling under this scheme shall not be required to act as withholding agent under any provision of the Ordinance.
Advance Tax.- Any person falling under this scheme may at its own option pay advance tax equal to one fourth of the tax liability as per last tax year in four equal installments.
Books of Accounts.- Persons falling under scheme shall keep and maintain books of accounts. The cash and bank book so maintained shall be the only ‘Books of Accounts’ required to be kept by the persons falling under this scheme for the purposes of compliance of this Ordinance.
Miscellaneous Provisions.- Source of self-invested equity for any earlier year shall be accepted.
Income under any other head shall be taxable under relevant provisions of the Ordinance.
For the purpose of collection and recovery of tax, provisions of Part IV of Chapter X shall apply.
Provisions of Section 182 and Section 205 shall apply accordingly.
The information disclosed by whistleblower shall be dealt in accordance with section 227B of the Ordinance.
The Federal Government may, from time to time, by notification in the official Gazette, amend the scheme so as to add, alter, omit or modify any provision therein.
Definitions.— Under this scheme, unless there is anything repugnant in the subject or context,—
(1) “Books of Accounts” means the prescribed cash/bank book containing all entries in respect of monies received and paid including those directly entered into bank account.
(2) “Fixed Assets” means under this scheme, property of any kind connected with business held by a person but does not include stock-in-trade.
(3) “Self-invested Equity” means personal funds invested in trade/business other than accumulated profits.
(4) “Turn over” means receipts from the sale of goods.
(5) All other expressions used but not defined in these rules shall have the same meaning as assigned to them under the Income Tax Ordinance, 2001.
RETURN OF INCOME UNDER RULE 4 OF THE TRADERS SCHEME
Form A
CNIC/NTN
Tax Year
Name*
Due Date
Address*
Business Assets
Filing Date
Employees
Equity/Capital
Description
Total Amount
1.
Turnover/Receipts
2.
Cost of Sales
3.
Opening Stock
4.
Purchases
5.
Closing Stock
6.
Other direct Expenses
7.
Gross Profit
8.
Overhead expenditure
9.
Net Profit/ Taxable income
10.
Income from all others sources
11.
Tax chargeable
12.
Minimum Tax
13.
Tax payable whichever is higher
14.
Tax already Paid
15.
Net tax payable/refundable
15.
Bank Account #
Verification
I Mr._____________ holding CNIC ______________do solemnly declare that to the best of my knowledge and belief the information given in this Return is correct and complete in accordance with the provisions of the Scheme.
Signature:
Date
WEALTH STATEMENT UNDER RULE 4 OF THE TRADERS SCHEME
Form B
S. No.
Description
CNIC/NTN
Tax Year
2019
Name
Due Date
1
Property/ Assets
2
House/Plot
3
Shop
4
Vehicle
5
Business Capital
6
Cash in hand/ Bank
7
Investment /Advance
8
Loan/liabilities
9
Net Assets
10
Reconciliation of Net Assets
11
Net Assets Current year
12
Net Assets Previous Year
13
Increase/Decrease in Assets
14
Income as per Return
15
Other inflows (Gift, Loan, remittance etc)
16
Outflows (Gift, Loan etc)
17
Personal Expenses
Verification
I Mr.______ holding CNIC _____
do solemnly declare that to the best of my knowledge and belief the information given in this Return is correct and complete in accordance with the provisions of the Scheme.
