Karachi, Pakistan: The Federal Board of Revenue (FBR) has taken a significant step to streamline the process of claiming income tax refunds. In a recent announcement, the FBR has issued detailed guidelines that outline the procedures for individuals and businesses to seek refunds for excess taxes paid.
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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.
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FBR directed to make proposed amnesty scheme more attractive
ISLAMABAD: Dr. Abdul Hafeez Shaikh, Adviser to the Prime Minister on Finance, Revenue, and Economic Affairs, directed the Federal Board of Revenue (FBR) to modify the proposed tax amnesty scheme to attract a maximum number of people.
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Sales Tax Act 1990: penalty for non-filing, miscalculation
KARACHI: The sales tax law has defined fine and penalty for persons fail to file sales tax returns within due date. The law also defined penalty for miscalculation and other obligations.
The updated Sales Tax Act, 1990 issued by the Federal Board of Revenue (FBR) explained the offences and penalties under section 33.
Following are the offences and penalties:
If a person fails to furnish a return within the due date then Such person shall pay a penalty of five thousand rupees:
Provided that in case a person files a return within ten days of the due date, he shall pay a penalty of one hundred rupees for each day of default.
Any person who fails to issue an invoice when required under this Act than such person shall pay a penalty of five thousand rupees or three per cent of the amount of the tax involved, whichever is higher.
Any person who un-authorizedly issues an invoice in which an amount of tax is specified, in such cases the person shall pay a penalty of ten thousand rupees or five per cent of the amount of the tax involved, whichever is higher.
Any person who fails to notify the changes of material nature in the particulars of registration of taxable activity then such person shall pay a penalty of five thousand rupees.
Any person who fails to deposit the amount of tax due or any part thereof in the time or manner laid down under this Act or rules or orders made there under.
Such person shall pay a penalty of ten thousand rupees or five per cent of the amount of the tax involved, whichever is higher:
Provided that, if the amount of tax or any part thereof is paid within ten days from the due date, the defaulter shall pay a penalty of five hundred rupees for each day of default:
Provided further that no penalty shall be imposed when any miscalculation is made for the first time during a year:
Provided further that if the amount of tax due is not paid even after the expiry of a period of sixty days of issuance of the notice for such payments by an officer of Inland Revenue, not below the rank of Assistant Commissioner Inland Revenue, the defaulter shall, further be liable, upon conviction by a Special Judge, to imprisonment for a term which may extend to three years, or with fine which may extend to amount equal to the amount of tax involved, or with both.
Any person who repeats erroneous calculation in the return during a year whereby amount of tax less than the actual tax due is paid. In that case such person shall pay a penalty of five thousand rupees or three per cent of the amount of the tax involved, whichever is higher.
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Text of Benami Transactions (Prohibition) Rules, 2019
KARACHI: The Federal Board of Revenue (FBR) has launched campaign to aware people about benami laws and harsh penalties under this law. Besides, the people are also informed about rewards to whistle blowers for pointing out benami properties.
The FBR launched the campaign after the introduction of benami transactions rules to enforce the benami act.
Following is the text of Benami Transactions (Prohibition) Rules, 2019.
S.R.O.326(1)/19 in exercise of the powers conferred by section 61 of the Benami Transaction (prohibition) Act 2017 the Federal Government is pleased to make the following rules, namely.
1. Short title and commencement
(1) These rules shall be called the Benami Transactions (Prohibition) Rules, 2019.
(2) This shall come into force at once.
2. Definitions.
(1) In these rules, unless there is anything repugnant in the subject or context,
(a) “Act” means the Benamui Transactions (prohibition) Act, 2017.
(b) “Chapter” means a Chapter of the Act, and
(c) “Section” means a section of the Act.
(2) Words and expressions used but not defined in these rules shall have the same meaning as assigned thereto in the Trusts Act, 1882 (II of 1882), the Succession Act, 1925 (XXXIX of 1925), the Partnership Act, 1932 (IX of 1932) the Income Tax Ordinance, 2001 (XLIX of 2001) The Anti money Laundering Act, 2010(VII of 2010) the Act and the Companies Act, 2017 (XIX of 2017).
3. Jurisdiction of Administrator, Initiating Officer and Approving Authority under sub-section (2) of section 15.
(1) the Board may, by an order assign any commissioner Inland Revenue to exercise the powers and perform the functions of approving authority under the provisions of the Act and these rules.
(2) the Board may, by an order, assign any Deputy Commissioner Inland Revenue to exercise the powers and perform the functions of Initiating Officer under the provision of the Act and these rules.
4. Determination of price in certain cases.
(1) For the purposes of sub-clause (b) of clause (15) of section 2, the price shall be determined in accordance with the provisions of section 68 of the Income Tax Ordinance, 2001 (XLIX of 2001)and rules made thereunder to the extent applicable under the Act.
5. Appointment of Chairperson and Members of Adjudicating Authority.
For the purposes of sub-section (4)of section 6, that Secretary Revenue Division shall forward to the Federal Government a panel of suitable officers who are qualified as per criteria provided for in sub-section (3) of section 6 and the Federal Government shall appoint from amongst the panel a Chairperson and as many Members as it may deem fit.
6. Terms and conditions of service of the Chairperson and members of the Adjudicating Authority.
For the purposes of sub-section (1) of section 10, the Chairperson and Members of the Adjudicating Authority shall respectively be entitled to the pay, allowances and other benefits, specified in column (3) of the Table below, namely.
1. Chairperson
(a) pay, allowances and other benefits admissible prior to his appointment under rule 5 or the pay.
(b) monthly adjudicating authority allowance of Rs 300,000.
2. Members
(a) pay and allowances admissible prior to their appointment under rule 5 or the pay, allowances, and the benefits admissible immediately before retirement.
(b) monthly adjudicating authority allowance of Rs. 200,000.
7. Provisional attachment. For the purposes of sub-section (3) of section 22, the Initiating Officer shall provisionally attach any property in the manner provided for in Part II and Part III of Chapter XVI of the Income Tax Rules, 2002 and to the extent applicable under the Act.
8. Confiscation of property under sub-section (1) of section 25. Where an order of confiscation of property under sub-section.
(1) of section 25 has been made, the Adjudicating Authority shall send a copy of the order to the Approving Authority.
(2) Where an order referred to in sub-rule (1) has been received by the Approving Authority in respect of any immovable property.
(a) forthwith direct the Administrator to proceed to take any or all steps mentioned in this sub-rule;
(b) issue notice to the concerned authority of the Federal Government or a provincial Government, or a local body or an authority or any person or officer who is responsible for recording the registration of any property or maintaining its record of ownership, as the case may be, having jurisdiction for the purposes of registration of such immovable property, intimating that the property has been confiscated under the Act.
(c) arrange to place copy of the notice at some conspicuous part of the immovable property for the benefit of general public mentioning clearly therein, in English and in vernacular language, that the property has been confiscated under the Act and vests absolutely in the Federal Government.
(3) Where an order referred to in sub-rule (1) has been received by the Approving Authority in respect of any movable property, he shall –
(a) forthwith direct the Administrator to proceed to take any or all steps mentioned in this sub-rule.
(b) forthwith issue a notice to the authority or person having the custody of such movable property informing that the property has been confiscated under the Act.
(c) sell the property, if the property is liable to speedy and natural decay or the expenses for maintenance are likely to exceed its value, with the written approval of the concerned Adjucating Authority and deposit the sale proceeds in the nearest Government Treasury of branch of the State Bank of Pakistan or Federal Treasury or in any branch of National Bank of Pakistan in fixed deposition and retain the receipt thereof:
Provided that where owner of the property furnishes the fixed deposit receipt of State Bank of Pakistan or Federal Treasury or National Bank of Pakistan equivalent to the value of property in the name of Administrator, the Approving Authority may accept and retain such fixed deposit receipt as security.
Provided further that where the movable property is a mode of conveyance of any description, the Approving Authority, after obtaining its valuation report from the Motor Licensing Authority or any other authority, as the case may be, may accept and retain the fixed deposit receipt of the National Bank of Pakistan, equivalent to the movable property as security in the name of Administrator:
(d) cause to deposit the property consisting of cash, Government or other securities or bullion or jewellery or other valuables in a locker in the name of the Administrator or in the form of fixed deposit, as the case may be, in the State Bank of Pakistan or in any branch of the National Bank of Pakistan, and retain the receipt thereof;
(e) cause to get the property in the form of shares, debentures, sum of collective investment schemes or instruments to be transferred in favour of Administrator.
(f) Issued a direction to the bank or financial institution, as the case may be, to transfer and credit the money to the account of the administrator where the property is in the form of cash in a bank or a financial institution.
9. Received of confiscated property under sub-section (1) of section 26.
(1) The administrator shall, at the tine of receiving the confiscated property, ensure proper identification of such property with reference to its particulars mentioned in the order made under sub-section (1) of section 22.
(2) The Administrator may, with approval to the Approving Authority establish one or more warehouses for safe keeping of attached and confiscated movable properties.
10. Management of confiscated property under sub-section (1) of section 26.
(1) Where the property confiscated is of such a nature that its removal from the place of attachment is impracticable or its removal involves expenditure out of proportion to the value of the property, the Administrator shall arrange for proper maintenance and custody of the property at the place of its attachment.
(2) If the property confiscated consists of cash, Government or other securities, bullion, jewellery or other valuables, the administrator shall cause to deposit them for safe custody in the nearest Government Treasury or a branch of the National Bank of Pakistan or the State Bank of Pakistan.
(3) The Administrator shall maintain a register for recording details in respect of moveable property such as cash, Government’s or other securities, bullion, jewellery or other valuables in the form as specified in part -1 of the first schedule to these rules .
(4) The Administrator shall obtain and receive from the Treasury or the bank, as the case may be, against the deposit of moveable properties specified in sub -rule (2).
(5) The Administrator shall maintain in respect of immovable property a register containing the detail in the form as specified in part -II of the First Schedule to these rules.
11. Disposal of confiscated property under sub-section (3) of section 26.
Where the Federal Government directs that the property vested in it under sub-section (3) of section 25 be disposed of under sub-section (3) of section 26, the Administrator shall arrange to dispose of the property in the manner as provided in Part II and Part III of Chapter XVI of the Income Tax Rules, 2002 to the extent applicable under the Act.
12. Appeals to the Federal Appellate Tribunal.
(1) An appeal to the Federal Appellate Tribunal under sub-section (1) of section 44 shall be filed in the form as specified in Part-III of the First Schedule to these rules.
(2) The form under sub-rule (1) shall be accompanied by a fee of one thousand Rupees.
(3) The form under sub-rule (1) shall set forth concisely and under distinct head the grounds of objection to the order appealed against and such grounds shall be numbered consecutively and shall specify the address of service at which notice or other processes of the Federal Appellate Tribunal May be served on the appellant and the date on which the order appealed against was served on the appellant.
(4) Where the appeal is preferred after expiry of the period of forty-five days referred to in sub-section (1) of section 44, it shall be accompanied by a petition, in quadruplicate, duly verified and supported by the documents, if any relied upon by the appellant, showing cause as to how the appellant had been prevented from preferring the appeal with in the period of forty-five days.
13. Terms and Conditions of service of the chairperson and members of Federal Appellate Tribunal.
(1) For the purposes of sub-section (1) of section 31 of the Act, the Chairperson and Members of the Federal Appellate Tribunal shall respectively be entitled to the pay, allowance and other benefits specified in column (3) of the table.
1. Chairperson: (a) pay, allowances and other benefits admissible prior to his appointment as chairperson , or pay allowances and benefits admissible immediately before his retirement.
(b) Monthly Federal Appellate Tribunal allowance of Rs. 400,000.
2. Members: (a) Pay, allowances and other benefits admissible prior to their appointment as Member or pay, allowances and other benefits admissible immediately before their retirement.
(b) Monthly Federal Appellate Tribunal allowance of Rs. 300,000.
14. Removal of Chairperson and Members from office in certain circumstances.
(1) For the purpose of sub-section (2)of section 33, the secretary Law and Justice Division , in pursuance of approval of the Federal Government shall file a reference before the Chief Justice of the High Court for inquiry, against the Chairperson and Members, whether or not suspended, on charges as specified under sub-section (1)of section 33 of the Act.
(2) The references under sub-rule (1)shall be filed before the Chief Justice in whose territorial jurisdiction the Chairperson and Members of the bench, whether or not suspended, are seated.
(3) The Chief Justice of High Court after receipt of the reference filed, shall inform the Chairperson and the Members, whether or not suspended, of the charges leveled against them and seek their written defense. The Chief Justice of the High Court may seek further explanations and may hear in person the Chairperson and the Members before submission of the inquiry report.
(4) The Chief Justice of High Court shall conclude the inquiry and transmit a report thereon the Federal Government, through Secretary, Law and Justice Division, within sixty days from the receipt of the reference.
15. Staff of Appellate Tribunal.
(1) For the purpose of sub-section (3)of section 37 of the Act, the officers and employees of the Federal Appellate Tribunal shall be entitled to such salaries and allowances as civil servants of the Federal Government of the same basic pay scales and status are entitled to.
16. Reward for Whistleblowers.
(1) For the purpose of reward, the provisions of the Inland Revenue Reward Rules, 2016 except as specified in these rules shall mutatis mutandis apply.
(2)The amount of reward as specified below relating to detection and confiscation of benami property to the extent specified below, shall be admissible.
1. Rs.2000,000 or less — Five percent of the price of benemi property.
2. More than Rs.2,000,000 but not more than Rs.5000,000, — Rs.100,000 plus four percent of the price of benami property in excess of Rs.2,000,000.
3. Over Rs.5,000,000 — Rs.220,000 plus three percent of the price of benami property in excess of Rs.5,000,000.
(3) The amount of reward shall be sanctioned after confiscation of the benami property under section 25.
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FBR plans prizes to encourage public take invoices from restaurants, hotels
ISLAMABAD: Federal Board of Revenue (FBR) is planning to introduce prize scheme through draw against invoices of restaurants submitted by customers.
Sources in FBR on Monday said that the plan was under consideration after identification of huge tax evasion by restaurants in Islamabad Capital Territory.
The sources said that the FBR would announce different prizes through a draw of invoices. The purpose of this prize scheme is to encourage people to take their invoices for food purchased from restaurants and hotels.
Few months back the FBR installed Restaurants Information Management System (RIMS) at top restaurants and hotels located in Islamabad to monitor their sales for collection of sales tax on services.
The RIMS is installed at the restaurants and directly connected with FBR online system for real-time data sharing of sales invoices.
However, it was identified that the most of the restaurants were found in suppressing sales through switching off the online system. The FBR sources said that it was detected that the restaurants were declaring less than half of their sales.
The FBR has launched penal action against non-compliant restaurants.
On the other side the owners of restaurants and hotels had announced shut down protest. However, this protest was called back after discussion with State Minister Hammad Azhar a day earlier.
The owners of hotels and restaurants would again hold talks with FBR officials today to resolve the matter.
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Sales Tax Act 1990: three years imprisonment for persons fail to get registration
KARACHI: Persons making taxable supplies but failed to get registration with tax department then such persons are liable to three years imprisonment, which may be extendable.
According to updated Sales Tax Act, 1990 issued by Federal Board of Revenue (FBR), the fines and penalties had been prescribed for persons deliberately violated the laws.
According to the law, any person who is required to apply for registration under this Act fails to make an application for registration before making taxable supplies.
Such person shall pay a penalty of ten thousand rupees or five per cent of the amount of tax involved, whichever is higher:
Provided that such person who is required to get himself registered under this Act, fails to get registered within sixty days of the commencement of taxable activity, he shall, further be liable, upon conviction by a Special Judge, to imprisonment for a term which may extend to three years, or with fine which may extend to an amount equal to the amount of tax involved, or with both.
Any person who fails to maintain records required under this Act or the rules made there under.
Such person shall pay a penalty of ten thousand rupees or five per cent of the amount of tax involved, whichever is higher.
Where a registered person who, without any reasonable cause, in non compliance with the provisions of section 25, –
(a) fails to produce the record on receipt of first notice;
(b) fails to produce the record on receipt of second notice; and
(c) fails to produce the record on receipt of third notice.
Then such person shall pay a penalty of five thousand rupees;
such person shall pay a penalty of ten thousand rupees; and
such person shall pay a penalty of fifty thousand rupees.
Any person who fails to furnish the information required by the Board through a notification issued under sub-section (5) of section 26.
Such person shall pay a penalty of ten thousand rupees.
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FBR identifies retailers taking undue benefits of present registration requirement
KARACHI: Federal Board of Revenue (FBR) has identified that large number of retailers are suppressing electricity consumption to avoid mandatory registration.
A tax unit in Karachi in its budget proposals for fiscal year 2019/2020, asked the FBR Headquarters to review the present regime of sales tax registration for retailers as they were taking undue advantage.
The tax unit said that presently retailers are dealt for registration under Sales Tax Special Procedure 2007, Chapter–II, Rule 4 & 6, a retailer operating as a unit of a national or international chain of stores and other retailers paying sales tax through electricity bills.
Before this, retailers were dealt for registration under Sales Tax Rule 2006, Chapter –I, Rule 4 (b) which is reproduced as under (omitted by SRO 494(I) 2015 dated 30-06-2015).
“A retailer whose value of supplies, in any period during the last twelve months exceeds five million rupees”.
At present retailers are taking benefits of this change and having turnover more than ten million are not liable to register and paying a meager amount in electric bills.
Retailers used generators, solar energy and other sources and maintain the level of electric bills not exceeding the amount of Rs 600000/- for last twelve months and through payment of 5 percent on less than Rs20,000 electricity bill and 7.5 percent on monthly bill greater than Rs.20,000.
The FBR has been urged that retailers having turnover more than ten million needs to be included in Rule 4 of Sales Tax Special Procedure 2007, Chapter –II, to enhance the net work of Sales Tax registration.
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Sales Tax Act 1990: FBR may appoint special panels for audit
KARACHI: Federal Board of Revenue (FBR) has been empowered under sales tax law to appoint special audit panels for conducting audit of any registered person.
The updated Sales Tax Act, 1990 issued by the FBR, the Section 32A explains the powers of the revenue body for appointment of special audit panels.
Section 32A: Audit by Special Audit Panels
Sub-Section (1): The Board may appoint as many special audit panels as may be necessary, comprising two or more members from the following, –
(a) an officer or officers of Inland Revenue;
(b) a firm of chartered accountants as defined under the Chartered Accountants Ordinance, 1961 (X of 1961);
(b) a firm of cost and management accountants as defined under the Cost and Management Accountants Act, 1966 (XIV of 1966); or
(d) any other person as directed by the Board,
to conduct audit of a registered person or persons, including audit of refund claims and forensic audit and the scope of such audit shall be determined by the Board or the Commissioner Inland Revenue on a case-to-case basis. In addition, the Board may, where it considers appropriate, also get such audit conducted jointly with similar audits being conducted by provincial administrations of sales tax on services.
Sub-Section (2): Notwithstanding that records of a registered person have been audited by an officer appointed under section 30, the Board or a Commissioner may direct special audit panel appointed under sub-section (1) to audit the records of any registered person.
Sub-Section (3): Every member of special audit panel appointed under sub-section (1), shall have the powers of an officer of Inland Revenue under sections 25, 37 and 38.
Sub-Section (4): Each special audit panel shall be headed by a chairman who shall be an officer of Inland Revenue.
Sub-Section (5): If any one member of the special audit panel, other than the chairman, is absent from conducting an audit, the proceedings of the audit may continue and the audit conducted by the special audit panel shall not be invalid or be called in question merely on the ground of such absence.
Sub-Section (6): The Board may prescribe rules in respect of constitution, procedure and working of special audit panel.
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Sales Tax Act 1990: return filing requirement by registered persons
KARACHI: A sales tax registered person is required to file true and correct sales tax return on monthly basis by providing details of supplies and persons whom the supplies were made during the period.
According to updated Sales Tax Act, 1990 issued by Federal Board of Revenue (FBR), the Section 26 explained the requirement of filing sales tax return by registered persons.
Section 26: Return
Sub-Section (1): Every registered person hall furnish not later than the due date a true and correct return in the prescribed form to a designated bank or any other office specified by the Board [FBR], indicating the purchases and the supplies made during a tax period, the tax due and paid and such other information, as may be prescribed;
Provided that the Board may, by notification in the official Gazette, require any person or class of persons to submit return on quarterly basis:
Provided further that the Board may, by notification in the official Gazette, require any person or class of persons to submit such return as may be prescribed annually in addition to the monthly return or quarterly return:
Provided also that the return filed electronically on the web or any magnetic media or any other computer readable media as may be specified by the Board shall also be deemed to be a return for the purpose of sub-section (1) and the Board may, by notification in the official Gazette, make rules for determining eligibility of the data of such returns and e-intermediaries who will digitize the data of such returns and transmit the same electronically under their digital signatures.
Sub-Section (2): omitted
Sub-Section (3): A registered person may, subject to approval of the Commissioner Inland Revenue having jurisdiction, file a revised return within one hundred and twenty days of the filing of return under sub-section (1) or, as the case may be, sub-section (2), or under clause (a) or clause (b) of section 27, to correct any omission or wrong declaration made therein.
Sub-Section (4): Notwithstanding the penalties prescribed in section 33, if a registered person wishes to file revised return voluntarily along with deposit of the amount of tax short paid or amount of tax evaded along with default surcharge, whenever it comes to his notice, before receipt of notice of audit, no penalty shall be recovered from him:
Provided that in case the registered person wishes to deposit the amount of tax as pointed out by the officer of Inland Revenue during the audit, or at any time before issuance of the show cause notice, he may deposit the evaded amount of tax, default surcharge under section (34), and twenty five percent of the penalty payable under section 33 along with the levied return:
Provided further that in case the registered person wishes to deposit the amount after issuance of show cause notice, he shall deposit the evaded amount of sales tax, default surcharge under section 34, and full amount of leviable penalty under section 33 along with the revised return and thereafter, the show cause notice, shall stands abated.
Sub-Section (5): The Board may, by notification in the official Gazette, require any person or class of persons, for any goods of such description or class, to furnish such summary or details or particulars pertaining to the imports, purchases and supplies during any tax period or periods, in such format as may be specified.
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FBR imposes ban on tax officials’ leaves
ISLAMABAD: Federal Board of Revenue (FBR) has imposed ban on its officials for availing any kind of leave, including ex-Pakistan.
In a circular issued on Friday, the FBR said that it had been observed with concern that the Field Formations of FBR are forwarding requests for grant of leaves, including ex-Pakistan leaves on daily basis despite the fact that the fourth quarter of the current financial year has started and the entire tax machinery is required to accelerate its efforts to achieve the assigned budgetary targets through full determination and devotion.
In view of the above, the competent authority has desired that requests for grant of ex-Pakistan leaves may not be forwarded to the board by the respective Heads of Field Formations till June 30, 2019.
All such cases will be processed in the board at the beginning of next financial year.
Similarly local leaves /leaves of other kind may also not be granted liberally during the fourth quarter of the current financial year and may only be allowed in the light of special circumstances / hardship cases.