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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.

  • Sales Tax Act 1990: IR officers authorized to arrest fraudsters

    Sales Tax Act 1990: IR officers authorized to arrest fraudsters

    KARACHI: The sales tax law has authorized officers of Inland Revenue to arrest persons committing fraud or any other offence.

    The Section 37A of the updated Sales Tax Act, 1990 issued by Federal Board of Revenue (FBR) explained the powers of IR officers for making arrests.

    Section 37A: Power to arrest and prosecute

    Sub-Section (1): An officer of Inland Revenue not below the rank of an Assistant Commissioner of Inland Revenue or any other officer of equal rank authorised by the Board in this behalf, who on the basis of material evidence has reason to believe that any person has committed a tax fraud or any offence warranting prosecution under this Act, may cause arrest of such person.

    Sub- Section (2): All arrests made under this Act shall be carried out in accordance with the relevant provisions of the Code of Criminal Procedure, 1898 (Act V of 1898).

    Sub-Section (3): deleted

    Sub-Section (4): Notwithstanding anything contained in sub-section (1) to subsection (3) or any other provision of this Act, where any person has committed a tax fraud or any offence warranting prosecution under this Act, the Commissioner may, either before or after the institution of any proceedings for recovery of tax, compound the offence if such person pays the amount of tax due along with such default surcharge and penalty as is determined under the provisions of this Act.

    Sub-Section (5): Where the person suspected of tax fraud or any offence warranting prosecution under this Act is a company, every director or officer of that company whom the authorized officer has reason to believe is personally responsible for actions of the company contributing the tax fraud or any offence warranting prosecution under this Act shall be liable to arrest; provided that any arrest under this sub-section shall not absolve the company from the liabilities of payment of tax, default surcharge and penalty imposed under this Act.

  • Cash withdrawal tax card: updated for Tax Year 2019

    Cash withdrawal tax card: updated for Tax Year 2019

    KARACHI: Federal Board of Revenue (FBR) has issued updated up to March 09, 2019 for withholding tax rate on cash withdrawal from banking system.

    The rate card has been updated after amendment to Income Tax Ordinance, 2001 introduced through Finance Supplementary (Second Amendment) Act, 2019.

    The financial institutions are required to collect/deduct withholding tax under Section 231 of Income Tax Ordinance, 2001. In the latest amendment the government abolished withholding tax on cash withdrawal for filers of income tax returns.

    Following are the rates for cash withdrawal and cash based transactions:

    – A bank shall collect 0.6 percent under Section 231A from non-filers on payment for cash withdrawal, or sum total of payment for cash withdrawal, in a day, exceeding Rs50,000.

    – Every banking company, non-banking financial institution, exchange company or any authorized dealer of foreign exchange shall collect 0.6 percent from non-filers under Section 231AA (I) at the time of sale against cash of any instrument, including demand draft, payment order, CDR, STDR, RTC, any other instrument of bearer nature or on receipt of cash on cancellation of any of these instrument where sum of total of transactions exceeds Rs25,000 in a day.

    – Every banking company, non-banking financial institution, exchange company or any authorized dealer of foreign exchange shall collect 0.6 percent from non-filers under Section 231AA (2) at the time of transfer of any sum against cash through online transfer, telegraphic transfer mail transfer, telegraphic transfer, mail transfer or any other mode of electronic transfer. Where sum total of transactions exceed Rs25,000 in a day.

    The withholding tax deduction is adjustable against income tax liability in case a non-filer declares his annual income and submits wealth statement.

  • Sales Tax Act 1990: IR officers empowered to summon persons

    Sales Tax Act 1990: IR officers empowered to summon persons

    KARACHI: The sales tax laws have empowered officers of Inland Revenue to summon person in legal proceedings for evidence and produce documents.

    According to updated Sales Tax Act, 1990 issued by Federal Board of Revenue (FBR), Section 37 explains power of IR officers to summon persons.

    Section 37: Power to summon persons to give evidence and produce documents in inquiries under the Act

    Sub-Section (1): Any officer of Inland Revenue shall have powers to summon any person whose attendance he considers necessary either to tender evidence or to produce documents or any other thing in any inquiry which such officer is making for any of the purposes of this Act.

    Sub-Section (2): Any person summoned under sub-section (1) shall be bound to attend either in person or by an authorized agent, as the officer of Inland Revenue may direct;

    Provided that a person who is exempted from personal appearance in a court under section 132 and 133 of the Code of Civil Procedure (Act V of 1908), shall not be required to appear in person.

    Sub-Section (3): Any inquiry before an officer of Inland Revenue shall be deemed to be a judicial proceeding within the meaning of section 193 and 228 of the Pakistan Penal Code (Act XLV of 1860).

  • Deduction of withholding tax on phone cards begins

    Deduction of withholding tax on phone cards begins

    ISLAMABAD: Federal Board of Revenue (FBR) has started collecting withholding tax on phone cards on Friday following the judgment of the Supreme Court of Pakistan (SCP).

    The apex court a day earlier in its judgment said that it would not interfere the taxation matter. The superior court itself suspended the taxation on phone cards in June 2018 after taking suo moto notice.

    The FBR started up to 12.50 percent withholding tax on prepaid card of mobile phones.

    Besides, the provinces have also started collecting sales tax on services on mobile phones usage at 17 to 19.50 percent.

    In the federal capital territory the FBR is collecting federal excise duty on mobile phones in sales tax mode.

    However, the service charges of mobile phone companies were still undecided as the apex court had not issued any such orders.

  • FBR set asides penalty on four customs officials

    FBR set asides penalty on four customs officials

    ISLAMABAD: Federal Board of Revenue (FBR) on Friday set-aside penalty imposed on four officials of Customs collectorate Quetta with future warning.

    The FBR Member Admin as appellate authority accepted the appeal of four customs officials of BS-16 including Muhammad Arif Dostani, Muhammad Arif, Ghulam Hussain Khoso, Saleem Akhtar, and set aside the minor penalty imposed on the officials.

    The chief management on June 19, 2017 imposed penalty on those four officials of ‘withholding of four increments without cumulative effect.’

  • Salary tax card – updated for Tax Year 2019

    Salary tax card – updated for Tax Year 2019

    KARACHI: Federal Board of Revenue (FBR) has updated tax rate for salary persons as per Finance Supplementary (Second Amendment) Act, 2019.

    The tax card is updated up to March 09, 2019.

    The FBR said that persons responsible for paying salary are required to collect tax from employees under Section 149 of Income Tax Ordinance, 2001 at the time salary is actually paid.

    Every person responsible for paying Salary to an employee shall deduct tax from the amount paid:

    1. Where the taxable income does not exceed Rs, 400,000: Zero percent

    2. Where the taxable income exceeds Rs, 400,000 but does not exceed Rs, 800,000: Rs1,000

    3. Where the taxable income exceeds Rs, 800,000 but does not exceed Rs, 1,200,000: Rs2,000

    4. Where the taxable income exceeds Rs, 1,200,000 but does not exceed Rs, 2,500,000: 5 percent of the amount exceeding Rs, 1,200,000.

    5. Where the taxable income exceeds Rs, 2,500,000 but does not exceed Rs, 4,000,000: Rs, 65,000/- + 15 percent of the amount exceeding Rs. 2,500,000.

    6. Where the taxable income exceeds Rs, 4,000,000 but does not exceed Rs, 8,000,000: Rs. 290,000/- + 20 percent of the amount exceeding Rs. 4,000,000.

    7. Where the taxable income exceeds Rs, 8,000,000: Rs. 1,090,000/- + 25 percent of the amount exceeding Rs. 4,800,000.

    Provided that where the taxable income exceeds Rs. 800,000/- the minimum tax payable shall be Rs.2,000/-

  • Sales Tax Act 1990: imposition of default surcharge in fraud, non-payment

    Sales Tax Act 1990: imposition of default surcharge in fraud, non-payment

    KARACHI: A person willfully does not make sales tax payment or commits fraud shall liable to pay default surcharge along with actual amount.

    According to updated Sales Tax Act, 1990 issued by the Federal Board of Revenue (FBR) the default surcharge has been explained through Section 34.

    Section 34: Default Surcharge

    Sub-Section (1): Notwithstanding the provisions of section 11, if a registered person does not pay the tax due or any part thereof, whether willfully or otherwise, in time or in the manner specified under this Act, rules or notifications issued thereunder or claims a tax credit, refund or makes an adjustment which is not admissible to him, or incorrectly applies the rate of zero per cent to supplies made by him, he shall, in addition to the tax due, pay default surcharge at the rate mentioned below:—

    (a) the person liable to pay any amount of tax or charge or the amount of refund erroneously made, shall pay default surcharge at the rate of twelve percent per annum, of the amount of tax due or the amount of refund erroneously made; and

    (b) deleted

    (c) in case, the default is on account of tax fraud, the person who has committed tax fraud shall pay default surcharge at the rate of two per cent per month, of the amount of tax evaded or the amount of refund fraudulently claimed, till such time the entire liability including the amount of default surcharge is paid.

    Sub-Section (2): For the purpose of calculation of default surcharge, –

    (a) in the case of inadmissible input tax credit or refund, the period of default shall be reckoned from the date of adjustment of such credit or, as the case may be, refund is received; and

    (b) in the case of non-payment of tax or part thereof, the period of default shall be reckoned from the 16th day of a month (following the due date of the tax period to which the default relates) to the day preceding the date on which the tax due is actually paid.

    Explanation: For the purpose of this section tax due does not include the amount of penalty.

  • FBR issues rules for ADR in sales tax, federal excise cases

    FBR issues rules for ADR in sales tax, federal excise cases

    ISLAMABAD: Federal Board of Revenue (FBR) on Thursday notified rules to make Alternate Dispute Resolution Committee (ADRC) functional for cases in sales tax and federal excise.

    The FBR issued SROs 488 and 489 (I)/2019 to notify the rules. The ADRC is required to decide a case within 120 days and the decision will have binding effect on both taxpayers and tax officials.

    Under the rules any person interested for resolution of any dispute shall make a written application for alternative dispute resolution to the FBR.

    The FBR, after examination of contents of the application and facts stated therein and on satisfaction that the application may be referred to a Committee for the resolution of the hardship or dispute, shall appoint and notify a Committee, within a period of sixty days from receipt of the application.

    A retired judge not below the rank of District and Sessions Judge, appointed in a manner as aforesaid, shall be Chairperson of the Committee.

    After notification of the Committee, the applicant or the Commissioner or both, as the case may be, shall withdraw appeal pending before any court of law or an appellate authority relating to the hardship or dispute stated in the application.

    The Committee shall commence proceedings after receipt of order of withdrawal of appeal from the FBR.

    The chairperson of the Committee shall be responsible for deciding the procedure to be followed by the Committee which may, inter-alia, include the following, namely:-

    (a) to decide about the place of sitting of the Committee, in consultation with the Chief Commissioner having jurisdiction over the applicant;

    (b) to specify date and time for conducting proceedings by the Committee;

    (c) to supervise the proceedings of the Committee;

    (d) to issue notices by courier or registered post or electronic mail to the applicant;

    (e) to requisition and produce relevant records or witnesses from the Commissioner or other concerned quarters;

    (f) to ensure attendance of the applicant for hearing either in person or through an advocate, representative or a tax consultant;

    (g) to consolidate decision of the Committee and communicate it to the Board, the Commissioner and the applicant; and

    (h) for any other matter covered under these rules.

    The Committee may conduct inquiry, seek expert opinion, direct any officer of Inland Revenue or any other person to conduct an audit and make recommendations to the Committee in respect of dispute or hardship.

    The Committee may determine the issue and may thereafter seek further information or data or expert opinion or make or cause to be made such inquiries or audit as it may deem fit, to decide the matter.

    The Committee shall decide the dispute within one hundred and twenty days from the date of receipt of order of withdrawal from the FBR.

    Decision of majority members of the Committee shall be construed decision of the Committee which shall be communicated by the Committee to the FBR, the Commissioner having jurisdiction and the applicant.

    The decision of the Committee shall be binding on the Commissioner and the aggrieved person.

    On receipt of the Committee’s decision, the applicant shall make payment of sales tax and other taxes as specified by the Committee in its decision and the Commissioner shall modify order as per decision of the Committee.

  • Tax amnesty scheme to be introduced in three phases, to continue by December 2019

    Tax amnesty scheme to be introduced in three phases, to continue by December 2019

    ISLAMABAD: Federal Board of Revenue (FBR) has recommended three phases for new tax amnesty scheme for undeclared assets.

    The FBR recommended three phases for the amnesty scheme for period ended June 30, 2019, September 30, 2019 and December 31, 2019. The rate of tax for undeclared assets (other than domestic real estate/undisclosed income has been recommended at five percent, 10 percent and 20 percent for first, second and third phase, respectively,

    The amnesty scheme has been proposed to cover real estate sector at one percent, two percent and four percent for three phases at fair market value (not less than value prescribed by the FBR under section 68 of Income Tax Ordinance, 2001), as declared by the declarant.

    Dr. Abdul Hafeez Shaikh, Adviser to Prime Minister on Finance, Revenue and Economic Affairs recently directed the FBR to review the proposed amnesty scheme and submit a new draft.

    According to the draft the amnesty scheme would be launched through promulgation of presidential ordinance.

    According to the draft the undisclosed sales shall be chargeable to tax at the rate of three percent (3 percent) of such sales in lieu of sales tax and federal excise duty.

    It is proposed that any foreign asset declared under this Ordinance shall be required to be repatriated to Pakistan or invested in Pakistan Banao Certificate before filing of declaration in the manner prescribed by the State Bank of Pakistan. This condition shall not be applicable on such foreign asset which represents foreign real estate.

  • Withholding tax rates on imports updated through Finance Supplementary (Second Amendment) Act 2019

    Withholding tax rates on imports updated through Finance Supplementary (Second Amendment) Act 2019

    KARACHI: Federal Board of Revenue (FBR) issued withholding tax rates on imports for tax year 2019 updated as per Finance Supplementary (Second Amendment) Act, 2019.

    The withholding tax rates updated up to March 09, 2019 on import under Section 148 of Income Tax Ordinance, 2001 as follow:

    The collector of customs shall collect withholding tax from every import of goods on the value of goods at the rate of one percent from filers of the import value increased by customs – duty, sales tax and federal excise duty and at 1.5 percent from non-filers of the import value as increased by customs-duty, sales tax and federal excise duty on the value of goods, included:

    1 (i) Industrial undertaking importing remeltable steel (PCT Heading 72.04) and directly reduced iron for its own use;

    (ii) Persons importing potassic of Economic Coordination Committee of the Cabinet’s decision No. ECC-155/12/2004 dated the 9th December, 2004

    (iii) Persons importing Urea;

    (iv) Manufactures covered under Notification No. S.R.O 1125(I)/2011 dated the 31st December, 2011 and importing items covered under S.R.O 1125(I)/2011 dated 31st December, 2011.

    (v) Persons importing Gold; and

    (vi) Persons importing Cotton

    (vii) Persons importing LNG

    — Industrial undertaking importing Plastic raw material (PCT Heading 39.01 to 39.12) for its own use.

    Filer: 1.75 percent of the import value as increased by Custom-duty, sales tax and federal excise duty

    2. Persons Importing Pulses

    Filer: 2 percent of the import value as increased by Custom-duty, sales tax and federal excise duty

    Non-filer: 3 percent of the import value as increased by custom-duty, sales tax and federal excise duty.

    3. Commercial importers covered under Notification No. S.R.O 1125(I)/2011 dated the 31st December, 2011 and importing items covered under S.R.O 1125(I)/2011 dated the 31st December, 2011

    Filer: 3 percent of the import value as increased by custom-duty sales tax and federal excise duty.

    Non-filer: 4.5 percent of the import value as increased by custom-duty , sales tax and federal excise duty

    Commercial Importer importing Plastic raw material (PCT Heading 39.01 to 39.12) for its own use

    Filer: 4.5 percent of the import value as increased by Custom-duty, sales tax and federal excise duty

    3A. Persons importing coal

    Filer: 4 percent

    Non-filer:6 percent

    4. Ship breakers on import of ship

    Filer: 4.5 percent

    Non-filer: 6.5 percent

    5. Industrial undertakings not covered under S.No 1 to 4

    Filer: 5.5 percent

    Non-filer: 8 percent

    6. Companies not covered under S. Nos 1 to 5

    Filer: 5.5 percent

    Non-filer: 8 percent

    7. Persons not covered Under S.Nos 1 to 6

    Filer: 6 percent

    Non-filer: 9 percent

    New proviso introduced through Finance Supplementary (Second Amendment) Act, 2019

    On Import of Mobile Phones by any Person (individual, AOP, Company) :

    C&F Value of Mobile Phone (in USD ($) ) Tax (in Rs)

    1. Up to $30: Rs70

    2.Exceeding $30 & up to $100: Rs. 730

    3.Exceeding $100 & up to $200: Rs. 930

    4.Exceeding $200 & up to $350: Rs. 970

    5.Exceeding $350 & up to $500: Rs. 3,000

    6.Exceeding $500: Rs. 5,200

    The tax shall be final for all other than those excluded under S. 148(7)&(8)

    The tax shall be adjustable for a tax year under S. 148(7) in respect of :-

    a. Raw material, plant, equipment & parts by an industrial undertaking for its own use;

    b. motor vehicle in CBU condition by manufacturer of motor vehicle.

    c. Large import houses as defined / explained in 148(7)(d)

    d. A foreign produced film imported for the purposes of screening and viewing.