Pkrevenue.com

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.

  • Consumers allowed 5pc cash back of sales tax paid on retail purchases

    Consumers allowed 5pc cash back of sales tax paid on retail purchases

    ISLAMABAD: Consumers have been allowed to get five percent cash back on the total amount of sales tax charged against purchases from retail outlets.

    Through Finance Bill, 2019 a major change has been introduced to Sales Tax Act, 1990 in order to widening the sales tax base and prevent sales tax evasion.

    The Finance Bill 2019 proposed:

    “Provided that the customers of a Tier-1 retailer shall be entitled to receive a cash back of up to five percent of the tax involved, from such date in the manner and to the extent, as may be prescribed by the Board.”

    The Sales Tax Act, 1990 defines Tier-1 retailers as:

    (a) a retailer operating as a unit of a national or international chain of stores;

    (b) a retailer operating in an air-conditioned shopping mall, plaza or centre, excluding kiosks;

    (c) a retailer whose cumulative electricity bill during the immediately preceding twelve consecutive months exceeds Rupees six hundred thousand; and

    (d) a wholesaler-cum-retailer, engaged in bulk import and supply of consumer goods on wholesale basis to the retailers as well as on retail basis to the general body of the consumers;”

    The FBR explained the amended regime for retailers that to rationalize tax on retailers and to capture its full potential and document its sales, following proposals are made:−

    (i) Turnover tax option may be withdrawn.

    (ii) For tier-1 retailer, it may be made mandatory to integrate their points of sales (POSs) with FBR’s Computerized System so that the sales are reported in real time.

    (iii) Retail shops having an area in excess of 1000 square feet may be included in Tier-1.

    (iv) In order to encourage customers to demand invoices from retailers, enabling provisions are proposed to be inserted in section 3 whereby FBR may allow cash back of up to 5% of the sales tax charged on invoices to the customers.

  • FBR estimates additional revenue of Rs2 billion through changes in super tax

    FBR estimates additional revenue of Rs2 billion through changes in super tax

    ISLAMABAD: Federal Board of Revenue (FBR) has estimated additional revenue of Rs2 billion through proposed changes in law related to super tax.

    The changes have been introduced to Section 4B of Income Tax Ordinance, 2001 through Finance Bill 2019.

    The FBR in explanation to the Finance Bill said that presently brought forward depreciation and business losses are excluded while computing income for calculating liability of super tax.

    However, such losses are not excluded in the case of banking, insurance, oil and mineral exploration companies.

    In order to ensure similar tax treatment, brought forward business and depreciation losses have been excluded from income computed to calculate super tax in the case of the abovementioned sectors.

    FBR sources said that Large Taxpayers Unit (LTU) Karachi had submitted its proposals related to super tax with estimated revenue generation of Rs2 billion.

    The LTU Karachi in its proposals said that the proposed amendment would bring uniform chargeability of super tax to all taxpayers including taxpayers falling within the purview of Fourth, Fifth, Seventh and Eighth Schedules of Income Tax Ordinance, 2001.

    Fourth Schedule mainly deals with Insurance companies.

    Fifth Schedule is related to exploration and production companies.

    Seventh Schedule is about banking companies.

    While Eighth Schedule covers capital gains and National Clearing Company Pakistan Limited (NCCPL).

  • Duty exemption on foreign bandwidth services withdrawn

    Duty exemption on foreign bandwidth services withdrawn

    The Federal Board of Revenue (FBR) has announced the withdrawal of duty exemption on foreign bandwidth services provided by telecom operators.

    (more…)
  • FBR empowered to probe foreign remittances above Rs5 million received in a year

    FBR empowered to probe foreign remittances above Rs5 million received in a year

    ISLAMABAD: Federal Board of Revenue (FBR) has been empowered to probe source of foreign remittances above Rs5 million received by a person in a year.

    According to Finance Bill 2019, an amendment has been proposed to Section 111(4) of Income Tax Ordinance, 2001 in this regard.

    At present the FBR cannot ask source to any amount of foreign exchange remitted from outside Pakistan through normal banking channels up to Rs10 million in a tax year that is encashed into rupees by a scheduled bank and a certificate from such bank is produced to that effect.

    However, this threshold has been reduced to Rs5 million.

    FBR sources said that the proposal had been introduced through Finance Bill 2019 to shut the window for whitening of money.

  • Finance Bill 2019: Advance tax increased by 900 percent on renewal of license by arhatis

    Finance Bill 2019: Advance tax increased by 900 percent on renewal of license by arhatis

    ISLAMABAD: The government has increased the advance tax by 900 percent (nine times) at the time of renewal of license by middleman of a commodity markets in agriculture sector.

    The tax rates have been increased through Finance Bill, 2019 and may be applicable from July 01, 2019.

    The Federal Board of Revenue (FBR) said that presently every market committee is required to collect advance tax from dealers, commission agents and arhatis at the time of issuance or renewal of licenses.

    Now the tax rates are being increase for:

    Class A from Rs10,000 to Rs100,000/-,

    Class B from Rs7,500 to Rs75,000/-,

    Class C from Rs5,000/- to Rs50,000; and

    for any other category from Rs5,000/- to Rs50,000/-.

    The tax has been collected under Section 236J of Income Tax Ordinance, 2001.

    According to the section:

    “236J. Advance tax on dealers, commission agents and arhatis etc.— (1) Every market committee shall collect advance tax from dealers, commission agents or arhatis, etc. at the rates specified in Division XVII of Part-IV of the First Schedule at the time of issuance or renewal of licences.

    (2) The advance tax collected under sub-section (1) shall be adjustable.

    (4) In this section “market committee” includes any committee or body formed under any provincial or local law made for the purposes of establishing, regulating or organizing agricultural, livestock and other commodity markets.”

  • Finance Bill 2019: Law proposed to initiate criminal proceedings against FBR officials

    Finance Bill 2019: Law proposed to initiate criminal proceedings against FBR officials

    ISLAMABAD: The government has framed law to initiate criminal proceedings against officers and officials of Federal Board of Revenue (FBR) for committing corruption.

    A new section 216A to Income Tax Ordinance, 2001 has been proposed through Finance Bill, 2019 as part of the budget 2019/2020 to initiate criminal proceedings against FBR officials.

    The FBR said that in order to effectively check misuse of authority to gain financial benefit, a new enabling provision is being introduced to prescribe rules for initiating criminal proceedings against officers and officials of the Board who deliberately commit acts or fail to act for personal benefits.

    Similar action would also be taken against persons who offer bribes or other financial benefits to the tax employees.

    The proposed section is as follow:

    “216A. Proceedings against persons.—(1) Subject to section 227, the Board shall prescribe rules for initiating proceedings including criminal proceedings against any authority mentioned in section 207 and officer of the Directorates General mentioned in Part II and Part III of Chapter XI including any person subordinate to the aforesaid authorities or officers of the Directorates General who willfully and deliberately commits or omits an act which results in personal benefits and undue advantage to the authority or the person or taxpayer or both.

    (2) Where proceedings under sub-section (1) have been initiated against a person or authority, the Board shall simultaneously intimate the relevant Governmental agency to initiate criminal proceedings against the taxpayer.

    (3) The proceedings under this section shall be without prejudice to any liability that the authority, person or taxpayer may incur under any other law for the time being in force.”

  • No provision for non-filers to purchase immovable property, motor vehicle: FBR

    No provision for non-filers to purchase immovable property, motor vehicle: FBR

    ISLAMABAD: Federal Board of Revenue (FBR) has said that no such provision was proposed through Finance Bill 2019 to allow non-filers to purchase immovable property or motor vehicles.

    In a statement on Wednesday, the FBR strongly refuted the news appearing in some sections of press which states that the new Finance Bill has allowed the non-filers to purchase immovable property or cars.

    The actual position is that the whole system of recognizing a non filer as a legal entity has been done away with in the new Finance Bill.

    FBR has explained that under Income Tax Ordinance, every person earning taxable income ought to file his Income Tax Returns.

    In case of failure of filing of Returns by persons involved in significant monetary transactions, a complete mechanism has been provided in the newly inserted 10th Schedule.

    such persons will not only have to pay 100 percent more tax at Withholding stage but will also be automatically assessed to tax and his imputable income will be treated as concealed income liable to penalties and prosecution.

  • Finance Bill 2019: Amnesty on immovable property purchase withdrawn

    Finance Bill 2019: Amnesty on immovable property purchase withdrawn

    ISLAMABAD: The government has withdrawn a permanent amnesty for not explaining the source of investment in purchasing immovable properties.

    The government has proposed to withdraw this provision through Finance Bill, 2019 as part of budget 2019/2020, presented on Tuesday.

    The Federal Board of Revenue (FBR) in its income tax salient features said that 3 percent tax for not explaining the source of investment is being withdrawn.

    Section 236W was introduced to Income Tax Ordinance, 2001 through Income Tax (Fourth Amendment) Act, 2016 dated December 02, 2016. This section was granted immunity from declaring source of investment for the purchase of immovable properties.

    The FBR said that in Pakistan the Real Estate sector is one of the biggest sources of money laundering and is used as a parking lot for untaxed as well as ill-gotten money.

    In view of this a wide range of steps have been taken to restructure the taxation of this sector.

    The various steps being taken are as under:-

    (i) At present, the Board has issued valuation tables of immovable properties in 21 major cities wherein such properties are valued at a value higher than the DC rates. The purchasers are also required to pay 3 percent tax on the difference between the DC value and FBR value of property to explain the source of investment to the extent of differential between FBR value and DC value. The rates notified by the Board are still considerably lower than actual market value. It is therefore intended that FBR rates of immovable properties would be taken closer to or about 85 percent of actual market value.

    (ii) As the increase in FBR values of immovable property is going to increase the incidence of tax on genuine buyers and sellers, the rate of withholding tax on purchase of immovable property is being reduced from 2 percent to 1 percent.

    (iii) At present, withholding tax on purchase of property is attracted only if the value of property is more than four million rupees. The threshold of four million rupees is being abolished and withholding tax on purchase is to be collected irrespective of the value of property.

    (iv) At present, there is no withholding tax on sale of property if the property is held for a period of more than three years. Since capital gain is to be taxed under normal tax regime even beyond the period of three years, withholding tax on sale of property would be collected where the holding period is up to five years.

    (v) Presently the law imposes restriction on registration or transfer of property having fair market value exceeding rupees five million in the name of a non-filer. The aforesaid restriction placed on purchase of immovable property is being withdrawn.

  • Finance Bill 2019: Final Tax Regime withdrawn

    Finance Bill 2019: Final Tax Regime withdrawn

    ISLAMABAD: The government has decided to withdraw Final Tax Regime (FTR) and bring various sectors into the documented economy.

    The FTR has been proposed to be abolished through Finance Bill, 2019 as part of budget 2019/2020, which was presented on Tuesday.

    The Federal Board of Income tax by its inherent nature is tax charged and levied on income.

    However presently persons involved in certain transactions are not required to pay tax on their actual profit.

    Instead, the tax collected or deducted on these transactions is treated as final tax liability.

    This regime is available persons to such as commercial importers, commercial suppliers of goods, contractors, persons deriving brokerage or commission income and persons earning income from CNG stations.

    “The tax collected or deducted from the aforesaid persons shall now be treated as minimum tax liability except for exporters, persons winning prizes and sellers of petroleum products.”

    This measure is designed as a first step for gradual phasing out of the final tax regime and transition to income based taxation for all persons.

  • Budget 2019/2020: Rs5,550 billion tax collection target set to reduce fiscal deficit

    Budget 2019/2020: Rs5,550 billion tax collection target set to reduce fiscal deficit

    ISLAMABAD: State Minister for Revenue Muhammad Hammad Azhar on Tuesday said that the government has set a challenging target of Rs5,550 billion revenue collection target for Federal Board of Revenue (FBR) in order to reduce the fiscal deficit.

    Presenting budget for fiscal year 2019/2020 on floor of house, the state minister said that by reducing imports and aiming for higher exports.

    “We want to bring current account deficit from $13 billion estimated this year to $6.5 billion in 2019-20,” he said.

    For increasing exports, the government will:

    Support duty structure on raw materials and intermediate goods

    Improve mechanism for tax refunds

    Provide electricity and gas at competitive cost

    Redo the Free Trade Agreements and make Pakistan part of the global value chain.

    He said that a challenging target of Rs.5,555 billion FBR revenue collection will be combined with aggressive expenditure controls to reduce primary deficit to 0.6 percent of GDP.

    Both the civil and military governments have announced unprecedented reduction in expenditure.

    He said that the government’s top priority is to enhancement of taxes.

    Pakistan has one of the lowest tax-to-GDP ratios at below 11 percent which is lower than others in our region. Only 2 million people file income tax returns – of which 600,000 are employees. 380 companies alone account for more than 80 percent of the total tax.

    There are over 341,000 electricity and gas connections – but only 40,000 are registered with sales tax.

    Only 1.4 million out of 3.1 million commercial consumers pay tax. There are estimated 50 million bank accounts but only 10 percent pay taxes. Out of 100,000 companies registered with Securities and Exchange Commission of Pakistan (SECP only half pay tax.

    Many rich do not to contribute to our taxes. This has to change in Naya Pakistan.

    Austerity shall be put in place in the regular civil and defence budgets. As a result, the running of civil government which was Rs.460 billion this year, is being budgeted at Rs.437 billion for the coming year, a decrease of 5 percent.

    The defence budget is being maintained at the last year level of Rs.1,150 billion. “In taking these difficult decisions on austerity, I want to appreciate the wisdom of the Prime Minister and the support of armed forces leadership in particular the Army Chief. Let me be clear on one point the sovereignty and defence of Pakistan is paramount.”

    All other considerations are secondary to that of national dignity and honour. We will ensure that the capacity of our armed forces to defend our country and our people is never compromised.

    Pakistan cannot develop until we reform our tax system. Historically, we have under allocated for health, education, drinking water, municipal services, and things that matter to the people. Now we are reaching a point where we have difficulty in paying our debts and even our salaries without recourse to borrowing. This situation has got to change.