Tag: Federal Board of Revenue

The Federal Board of Revenue is Pakistan’s apex tax agency, overseeing tax collection and policies. Pakistan Revenue is committed to providing timely updates on the Federal Board of Revenue to its readers.

FBR excludes salary persons from audit selection

ISLAMABAD: Federal Board of Revenue (FBR) on Thursday issued Audit Policy 2018 and excluded salary persons from selection of audit.

The following exclusions have been identified and approved by the Board under relevant rules where selection for audit by the Board is not required.

Income Tax

i. All cases already selected for audit by the Commissioners Inland Revenue or Director I&I (IR) under section 177 of the Income Tax Ordinance for any of the preceding three Tax Years i.e 2014, 2015, 2016

ii. All cases already selected for audit under section 214D of the Income Tax Ordinance, 2001, for any of the preceding three Tax Years i.e 2014, 2015, 2016

iii. All cases where income chargeable to tax under the head salary exceeds 50% of taxable income, except cases having business income. Directors of companies do not qualify for this exclusion.

iv. All cases where entire income is covered under Final Tax Regime (FTR)

Sales Tax

All cases already selected under section 25 and 38 of Sales Tax Act, 1990 by the Commissioner Inland Revenue or Director I&I (IR) for tax periods corresponding to the accounting period adopted for the purpose of return of income under the Income Tax Ordinance, 2001 for Tax Year 2016

Provided that where only a part of the said accounting period had been audited already, the relevant authority may select the remaining period for audit.

ii. All cases already selected for audit under section 72B through computer ballot held under Taxpayers’ Audit Policy, 2017

iii. All cases of Steel Melters and Steel Re-rollers who are paying sales tax under the Sales Tax Special Procedure Rules, 2007.

iv. Federal, Provincial and Local Government Departments.

Federal Excise

i. All cases already selected under section 46 of the Federal Excise Act, 2005 by the Commissioner Inland Revenue or Director I&I (IR) for tax periods corresponding to the accounting period adopted for the purpose of return of income under the Income Tax Ordinance, 2001 for tax year 2016.

Provided that where only a part of the said accounting period had been audited already, the relevant authority may select the remaining period for audit.

ii. All cases already selected for audit under section 42B through computer ballot held under Taxpayers’ Audit Policy, 2017

iii. Federal, Provincial and Local Government Department.

April 4, 2019
FBR selects 14,164 audit cases through computerized balloting

ISLAMABAD: Federal Board of Revenue (FBR) on Thursday selected total 14,164 audit cases through computerized balloting in income tax, sales tax and federal excise duty cases.

The FBR selected 10,982 audit cases under Section 214C of Income Tax Ordinance, 2001.

The revenue body selected around 3,126 sales tax cases under Section 72B of Sales Tax Act, 1990.

Further, 56 cases have been selected under Section 42B of Federal Excise Act, 2005.

April 4, 2019
Sales Tax Act 1990: zero rating on export, supply of goods

KARACHI: The sales tax laws have allowed zero rating of sales tax on exports or supply of goods.

According to updated Sales Tax Act, 1990 issued by Federal Board of Revenue (FBR), the Section 4 of the Act explained the zero rating.

Section 4: Zero rating

Notwithstanding the provisions of section 3 except those of sub-section (1A), the following goods shall be charged to tax at the rate of zero per cent:

(a) goods exported, or the goods specified in the Fifth Schedule;

(b) supply of stores and provisions for consumption aboard a conveyance proceeding to a destination outside Pakistan as specified in section 24 of the Customs Act, 1969 (IV of 1969);

(c) such other goods as the Federal Government may, by notification in the Gazette, specify:

Provided that nothing in this section shall apply in respect of a supply of goods which –

(i) are exported, but have been or are intended to be re-imported into Pakistan; or

(ii) have been entered for export under Section 131 of the Customs Act, 1969 (IV of 1969), but are not exported; or

(iii) have been exported to a country specified by the Federal Government, by Notification in the official Gazette:

Provided further that the Federal Government may by a notification in the official Gazette, restrict the amount of credit for input tax actually paid and claimed by a person making a zero-rated supply of goods otherwise chargeable to sales tax.

(d) such other goods as may be specified by the Federal Board of Revenue through a general order as are supplied to a registered person or class of registered persons engaged in the manufacture and supply of goods supplied at reduced rate of sales tax.

April 4, 2019
FBR to conduct balloting for audit selection

ISLAMABAD: Federal Board of Revenue (FBR) to conduct balloting for selection of audit cases on Thursday, April 04, 2019.

The balloting will be conducting for audit selection of income tax returns filed for tax year 2017.

Around 1.84 million tax returns were filed for the tax year 2017 by salary persons, business individuals, Association of Persons and corporate entities.

The audit selection would be made in income tax, sales tax and federal excise duty.

The FBR conduct balloting to select audit cases under Section 214C of Income Tax Ordinance, 2001.

April 3, 2019
FBR extends suspension period of two customs officers

ISLAMABAD: Federal Board of Revenue (FBR) has extended in suspension period of two customs officers posted in Karachi for further three months.

In a notification issued on Wednesday, the FBR extended the suspension period of Sultan Aurangzeb, Principal Officer (BS-17), Model Customs Collectorate of Port Muhammad Qasim, Karachi for a period of three months effective from March 31, 2019.

The FBR suspended Sultan Aurangzeb on December 31, 2019 while taking disciplinary action against the officer.

In another notification, the FBR extended in suspension period of Muhammad Sarfaraz Hayat, Preventive Officer (BS-16), Model Customs Collectorate of Preventive, Karachi for a period of three months effective from March 31, 2019.

The FBR suspended Muhammad Sarfaraz Hayat on December 31, 2019 while taking disciplinary action against the officer.

April 3, 2019
Sales Tax Act, 1990: collection of excess sales tax

KARACHI: A person is required to pay sales tax, which was collected under misapprehension of any provision of the act and was not collectable or in excess of tax.

The FBR recently updated Sales Tax Act, 1990 and its Section 3B explained the collection of excess sales tax.

Section 3B: Collection of excess sales tax etc

Sub-Section (1): Any person who has collected or collects any tax or charge, whether under misapprehension of any provision of this Act or otherwise, which was not payable as tax or charge or which is in excess of the tax or charge actually payable and the incidence of which has been passed on to the consumer, shall pay the amount of tax or charge so collected to the Federal Government.

Sub-Section (2): Notwithstanding anything contained in any law or judgement of a court, including the Supreme court and a High court, any amount payable to the Federal Government under sub-section (1) shall be deemed to be an arrear of tax or charge payable under this Act and shall be recoverable accordingly and any claim for refund in respect of such amount shall neither be admissible to the registered person nor payable to any court of law or to any person under direction of the court.

Sub-Section (3): The burden of proof that the incidence of tax or charge referred to in sub-section (1) has been or has not been passed to the consumer shall be on the person collecting the tax or charge.

April 2, 2019
FBR notifies Benami zones for initiating cases across country

In a significant move to combat Benami transactions, the Federal Board of Revenue (FBR) has announced the establishment of three dedicated zones in major cities across the country.
(more…)

April 2, 2019
FBR’s tax collection gap widens by Rs295bn; needs Rs1,698bn in three months to meet target

ISLAMABAD: The deficit in tax collection has soared by 295 billion in first nine month of current fiscal year making it an impossible task for Federal Board of Revenue (FBR) to achieve Rs4,398 billion target for current fiscal year.

The revenue collection for July – March 2019 was stood at Rs2,700 billion as against the target of Rs2,995 billion.

The widening of tax gap posed a serious trouble for the government in meeting development expenditures and curtailing fiscal deficit.

The State Bank of Pakistan (SBP) has already projected the fiscal deficit at 6 to 7 percent as against actual target of 4.9 percent of the GDP for the fiscal year 2018/2019.

According to provisional collection the FBR collected Rs358 billion. The collection target for the month of March was Rs432 billion.

FBR sources said that the collection of advance tax witnessed steep fall due to shrinking profitability of the corporate sector.

The corporate sector pay advance income tax in March on the assumption of their income in the three quarters.

As per the latest development in the revenue collection the FBR will required Rs1,698 billion during next three months in order to achieve the revenue collection target of Rs4,398 billion.

April 1, 2019
Sales Tax Act 1990: 17 percent applicable on taxable supplies

KARACHI: A normal sales tax rate at 17 percent is applicable on taxable supplies made by registered person.

Federal Board of Revenue (FBR) issued recently the updated Sales Tax Act, 1990 under which its Section 3 explained the scope of tax.

Section 3: Scope of tax

Sub-Section (1): Subject to the provisions of this Act, there shall be charged, levied and paid a tax known as sales tax at the rate of seventeen percent of the value of–

(a) taxable supplies made by a registered person in the course or furtherance of any taxable activity carried on by him; and

(b) goods imported into Pakistan, irrespective of their final destination in territories of Pakistan.

Sub-Section (1A): Subject to the provision of sub section (6) of section 8 or any notification issued thereunder, where taxable supplies are made to a person who has not obtained registration number, there shall be charged, levied and paid a further tax at the rate of three percent of the value In addition to the rate specified in sub sections (1), (1B), (2), (5), (6) and section 4 provided that the Federal Govt. may, by notification in the official Gazette, specify the taxable supplies in respect of which the further tax shall not be charged, levied and paid.

Sub-Section (1B): The Board may, by notification in the Official Gazette, in lieu of levying and collecting tax under sub section (1) on taxable supplies, levy and collect tax –

(a) On the production capacity of plants, machinery, undertaking, establishments or installation producing on manufacturing such goods; or

(b) On fixed basis, as it may deem fit, from any person who is in a position to collect such tax due to the nature of the business.

Sub-Section (2): Notwithstanding the provisions of sub-section (1): –

(a) taxable supplies specified in the Third Schedule shall be charged to tax at the rate of seventeen per cent of the retail price or in case such supplies are also specified in the Eighth Schedule, at the rates specified therein and the retail price thereof, along with the amount of sales tax shall be legibly, prominently and indelibly printed or embossed by the manufacturer on each article, packet, container, package, cover or label, as the case may be;
Provided that the Federal Government, may, by notification in the official Gazette, exclude any taxable supply from the said Schedule or include any taxable supply therein;

(aa) goods specified in the Eighth schedule shall be charged to tax at such rates and subject to such conditions and limitations as specified therein; and

(b) the Federal Government may, subject to such conditions and restrictions as it may impose, by notification in the official Gazette, declare that in respect of any taxable goods, the tax shall be charged, collected and paid in such manner and at such higher or lower rate or rates as may be specified in the said notification.

Sub-Section (3): The liability to pay the tax shall be,-

(a) in the case of supply of goods, of the person making the supply, and

(b) in the case of goods imported into Pakistan, of the person importing the goods.

April 1, 2019
FBR establishes directorate for taking action against undeclared offshore assets

ISLAMABAD: Federal Board of Revenue (FBR) has established Directorate General of International Tax Operations to initiate legal proceedings in undeclared offshore assets by Pakistanis.

The FBR issued notification to set up the directorate on March 29, 2019. The directorate will have head office in Islamabad and its subordinate offices will be at Lahore, Peshawar, Multan, Karachi, Quetta.

The directorate was introduced through Finance Supplementary (Second Amendment) Act, 2019 by inserting Section 230E to Income Tax Ordinance, 2001.

The functions and powers of the directorate general of international tax operations would be:

a. receive and send information from other jurisdictions under spontaneous, automatic and on demand exchange of information under exchange of information agreements.

b. Levy and recover tax by passing an assessment order under section 123(1A) in case of undeclared offshore assets and incomes.

c. Receive, transmit and exchange country by country reports of the jurisdictions that are parties to international agreements with Pakistan.

d. Conduct transfer pricing audit in cases selected for such audit by the directorate genera of international tax operations.

March 31, 2019