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.

Advance tax on dealers, commission agents

KARACHI: Every market committee has been required to collect advance tax from dealers, commission agents under income tax laws.

The Federal Board of Revenue (FBR) recently updated Income Tax Ordinance, 2001 under which advance tax is collectable from dealers, commission agents and arhatis under Section 236J.

Section 236J: Advance tax on dealers, commission agents and arhatis etc

Sub-Section (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.

The rate of collection of tax under section 236J shall be as follows:

Group Amount of tax
(per annum)
Group or Class A: Rs. 10,000
Group or Class B: Rs. 7,500
Group or Class C: Rs. 5,000
Any other category: Rs. 5,000

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

Sub-Section (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.

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Income Tax Ordinance 2001: amended advance tax rates on marriages, functions
Income Tax Ordinance 2001: advance tax on sale, purchase of immovable properties

March 23, 2019
SBP directs banks to ensure OTC tax collection by March 27

KARACHI: State Bank of Pakistan (SBP) on Friday directed all commercial banks to ensure receiving payment of duty and taxes through over the counter (OTC) channel.

The SBP said that the finance department through circular on July 17, 2018 made it mandatory for banks to enable their Over-the-Counter (OTC) Channel for collection of taxes and duties.

Complaints are pouring in from different quarters, regarding non-entertaining of tax payment requests through banks’ OTC Channel.

So much so that Federal Board of Revenue (FBR) has formally launched a complaint that PSIDs generated by WeBOC system for payment of customs duty and other taxes especially the levy on Mobile devices are not being entertained, by the bank branches.

In view of the above, all banks were advised vide email dated 15th March 2019 to improve their customer services in facilitating taxpayers with due courtesy.

Despite the above-referred instructions, there is no visible improvement, as complaints from different quarters are still landing with us.

It is therefore advised to share these instructions with all your branches across the country with the advice to ensure meticulous compliance and facilitate the taxpayers in payment of taxes and duties under the I Link’s OTC facility.

The branches shall also prominently display on their respective Notice Boards that “Taxes and Duties are accepted here under the 1Link’s OTC facility”. Further, banks shall also ensure that the branch staff has adequate understanding of the mechanism for collection of taxes and duties under the said facility.

The banks shall inform this department within 3 working days of the date of circular i.e. 27th March 2019 that these instructions have been communicated to all their branches for meticulous compliance and that the Notice Boards of branches are prominently displaying the message that “Taxes and Duties are accepted here under the 1Link’s OTC facility”.

March 23, 2019
Option of refund through bonds can be availed by March 25: FBR

ISLAMABAD: Federal Board of Revenue (FBR) has asked sales tax refund claimants to avail option of bonds by March 25, 2019.

“Those who wish to be included in the first phase of bond issuance may furnish their options by March 25, 2019,” the FBR said in a notice on Thursday.

The FBR said that in order to facilitate exporters and other businesses, it has been decided to issue them sales tax refund bonds in the Sales Tax Act, 1990 for this purpose:

The bonds shall be tradeable, SLR eligible and shall act as collateral for getting bank loans.

The bonds also carry simple profit of 10 percent per annum over three-year maturity period.

The FBR said that those claimants willing to get refund payment through bonds may furnish their options.

March 21, 2019
FBR notifies promotion of IR officers to BS-16

ISLAMABAD: Federal Board of Revenue (FBR) on Thursday notified promotions of steno-typists and supervisors/head clerks of Inland Revenue Department to BS-16 with immediate effect.

Through a notification following steno-typists have been promoted as assistant private secretary (BS-16) on regular basis with immediate effect:

01. Alamgir Khan, RTO Peshawar

02. Sirajuddin, RTO Peshawar

03. Zaheer Iqbal, RTO Rawalpindi (He will actualize promotion with effect from April 14 on retirement of Javaid Mukhtar, APS (BS-16), RTO Rawalpindi.

04. Khalid Mehmood, RTO Gujranwala

05. Muhammad Khalid, RTO Gujranwala

Through another notification, the following supervisors/head clerks of Inland Revenue Department have been promoted to the post of Office Superintend Inland Revenue (BS-16) with immediate effect:

01. Muhammad Ramazan, Supervisor, RTO Islamabad

02. Noor Zaman, Supervisor, RTO Peshawar

03. Muhammad Mukhtiar, head clerk, RTO Peshawar

04. Muhammad Younis, Supervisor, RTO Sahiwal

05. Muhammad Mushtaq, Supervisor, RTO Sahiwal

The FBR said that promotion would take effect subject to the condition that no disciplinary proceedings are pending against them.

March 21, 2019
Income Tax Ordinance 2001: return filers can claim tax adjustment paid on educational fee

KARACHI: Income tax return filers can claim adjustment of advance tax paid on educational fee.

According to updated Income Tax Ordinance, 2001 issued by Federal Board of Revenue (FBR) the advance tax collected on education fee under Section 236I is adjustable against total income tax liability of a taxpayer.

Section 236I: Collection of advance tax by educational institutions

Sub-Section (1): There shall be collected advance tax at the rate specified in Division XVI of Part-IV of the First Schedule on the amount of fee paid to an educational institution.

The rate of collection of tax under section 236I shall be 5 percent of the amount of fee.

Sub-Section (2): The person preparing fee voucher or challan shall charge advance tax under sub-section (1) in the manner the fee is charged.

Sub-Section (3): Advance tax under this section shall not be collected from a person on an amount which is paid by way of scholarship or where annual fee does not exceed two hundred thousand rupees.

Sub-Section (4): The term “fee” includes, tuition fee and all charges received by the educational institution, by whatever name called, excluding the amount which is refundable.

Sub-Section (5): Tax collected under this section shall be adjustable against the tax liability of either of the parents or guardian making payment of the fee.

Sub-Section (6): Advance tax under this section shall not be collected from a person who is a non-resident and,—

(i) furnishes copy of passport as an evidence to the educational institution that during previous tax year, his stay in Pakistan was less than one hundred eighty-three days;

(ii) furnishes a certificate that he has no Pakistan-source income; and
(iii) the fee is remitted directly from abroad through normal banking channels to the bank account of the educational institution.

March 21, 2019
FBR outlines sales tax amendments through second supplementary finance act

ISLAMABAD: Federal Board of Revenue (FBR) has summarized amendments to sales tax regime through Finance Supplementary (Second Amendment) Act, 2019 and directed the officials of Inland Revenue to take necessary action for implementation.

The FBR said that to liquidate huge amount claimed by taxpayers in refunds which have been accumulated over a long time, the government has decided to pay the same through sales tax refund bonds, which shall have a maturity period of three years.

Simple profit at 10 percent per annum is also proposed to be paid. The claimants shall also be able to raise the much needed cash by selling these notes in the security market.

A new Section 67A has been inserted in the Sales Tax Act, 1990 to include enabling provisions for payment of refunds in this manner and also to provide for regulatory mechanism relating to issuance, transfer, redemption and other related matters.

The FBR said that in the Sixth Schedule, the exemption of sales tax already available in relation to plant, machinery and equipment required for power generation from renewable sources of energy has been guaranteed up to June 30, 2023, to provide for certainty and confidence to investors. Same protection has been ensured on the import side of the similar equipment as covered under the Sixth Schedule.

The FBR said that keeping in view the difficulties being faced by cancer patients and also on the orders of the Supreme Court, items related to ostomy procedures for treatment of cancer patients, which were not expressly and exhaustively mentioned in Sixth Schedule to Sales Tax Act, 1990, have now been so covered by substituting Serial Number 117 and relating it to heading 99.25 in the First Schedule to the Customs Act.

The FBR said that presently sales tax exemption on plant and machinery is available only to specified sectors. Others sectors have to pay sales tax on import of plant and machinery.

This sales tax is adjustable against future output tax but such adjustment takes place after a long time when the industry starts selling its product. This serves as an impediment to investment by increasing initial costs.

In order to encourage green field investment and industrialization, exemption from payment of sales tax on imported plant and machinery to be used for setting up new industry for production of taxable goods has been provided by amending Sixth Schedule to the Sales Tax Act, 1990, as imported by the persons registered on or after 1st July, 2019 through Sr No 150 in Table 1 of Sixth Schedule to the Sales Tax Act, 1990.

The FBR said that the new rates on the import of cellular mobile phones have been introduced by substitution in the Ninth Schedule to the Sales Tax Act, 1990.

March 20, 2019
FBR explains FED on motor vehicles under Second Amendment Act

ISLAMABAD: Federal Board of Revenue (FBR) on Wednesday explained the amendment of Federal Excise Duty (FED) on imported and locally manufactured vehicles through Finance Supplementary (Second Amendment) Act, 2019.

The FBR said that Serial Number of Table 1 of the First Schedule to the FED Act, 2005 had been amended and duty of the imported motor vehicles of 1800 cc to 3000cc had been enhanced to 25 percent ad valorem.

Further, a new Serial Number 55A has been inserted whereby rate of federal excise duty has been enhanced to 30 percent ad valorem on import of motor cars, SUVs and other motor vehicles of cylinder capacity of 3000cc of above (other than those vehicles as designed for the transport of 10 or more persons.

The FBR said that federal excise duty on locally manufactured cars SUVs etc. of engine capacity exceeding 1700CC and above at 10 percent ad valorem had also been introduced.

March 20, 2019
FBR assigns Benami properties cases to BTB zones

ISLAMABAD: Federal Board of Revenue (FBR) has assigned Broadening of Tax Base (BTB) Zones to initiate cases against Benami properties and directed to submit challan within 120 days.

The FBR on Wednesday said Benami Transactions (Prohibition) Rules, 2019 have been enforced with immediate effect and BTB zones of Inland Revenue Service have been assigned the duty to establish cases against Benami properties and submit challan to Adjudication Authority within 120 working days.

After Implementation of Benami Transactions (Prohibition) Rules, 2019.The Federal Board of Revenue (FBR) has clarified that a Benami property means any property which is subject matter of Benami transaction and also includes proceeds from such property.

Benami transaction encompasses where a property is transferred to, or is held by, a person and the consideration for such property has been provided, or paid by, another person ( the trustees and wife, children, brother or sister to whom property has been transferred from known resources will be excluded);

A transaction or arrangement in respect of a property carried out or made in a fictitious name; or a transaction or arrangement in respect of a property where the owner of the property is not aware of, or denies knowledge of, such ownership; or a transaction or arrangement in respect of a property where the person providing the consideration is not traceable or is fictitious.

The potential types of Benami properties include plots, houses, shopping plazas, shops, housing schemes, bank accounts, vehicles, business shares, jewellery, foreign currency, legal documents and intangible properties having financial value.

During this period, sale, purchase and transfer of property will be banned till further orders.

Appeal against the decision of Adjudication Authority can be lodged with the Federal Tribunal and after the decision of the Federal Tribunal such properties will be confiscated and sold out by the federal government.

Furthermore, if the crime of Benami transactions proved, criminal proceedings will be initiated against accused persons and where proven guilty, rigorous imprisonment of one year to seven years can be awarded to such persons. Similarly, persons providing false and baseless information can also be sentenced to rigorous imprisonment of six months to five years.

In this regard, the whistleblowers will be entitled to a cash reward for providing credible information leading to detection of Benami property or transaction. If property is worth Rs.2,000,000 or less, five percent of price of Benami property will be given to informer.

If property’s worth is more than Rs.2,000,000 or 5,000,000, four percent of Benami property will be given to informer and where the value of property will be more than Rs.5,000,000, three percent of Benami property will be given to informer.

It is clarified that this reward will be given only if the information provided is of value and FBR doesn’t already have it and the information was not available in public records and appeal against confiscation of property has attained finality.

March 20, 2019
Advance tax on sales to distributors, dealers and wholesalers

KARACHI: Federal Board of Revenue (FBR) has made manufacturers responsible for collecting advance tax on sales to distributors, dealers and wholesalers.

The tax has been imposed under Section 236G of Income Tax Ordinance, 2001.

Section 236G: Advance tax on sales to distributors, dealers and wholesalers

Sub-Section (1): Every manufacturer or commercial importer of electronics, sugar, cement, iron and steel products, fertilizer, motorcycles, pesticides, cigarettes, glass, textile, beverages, paint or foam sector, at the time of sale to distributors, dealers and wholesalers, shall collect advance tax at the rate specified in Division XIV of Part IV of the First Schedule, from the aforesaid person to whom such sales have been made.

The rate of collection of tax under section 236G shall be as follows:-

Category of Sale Rate of Tax
Filer Non-Filer
Fertilizers 0.7 percent 1.4 percent
Other than Fertilizers 0.1 percent 0.2 percent

Sub-Section (2): Credit for tax collected under sub-section (1) shall be allowed in computing the tax due by the distributor, dealer or wholesaler on the taxable income for the tax year in which the tax was collected.

Section 236H: Advance tax on sales to retailers

Sub-Section (1): Every manufacturer, distributor, dealer, wholesaler or commercial importer of electronics, sugar, cement, iron and steel products, motorcycles, pesticides, cigarettes, glass, textile, beverages, paint or foam sector, at the time of sale to retailers, “and every distributor or dealer to another wholesaler in respect of the said sectors”, shall collect advance tax at the rate specified in Division XV of Part IV of the First Schedule, from the aforesaid person to whom such sales have been made.

The rate of collection of tax under section 236H on the gross amount of sales shall be as follows:-

Category of sale Rate of tax
Filer Non-Filer
(1) (2) (3)
Electronics 1 percent 1 percent
Others 0.5 percent

Sub-Section (2): Credit for the tax collected under sub-section (1) shall be allowed in computing the tax due by the retailer on the taxable income for the tax year in which the tax was collected.

Section 236HA: Tax on sale of certain petroleum products

Sub-Section (1): Every person selling petroleum products to a petrol pump operator or distributor, where such operator or distributor is not allowed a commission or discount, shall collect advance tax on ex-depot sale price of such products at the rate specified in Division XVA of Part IV of the First schedule.

The rate of collection of tax under section 236HA shall be 0.5 percent of ex-depot sale price for filers and 1 percent for non-filers.

Sub-Section (2): The tax deductible under sub-section (1) shall be a final tax on the income arising from the sale of petroleum products to which sub-section (1) applies.

Related Stories
Income Tax Ordinance 2001: advance tax on electronic media, cable operators
Income Tax Ordinance 2001: amended advance tax rates on marriages, functions
Income Tax Ordinance 2001: advance tax on sale, purchase of immovable properties
Income Tax Ordinance 2001: advance tax on domestic, international air tickets
Income Tax Ordinance 2001: advance tax on electricity consumption

March 20, 2019
FBR extends last date for submitting customs proposals for budget 2019/2020

ISLAMABAD: Federal Board of Revenue (FBR) has extended the last date for submitting customs related budget proposals for 2019/2020.

In a notification to all chambers and association, the FBR said that the board issued a letter on January 25, 2019 for submitting customs proposals for budget 2019/2020.

The proposals would cover three areas i.e. changes in Customs Tariff rates, Rules/Procedures and Customs Act, 1969.

The FBR said that to enable the Customs Wing of the FBR to properly process and evaluate each proposal, three separate formats had been attached to the letter for preparing the proposals on MS Excel Sheets.

The FBR said that while formulating the proposals, provision of the existing customs tariff rates/law may carefully be studied/consulted.

Wherever required the proposal may be supported with the statistical data etc. so that it is not dropped on account of any such infirmity.

In case of local manufacturer claiming tariff protection on its finished products or concession o its raw materials, complete given annexure as well, without which it would not be possible to process these types of proposals.

It is requires that the proposals may be sent to the FBR by March 25, 2019.

The government is scheduled to announce the budget 2019/2020 in the first week of June 2019.

March 19, 2019