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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.

  • FBR extends last date for filing return up to March 31

    FBR extends last date for filing return up to March 31

    ISLAMABAD: Federal Board of Revenue (FBR) has extended the last date for filing income tax returns and wealth statements up to March 31, 2019, which will enable the late filers to become part of active taxpayers list.

     FBR issued Circular 02/2019 on Friday and extended the last date for salary persons and final taxations which was due on August 31, 2018 and extended up to December 15, 2018 has been further extended up to March 31, 2019.

     The date of filing of returns of total income and statement of final taxation for companies, individuals and association of persons which were due on September 30, 2018 and extended up to December 15, 2018 has been extended up to March 31, 2019.

     Further the date of filing of returns of total income and statement of final taxation for companies which were due on December 31, 2018 has been further extended to March 31, 2019.

  • Income Tax Ordinance 2001: advance tax on domestic, international air tickets

    Income Tax Ordinance 2001: advance tax on domestic, international air tickets

    KARACHI: Passengers traveling through domestic or international airlines are required to pay certain amount of advance tax on purchase of air tickets.

    According to Income Tax Ordinance, 2001 issued by Federal Board of Revenue (FBR) passengers of domestic and international destinations are required to pay advance tax under Section 236B and Section 236L.
    Section 236B: Advance tax on purchase of air ticket.

    Sub-Section (1): There shall be collected advance tax at the rate specified in Division IX of Part IV of the First Schedule, on the purchase of gross amount of domestic air ticket:

    (The rate of tax to be deducted under section 236B shall be 5 percent of the gross amount of air ticket.)

    “Provided that this section shall not apply to routes of Baluchistan coastal belt, Azad Jammu and Kashmir, Federally Administered Tribal Areas, Gilgit-Baltistan and Chitral.”

    Sub-Section (2): The airline issuing air ticket shall charge advance tax under sub-section (1) in the manner air ticket charges are charged.

    Sub-Section (2A): The mode, manner and time of collection shall be as may be prescribed.

    Sub-Section (3): The advance tax collected under sub-section (1) shall be adjustable.

    Section 236L: Advance tax on purchase of international air ticket
    Sub-Section (1): Every airline, issuing ticket for journey originating from Pakistan, shall collect advance tax at the rates specified in Division XX of Part IV of the First Schedule, on the gross amount of international air tickets issued to passengers booking one-way or return, from Pakistan.
     

    01First/Executive ClassRs16,000 per person
    02Other excluding EconomyRs12,000 per person
    03Economy0

     
    Sub-Section (2): The airline issuing air ticket shall collect or charge advance tax under sub-section (1) in the manner air ticket charges are collected or charged, either manually or electronically.

    Sub-Section (3): The mode, manner and time of collection under sub-section (1) and time of collection shall be as may be prescribed.

    Sub-Section (4): The advance tax collected under sub-section (1) shall be adjustable.

  • Foreign Remittances: Non-filers get exemption on cash withdrawal

    Foreign Remittances: Non-filers get exemption on cash withdrawal

    KARACHI: The government has granted exemption from deduction of income tax on cash withdrawal by non-filers from Pak Rupee bank accounts, which have been opened for receiving foreign remittances.

    Through Finance Supplementary (Second Amendment) Act, 2019 a clause 101A has been inserted to Second Schedule of Income Tax Ordinance, 2001.

    It said: “The provisions of Section 231A shall not apply to Pak Rupee account if the deposits in the account are made solely from foreign remittances credited directly into such account.”

    The Section 231A is related to deduction of withholding tax on cash withdrawal from banking system.

    The government through the latest Act already exempted deduction of withholding tax on cash withdrawal by filers of income tax returns.

    The instant clause also exempts the non-filers of income tax returns if their bank accounts receive foreign remittances.

    Sources in Federal Board of Revenue (FBR) said that the measures have been taken to promote inflows of foreign remittances through normal banking system.

    The sources further said that on normal transactions by non-filers a tax rate of 0.6 percent will apply on cash withdrawal of Rs50,000 per day.

  • Advance tax rates enhanced by 50pc for non-filers on motor vehicle purchase

    Advance tax rates enhanced by 50pc for non-filers on motor vehicle purchase

    KARACHI: The government has allowed non-filers to purchase locally manufactured motor vehicles but at the same time the advance tax rates for non-compliant taxpayers have been increased by 50 percent.

    Federal Board of Revenue (FBR) said that the rates have been revised upward on purchase and registration of new locally manufactured cars by non-filers and these rates would be applicable from the date of approval of Finance Supplementary (Second Amendment) Act, 2019.

    Following are the rates for non-filers on purchase of motor vehicles:

    S. NoEngine capacityOld ratesNew rates
    01Up to 850ccRs10,000Rs15,000
    02851cc to 1000ccRs25,000Rs37,500
    031001cc to 1300ccRs40,000Rs60,000
    041301cc to 1600ccRs100,000Rs150,000
    051601cc to 1800ccRs150,000Rs225,000
    061801cc to 2000ccRs200,000Rs300,000
    072001cc to 2500ccRs300,000Rs450,000
    082501cc to 3000ccRs400,000Rs600,000
    09Above 3000ccRs450,000Rs675,000

     

  • Return filers enjoy tax free banking transactions

    Return filers enjoy tax free banking transactions

    KARACHI: The income tax filers have started enjoying withholding tax exemption on transactions of money through banking channels.

    After the implementation of amendments made through Finance Supplementary (Second Amendment) Act, 2019 the income tax return filers are no more required to pay 0.6 percent withholding tax on cash withdrawal.

    The exemption is applicable on the taxpayers, who are appeared on the Active Taxpayers List (ATL) for tax year 2018.

    Before the amendment the rate of withholding tax was 0.3 percent for return filers on cash withdrawal of Rs50,000 in aggregate from banking system per day.

    In order to give incentives to compliant taxpayers and encourage return filing the government exempted the withholding tax on cash withdrawal.

    Now the withholding tax on any banking transactions i.e. cash or non-cash transactions is only applicable on non-filers of income tax returns.

    The non-filers are required to pay 0.6 percent on transactions under Section 231A and Section 236P of Income Tax Ordinance, 2001 on transactions of Rs50,000 per day.

    Tax experts said that the withholding tax on cash withdrawal on non-filers was major impediment in improving banking deposits.

    They said that it would encourage non-compliant to file their returns and further the measure would also reduce channels of cash economy.

  • Duty free import of plant, machinery allowed for industrial units

    Duty free import of plant, machinery allowed for industrial units

    KARACHI: Federal Board of Revenue (FBR) has allowed duty free import of plant and machinery by industrial and manufacturing units.

    The exemption has been allowed through Finance Supplementary (Second Amendment) Act, 2019 under Chapter 84 and 85 of Customs Act, 1969.

    The FBR said that plant and machinery shall be allowed zero percent customs duty but it should be excluded consumer durable goods and office equipment as imported by Greenfield industries, intending to manufacture taxable goods, during their construction and installation period.

    The exemption of customs duty is available on fulfillment of following conditions, namely:

    (a) the importer is registered under the Sales Tax Act on or after the first day of July, 2019

    (b) the industry is not established by splitting up or reconstruction or reconstruction of an undertaking already in existence or by transfer of machinery or plant from another industrial undertaking in Pakistan.

    (c) exemption certificate issued by the commissioner Inland Revenue having jurisdiction; and

    (d) The goods shall not be sold or otherwise disposed of without prior approval of the FBR and the payment of customs duties and taxes leviable at the time of import.

  • Mobile handset levy increased up to Rs7,000 per set

    Mobile handset levy increased up to Rs7,000 per set

    ISLAMABAD: The government has increased mobile handset levy up to Rs7,000 per set from the date of implementation of Finance Supplementary (Second Amendment) Act, 2019.

    The government through Finance Act, 2018 introduced mobile hand set levy at different rates as values of smart phones were determined in Pak Rupee value.

    However, through Finance Supplementary (Second Amendment) Act, 2019, the determination of value of smart phones has been changed to US Dollar and the categories have been increased to six.

    Following are the amendment to levy on mobile handsets:

    01. Mobile phones have cost and freight value up to $30: No levy

    02. Mobile phones have cost and freight value above $30 and up to $100: No levy

    03. Mobile phones have cost and freight value above $100 and up to $200: Rs500

    04. Mobile phones have cost and freight value above $200 and up to $350: Rs1,500

    05. Mobile phones have cost and freight value above $350 and up to $500: Rs3,500

    06. Mobile phones have cost and freight value above $500: Rs7,000

    Previously there were four categories, which were as follow:

    01. Where Import value of handset (including duties and taxes) does not exceed Rs.10,000/: No levy

    2. Where Import value of handset (including duties and taxes) exceeds Rs.10,000 but does not exceed Rs.40,000/: Rs1,000

    3. Where Import value of handset (including duties and taxes) exceeds Rs.40,000 but does not exceed Rs.80,000/: Rs3,000

    4. Where Import value of handset (including duties and taxes) exceeds Rs.80,000/: Rs5,000

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  • Finance Supplementary (2nd Amendment) Act 2019: Directorate set up for tax recovery from undeclared offshore assets

    Finance Supplementary (2nd Amendment) Act 2019: Directorate set up for tax recovery from undeclared offshore assets

    ISLAMABAD: The federal government has set up Directorate General of International Tax Operations for recovery of tax in undeclared off-shore assets and incomes.

    According to Finance Supplementary (Second Amendment) Act, 2019, the directorate has been established under new section 230E of Income Tax Ordinance, 2001.

    The new section is as follow:

    Section 230E: Directorate General of International Tax Operations:

    Sub-Section (1): The Directorate General of International Tax Operations shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors, Assistant Directors and such other officers as the Federal Board of Revenue (FBR) may, by notification in the official Gazette, appoint.

    Sub-Section (2): The Board may, by notification in the official Gazette,-

    (a) specify the functions and jurisdiction of the Director General and its officers; and

    (b) confer the powers of authorities specified in Section 207 upon the Directorate General and its officers.

    Sub-Section (3): The functions and powers of the Directorate General of International Tax Operations shall include but not limited to –

    (a) receive and send information from other jurisdiction 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 off-shore assets and incomes;

    (c) receive, transmit and exchange country by country reports to the jurisdictions that are parties to international agreements with Pakistan; and

    (d) conduct transfer pricing audit in cases selected for such audit by the Director General of International Tax Operations.

    Sub-Section (4): The FBR may, by notification in the official Gazette, specify the criteria for selection of the taxpayer for transfer pricing audit.

    Explanation: For the removal of doubt, it is clarified that transfer pricing audit refers to the audit for determination of transfer price at arm’s length in transactions between associates and is independent of audit under Section 177 and 214C which is audit of the income tax affairs of the taxpayer.

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  • Motor vehicle purchase restriction on non-filers withdrawn

    Motor vehicle purchase restriction on non-filers withdrawn

    ISLAMABAD: The federal government has allowed non-filers of income tax returns to purchase locally manufactured motor vehicles.

    According to Finance Supplementary (Second Amendment) Act, 2019, the government lifted the mandatory condition of return filing for purchase of motor car.

    Further through the Act, non-resident Pakistani citizens holding international passport have also been allowed to registered imported or locally manufactured cars.

    “227C. Restriction on purchase of certain assets

    Notwithstanding anything contained in any law, for the time being in force,—

    (a) any application for booking, registration or purchase of a new locally manufactured motor vehicle or for first registration of an imported vehicle shall not be accepted or processed by any vehicle registering authority of Excise and Taxation Department or a manufacturer of a motor vehicle respectively, unless the person is a filer.; and

    (b) any application or request by a person to any authority responsible for registering, recording or attesting transfer of any immovable property, exceeding five million rupees, for registering or attesting the transfer shall not be accepted or processed by such authority, unless the person is a filer:

    “Provided that the provisions of clause (a) shall not apply in respect of,─

    (i) locally manufactured motor vehicle; or

    (ii) a person holding a Pakistan origin card or a national identity card for overseas Pakistanis or a non-resident Pakistani citizen holding international passport who produces a certificate from a scheduled bank of receipt of foreign exchange remitted from outside Pakistan through normal banking channels during a period of sixty days prior to the date of booking, registration or purchase of motor vehicle:

    Provided further that the provisions of clause (b) shall not apply to,─

    (i) a legal heir acquiring property in inheritance; or

    (ii) a person holding a Pakistan origin card or a national identity card for overseas Pakistanis or a non-resident Pakistani citizen holding international passport who produces a certificate from a scheduled bank for receipt of foreign exchange remitted from outside Pakistan through normal banking channels during a period of sixty days prior to the date of registering, recording or attesting transfer.”

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  • FBR to issue sales, income tax refund bonds

    FBR to issue sales, income tax refund bonds

    ISLAMABAD: Federal Board of Revenue (FBR) will issue sales tax and income tax refund bonds through its subsidiary company ‘FBR Refund Settlement Company (Private) Limited.

    (more…)