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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 issues ATL for Tax Year 2018, active taxpayers decline to 1.6 million

    FBR issues ATL for Tax Year 2018, active taxpayers decline to 1.6 million

    ISLAMABAD: Federal Board of Revenue (FBR) on Friday launched new Active Taxpayers List (ATL) for Tax Year 2018, which is showing around 1.6 million taxpayers filed their income tax returns by respective due dates.

    The FBR issues ATL for the latest tax year on every first day of March. In the latest ATL the number of active taxpayers reduced to 1.6 million from 1.84 million as per the last weekly updated ATL for Tax Year 2017, showing fall of 240,000 returns submitted to the tax authorities.

    The number of active taxpayers will not further increased as late return filers have been deprived of appearing on the ATL.

    The previous PML-N government in its last budget announcement made a law to restrict the list with those name, who filed their list by due date.

    Through Finance Act, 2018 a new provision Section 182A was added to Income Tax Ordinance, 2001 for this purpose.

    Section 182A: Return not filed within due date.—

    Sub-Section (1): Notwithstanding anything contained in this Ordinance, where a person fails to file a return of income under section 114 by the due date as specified in section 118 or by the date as extended by the Board under section 214A or extended by the Commissioner under section 119, as the case may be, such person shall—

    (a) not be included in the active taxpayers’ list for the year for which return was not filed within the due date; and

    “Explanation.—For the removal of doubt it is clarified that the provisions of this section shall apply from tax year 2018 and onwards for which the first Active Taxpayers List is to be issued on first day of March, 2019 under Income Tax Rules, 2002.; and

    (b) not be allowed, for that tax year, to carry forward any loss under Part VIII of Chapter IV.

    The appearance on ATL is important for a taxpayer to avail reduced rate of withholding tax rates.

    The appearance of name has become even more important after the amendments brought in to restrict non-filers in purchase / registering new motor vehicles and immovable properties.

    With the issuance of new active taxpayers’ list the FBR will also suspend the weekly updated list as the late filers have been denied to have their names on the list.

  • Authorities to pay penalty for processing non-filers’ request

    Authorities to pay penalty for processing non-filers’ request

    KARACHI: Provincial motor or immovable property registration authorities will liable to pay penalty around three percent of the value in case of processing registration request by non-filers of income tax return.

    According to updated Income Tax Ordinance, 2001 issued by the Federal Board of Revenue (FBR), the government imposed restriction on registration of motor vehicle and immovable properties by non-filers under Section 227C.

    A penalty of three percent of the value of motor vehicle or immovable property is liable to pay:

    i. Where any registering authority of Excise and Taxation Department accepts, processes or registers any application for registration of a locally manufactured motor vehicle or for the first registration of an imported vehicle in violation of the provisions of clause (a) of section 227C.

    ii. Where any authority responsible for registering, recording or attesting the transfer of immovable property accepts or processes the registration or attestation of such property in violation of the provisions of clause (b) of section 227C.

    Similarly car manufacturers are also liable to pay penalty in case of selling motor car to non-filer of income tax return.

    A car manufacturer is liable to pay penalty of five percent of the value of the motor vehicle:

    Where any manufacturer of a motor vehicle accepts or processes any application for booking or purchase of a locally manufactured motor vehicle in violation of the provisions of clause (a) of section 227C.

    Related Stories
    Income Tax Ordinance 2001: Late filers not to get names on ATL
    Income Tax Ordinance 2001: No commercial, industrial gas or electricity connection without NTN
    Income Tax Ordinance 2001: Commissioner can take assistance of police, civil armed forces to conduct audit
    Income Tax Ordinance 2001: Commissioner IR has court powers for production of taxpayers’ record
    Income Tax Ordinance 2001: Tax officials’ power to enter premises without notice

  • Income Tax Ordinance 2001: Late filers not to get names on ATL

    Income Tax Ordinance 2001: Late filers not to get names on ATL

    KARACHI: Late filers of income tax returns will not get their name on the Active Taxpayers List (ATL) that will be issued tomorrow (March 01, 2019).

    The Federal Board of Revenue (FBR) will issue the latest edition of ATL, which will carry names of those taxpayers who filed their income tax returns by due date for Tax Year 2018.

    With the issuance of new active taxpayers’ list the FBR will also suspend the weekly updated list as the late filers have been denied to have their names on the list.

    The previous PML-N government in its last budget announcement made a law to restrict the list with those name, who filed their list by due date.

    Through Finance Act, 2018 a new provision Section 182A was added to Income Tax Ordinance, 2001 for this purpose.

    Section 182A: Return not filed within due date.—

    Sub-Section (1): Notwithstanding anything contained in this Ordinance, where a person fails to file a return of income under section 114 by the due date as specified in section 118 or by the date as extended by the Board under section 214A or extended by the Commissioner under section 119, as the case may be, such person shall—

    (a) not be included in the active taxpayers’ list for the year for which return was not filed within the due date; and

    “Explanation.—For the removal of doubt it is clarified that the provisions of this section shall apply from tax year 2018 and onwards for which the first Active Taxpayers List is to be issued on first day of March, 2019 under Income Tax Rules, 2002.; and

    (b) not be allowed, for that tax year, to carry forward any loss under Part VIII of Chapter IV.

    The FBR issued its last weekly updated ATL for Tax Year 2017 on Monday, February 25, 2019, which carried those taxpayers list who filed their returns up to February 24, 2019.

    The last ATL shows the FBR received 1.84 million returns till February 24, 2019 for tax year 2017.

    While, the FBR received around 1.55 million income tax returns for tax year 2018 by due dates for individuals and corporate entities.

    The appearance on ATL is important for a taxpayer to avail reduced rate of withholding tax rates.

    The appearance of name has become even more important after the amendments brought in to restrict non-filers in purchase / registering new motor vehicles and immovable properties.

  • FBR discontinues zero rating facility to two textile units

    FBR discontinues zero rating facility to two textile units

    ISLAMABAD: Federal Board of Revenue (FBR) has withdrawn sales tax zero rating to two textile units in Karachi for misusing facility on consumption of gas and electricity.

    According to Sales Tax General Order (STGO) issued on Wednesday, the FBR withdrew the facility of zero rating that was granted on consumption of electricity and gas to companies including A R Hosiery Works and International Chrome Tannery.

    The FBR said that the zero-rated facility was withdrawn on the recommendation of Regional Tax Office (RTO)-III Karachi.

    The FBR directed the Chief Commissioner Inland Revenue of RTO-III Karachi to communicate with concerned authorities for charging the normal sales tax rates from those textile units.

    The FBR further directed the chief commissioner to submit report in case of misuse of the facility.

  • Income Tax Ordinance 2001: No commercial, industrial gas or electricity connection without NTN

    Income Tax Ordinance 2001: No commercial, industrial gas or electricity connection without NTN

    KARACHI: The National Tax Number (NTN) is mandatory for a person applying by commercial or industrial connection for electricity or natural gas.
     
    The Federal Board of Revenue (FBR) recently updated Income Tax Ordinance, 2001 which explained about taxpayer’s registration.
    Section 181: Taxpayer’s registration.—

    Sub-Section (1): Every taxpayer shall apply in the prescribed form and in the prescribed manner for registration.

    Sub-Section (2): The Commissioner having jurisdiction over a case, where necessitated by the facts of the case, may also register a taxpayer in the prescribed manner.

    Sub-Section (3): Taxpayers’ registration scheme shall be regulated through the rules to be notified by the board.

    Sub-Section (4): From tax year 2015 and onwards, in case of individuals having Computerized National Identity Card (CNIC) issued by the National Database and Registration Authority, CNIC shall be used as National Tax Number.

    Section 181A: Active taxpayers’ list

    Sub-Section (1): The Board shall have the power to institute active taxpayers’ list.

    Sub-Section (2): Active taxpayers’ list shall be regulated as may be prescribed.

    Section 181AA: Compulsory registration in certain cases

    Sub-Section (1): Notwithstanding anything contained in any law, for the time being in force, any application for commercial or industrial connection of electricity or natural gas, shall not be processed and such connection shall not be provided unless the person applying for electricity or gas connection is registered under section 181.

    Section 181B: Taxpayer card

    Subject to this Ordinance, the Board may make a scheme for introduction of a tax-payer honour card for individual taxpayers, who fulfill a minimum criteria to be eligible for the benefits as contained in the scheme.

    Section 181C: Displaying of National Tax Number

    Every person deriving income from business chargeable to tax, who has been issued a National Tax Number, shall display his National Tax Number at a conspicuous place at every place of his business.

  • FBR fixes sales tax rate for cottonseed

    FBR fixes sales tax rate for cottonseed

    ISLAMABAD: Federal Board of Revenue (FBR) has fixed Rs 8 as sales tax for 40 kilogram of cottonseed for the period starting from July 01, 2019.

    Similarly, Rs 7 sales tax for 40kg of cottonseed for the period of starting July 01, 2018 and ending on June 30, 2018 (both days inclusive).

    The FBR on Tuesday issued SRO 253(I)/2019 and said that SRO 188(I)/2015 dated March 05, 2018 was issued for a special procedure for payment of sales tax on cottonseed oil and to exempt cottonseed oil cake from payment of sales tax.

    The FBR further said that the notification was declared ultra vires by the Lahore High Court and the order of the Lahore High Court was upheld by the Supreme Court of Pakistan vide its order dated April 16, 2018 in Civil Petition No. 1028 to 1121, 1433 to 14558 and 2550 to 2553 of 2017 on the ground that the approval of the federal cabinet was not obtained.

    Therefore, the federal government approved the amendments to Sales Tax (Special Procedures) Rules, 2007, which would be effective July 01, 2018.

    The FBR said that the notified sales tax rates would be collected under the special procedure.

    It said that all cotton ginners, if not already registered or required to be registered, shall obtain sales tax registration for the purpose of these rules.

    The amount of sales tax so charged and collected by the cotton ginners shall be declared in the monthly returns and shall be deposited as such without any input tax adjustment.

    The suppliers of cottonseed shall mention sales tax charged separately on the sales tax invoice to be issued by them.

    The oil expelling units using the cottonseed on which sales tax has been charged and collected in the aforesaid manner shall be exempt from payment of sales tax on the supplies of oil cake produced from such cottonseed.

    The ginner shall submit a certificate to the commissioner having jurisdiction by the 15th day of the month following the tax period for the quantity of cottonseed supplied to the growers for sowing purpose.

  • FBR notifies rules for online monitoring of five major items

    FBR notifies rules for online monitoring of five major items

    ISLAMABAD: Federal Board of Revenue (FBR) has notified rules for electronic monitoring of five goods in order to prevent sales tax evasion.

    The FBR issued SRO 250(I)/2019 on Tuesday for electronic monitoring, tracking and tracing of production, import and supply-chain of the following goods, on real time basis, hereinafter referred to as the specified goods, namely:-

    (a) tobacco Products;

    (b) beverages;

    (c) sugar;

    (d) fertilizer; and

    (e) cement:

    Provided that any or all of the said specified goods above shall be monitored, tracked and traced in the manner provided in this Chapter from the date to be specified by the FBR, through a general order:

    Provided further that the specified goods, if brought from non-tariff area as defined in the Federal Excise Act, 2005, shall be treated as imported goods for the purposes of this chapter.

    The FBR said that goods to be affixed with tax stamps, banderoles, stickers, labels, barcodes, etc.

    (1) On every package, including a tin, container or bottle, of the specified goods whether manufactured or imported shall be affixed or printed a tax stamp, banderole, sticker, label, barcode, etc., hereinafter referred to as tax stamp, in the manner prescribed under this Chapter:

    Provided that in respect of such specified goods which are exempt or meant for export tax stamps shall not be required to be affixed thereon, but shall be clearly, legibly and indelibly marked as “Exempt Goods” or “For Export”, as the case may be.

    (2) Every tax stamp required to be affued under these rules shall bear such security features as are approved by the Board in order to-

    (a) prevent counterfeiting;

    (b) enable accounting of production of the specified goods; and

    (c) enable any person in the supply chain or an officer authorized by the Commissioner Inland Revenue to authenticate such tax stamp.

    (3) The system for imported goods shall be installed in a designated area at the port of importation or a customs bonded warehouse, as the case may be, declared by the importer for this purpose, or any other place approved by the Project Director:

    Provided that the Board may allow tax stamps to be affixed on any specified goods to be imported in a production facility in the exporting country, subject to such conditions as the Board may specify.

    (4) No person engaged in manufacturing, sale or purchase or handling of specified goods shall remove or tamper with the tax stamp affixed thereon until these are sold to the final consumer.

  • FBR notifies function, powers of intelligence directorate

    FBR notifies function, powers of intelligence directorate

    ISLAMABAD: Federal Board of Revenue (FBR) on Tuesday notified functions and powers Directorate General of Intelligence and Investigation under Federal Excise Act, 2005.

    The FBR issued SRO 251(I)/2019 to notify following functions of the Directorate General, Intelligence and Investigation IR:

    The functions of Directorate General of Intelligence and Investigation, Inland Revenue shall be:

    a) to carry out intelligence activities or intelligence gathering on tax and duty related issues including non-declaration, under-declaration, non-payment of duty, duty evasion and revenue leakages through any other mean;

    b) to collect third party information relating to financial transactions in ongoing inquiries and investigations;

    c) to establish and develop linkages with all major national, provincial or other data bases to collect relevant information in ongoing inquiries and investigations;

    d) to identify trends and modus operandi of Federal Excise Duty evasion and carry out inquiry and investigation to retrieve the loss of revenue;

    e) to exercise powers of seizure of goods under the provisions of Federal Excise Act, 2005 and the rules made there-under;

    f) to identify and investigate cases of duty evasion having any financial implication, punishable as an offence under the Federal Excise Act, 2005 and the rules made there-under;

    g) to carry out criminal investigation and prosecution in cases involving offences

    punishable under the Federal Excise Act, 2005 and the rules made there-under;

    h) to share or disseminate actionable information or corroborating evidence, where required, through written reports or alerts to authorities or officers in the headquarter and field formations of the Federal Board of Revenue for further proceedings; and

    i) to process complaints of tax and duty evasion etc.

  • Income Tax Ordinance 2001: Commissioner can take assistance of police, civil armed forces to conduct audit

    Income Tax Ordinance 2001: Commissioner can take assistance of police, civil armed forces to conduct audit

    KARACHI: A commissioner of Inland Revenue (IR) can take assistance of government authorities, police and civil armed forces to conduct audit of taxpayers.

    According to updated Income Tax Ordinance, 2001 recently issued by the Federal Board of Revenue (FBR), Section 178 explained the powers of Commissioner IR.

    Section 178: Assistance to Commissioner

    “Every Officer of Customs, Provincial Excise and Taxation, District Coordination Officer, District Officers including District Officer – Revenue, the Police and the Civil Armed Forces is empowered and required to assist the Commissioner in the discharge of the Commissioner’s functions under this Ordinance.”

    The Section 177 of the Ordinance explains the powers of Commissioner to call for any record of taxpayer for conducting audit.

    177: Audit.—

    Sub-Section (1): The Commissioner may call for any record or documents including books of accounts maintained under this Ordinance or any there law for the time being in force for conducting audit of the income tax affairs of the person and where such record or documents have been kept on electronic data, the person shall allow access to the Commissioner or the officer authorized by the Commissioner for use of machine and software on which such data is kept and the Commissioner or the officer may have access to the required information and data and duly attested hard copies of such information or data for the purpose of investigation and proceedings under this Ordinance in respect of such person or any other person:

    Provided that—

    (a) the Commissioner may, after recording reasons in writing call for record or documents including books of accounts of the taxpayer; and

    (b) the reasons shall be communicated to the taxpayer while calling record or documents including books of accounts of the taxpayer:

    Provided further that the Commissioner shall not call for record or documents of the taxpayer after expiry of six years from the end of the tax year to which they relate.

    Sub-Section (2): After obtaining the record of a person under sub-section (1) or where necessary record is not maintained, the Commissioner shall conduct an audit of the income tax affairs (including examination of accounts and records, enquiry into expenditure, assets and liabilities) of that person or any other person and may call for such other information and documents as he may deem appropriate.

    Sub-Sections (3) (4) and (5) omitted

    Sub-Section (6): After completion of the audit, the Commissioner may, if considered necessary, after obtaining taxpayer’s explanation on all the issues raised in the audit, amend the assessment under sub-section (1) or sub-section (4) of section 122, as the case may be.

    Sub-Section (7): The fact that a person has been audited in a year shall not preclude the person from being audited again in the next and following years where there are reasonable grounds for such audits.

    Sub-Section (8): The Board may appoint a firm of Chartered Accountants as defined under the Chartered Accountants Ordinance, 1961 (X of 1961) or a firm of Cost and Management Accountants as defined under the Cost and Management Accountants Act, 1966 (XIV of 1966), or a firm of Cost and Management Accountants as defined under the Cost and Management Accountants Act, 1966 (XIV of 1966) to conduct an audit of the income tax affairs of any person or classes of persons and the scope of such audit shall be as determined by the Board or the Commissioner on a case to case basis.

    Sub-Section (9): Any person employed by a firm referred to in sub-section (8) may be authorized by the Commissioner, in writing, to exercise the powers in sections 175 and 176 for the purposes of conducting an audit under that sub-section.

    Sub-Section (10): Notwithstanding anything contained in sub-sections (2) and (6) where a person fails to produce before the Commissioner or a firm of Chartered Accountants or a firm of Cost and Management Accountants appointed by the Board or the Commissioner under sub-section (8) to conduct an audit, any accounts, documents and records, required to be maintained under section 174 or any other relevant document, electronically kept record, electronic machine or any other evidence that may be required by the Commissioner or the firm of Chartered Accountants or the firm of Cost and Management Accountants for the purpose of audit or determination of income and tax due thereon, the Commissioner may proceed to make best judgment assessment under section 121 of this Ordinance and the assessment treated to have been made on the basis of return or revised return filed by the taxpayer shall be of no legal effect.

    Explanation.— For the removal of doubt, it is declared that the powers of the Commissioner under this section are independent of the powers of the Board under section 214C and nothing contained in section 214C restricts the powers of the Commissioner to call for the record or documents including books of accounts of a taxpayer for audit and to conduct audit under this section.

    Sub-Section (11): The Board may appoint as many special audit panels as may be necessary, comprising two or more members from the following:—

    (a) an officer or officers of Inland Revenue;

    (b) a firm of chartered accountants as defined under the Chartered Accountants Ordinance, 1961 (X of 1961);

    (c) a firm of cost and management accountants as defined under the Cost and Management Accountants Act, 1966 (XIV of 1966); or

    (d) any other person including a foreign expert or specialist as directed by the Board, to conduct an audit, including a forensic audit, of the income tax affairs of any person or classes of persons and the scope of such audit shall be as determined by the Board or the Commissioner on case-to-case basis.

    (e) a tax audit expert deployed under an audit assistance programme of an international tax organization or a tax authority outside Pakistan:

    Provided that in case the member is not an officer of Inland Revenue, the person shall only be included as a member in the special audit panel if an agreement of confidentiality has been entered into between the Board and the person, international tax organization or a tax authority, as the case may be.

    Sub-Section (12): Special audit panel under sub-section (1) shall be headed by a Chairman who shall be an officer of Inland Revenue.

    Sub-Section (13): Powers under sections 175 and 176 for the purposes of conducting an audit under sub-section (11), shall only be exercised by an officer or officers of Inland Revenue, who are member or members of the special audit panel, and authorized by the Commissioner.

    Sub-Section (14): Notwithstanding anything contained in sub-sections (2) and(6), where a person fails to produce before the Commissioner or a special audit panel under sub-section (11) to conduct an audit, any accounts, documents and records, required to be maintained under section 174 or any other relevant document, electronically kept record, electronic machine or any other evidence that may be required by the Commissioner or the panel, the Commissioner may proceed to make best judgment assessment under section 121 and the assessment treated to have been made on the basis of return or revised return filed by the taxpayer shall be of no legal effect.

    Sub-Section (15): If any one member of the special audit panel, other than the Chairman, is absent from conducting an audit, the proceedings of the audit may continue, and the audit conducted by the special audit panel shall not be invalid or be called in question merely on the ground of such absence.

    Sub-Section (16): Functions performed by an officer or officers of Inland Revenue as members of the special audit panel, for conducting audit, shall be treated to have been performed by special audit panel.

    Sub-Section (17): The Board may prescribe the mode and manner of constitution, procedure and working of the special audit panel.

  • FBR launches crackdown against high-valued undeclared immovable properties

    FBR launches crackdown against high-valued undeclared immovable properties

    KARACHI: Federal Board of Revenue (FBR) has launched drive against high-valued transactions of immovable properties in order to unearth quantum of black money used for the purpose.

    FBR sources said that the Broadening of Tax Base (BTB) unit of Regional Tax Office (RTO) – II Karachi launched action against around 2,000 persons who had acquired high valued immovable properties.

    Those persons either failed to declare their assets before the tax authorities or misdeclared the amount used for the transactions.

    The FBR sources said that the transactions had been identified through third party sources including banking transactions, where buyers made pay orders or demand draft for payment.

    The real estate sector is one of the biggest parking lot for black economy in Pakistan. This is because the declared values of immovable properties are much lower than transactions values.

    The FBR sources said that the BTB has expanded its coverage all around the mega city and detected huge number of transactions, where misdeclarations were found.

    The sources further said that the BTB is taking action against 2,000 high valued transactions in the first phase. This will be further expanded on the basis of withholding tax data obtained from registrar of properties.

    The sources said that huge mismatch was found in the properties of DHA, Gulshan e Iqbal, North Nazimabad, F B Area, Clifton, etc.

    The sources further said that the BTB had conducted independent survey to determine the open market value and the payment history of past transactions of immovable properties.

    The FBR sources also made it clear that immunity available under Section 236W was available to amounts to the extent of FBR valuations.

    Under Section 236W of Income Tax Ordinance, 2001, the FBR will not ask any person making payment of withholding tax under this section to the extent values available under FBR valuation table.