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Tag: Finance Act 2020

  • FBR empowered to send electronic notice, decisions to all sales tax registered persons

    FBR empowered to send electronic notice, decisions to all sales tax registered persons

    KARACHI: Federal Board of Revenue (FBR) has been authorized to serve electronic notice and decision as legal document to sales tax registered persons.

    In this regard an amendment has been made to Section 56 of Sales Tax Act, 1990 through Finance Act, 2020.

    Prior to amendment the FBR was empowered to send electronically through email or to the e-folder maintained for the purpose of e-filing of sales tax-cum-Federal Excise returns by the limited companies, both public and private.

    However, through the amendment the FBR has been empowered to send electronic notice or decision to all registered persons.

    The serving of electronic notices by the FBR was legalized through Finance Act, 2017.

    The section 56 after the amendment shall be:

    “Section 56: Service of orders; decisions etc. – (1) subject to this Act , any notice, order or requisition required to be served on a resident individual, other than in a representative capacity for the purposes of this Act shall be treated as properly served on the individual if –

    (a) personally served on the individual or, in the case of an individual under a legal disability or a non-residents individual the representative of the individual;

    (b) sent by register post or courier service specified in clause (b) of sub-section (2) or to the individual’s usual or last known address in Pakistan;

    (c) served on the individual in the manner prescribed for service of a summons under the code of civil procedure, 1908(Act V of 1908); or

    (d) sent electronically through email or to the e-folder maintained for the purpose of e-filing of sales tax-cum-Federal excise returns by registered person.

    (2) Subject to this Act, any notice order or requisition required to be served on any person, other than a resident individual to whom sub-section (1)applies, for the purposes of this Act, shall be treated as properly served on person if –

    (a) personally served on the representative of the person;

    (b) sent by registered post or courier service to the person’s registered office or address for service of notices under this Act, in Pakistan or where the person does not have such office or address, the notice is sent by registered [Post to any office or place of business of the person in Pakistan;

    (c) served on the Person in the manner prescribed for service of a summons under the code of civil procedure, 1908(Act V of 1908); or

    (d) sent electronically through email or to the e-folder maintained for the purpose of e-filing of sales tax-cum-Federal excise returns by registered person.

    (3) Where an association of persons is dissolved, any notice, order or requisition required to be served under this Act, on the association or a member of the association may be served on any person who was the principal officer or a member of the association immediately before such dissolution.

    (4) Where, business stands discontinued, any notice, order or requisition required to be served under this Act, on the person discontinuing the business may be served on the person personally or on any individual who was the person’s representative at the time of discontinuance.

    (5) The validity of service of a notice under this Act shall not be called into question after the notice has been complied with in any manner.“

  • FBR to get CNIC details of unregistered persons making purchases above Rs100,000

    FBR to get CNIC details of unregistered persons making purchases above Rs100,000

    ISLAMABAD: Federal Board of Revenue (FBR) will get CNIC details of unregistered persons making purchases above Rs100,000 through monthly sales tax return for July 2020 to be filed by registered persons in August 2020.

    The registered persons are required to provide details of all those unregistered persons who made purchases above Rs100,000. The information of CNIC of unregistered persons should be provided through sales tax return for the month of July 2020 in August 2020.

    Through Finance Act, 2019 the government made it mandatory for sales tax registered persons to provide information of unregistered persons including their CNICs, names and addresses on making supplies above Rs50,000.

    However, due to difficulties in implementation the condition was applied from August 2019. But due to dispute between FBR and retailers the implementation of this condition was remained inapplicable.

    Through Finance Act, 2020 the limit of purchases by unregistered persons has been enhanced to Rs100,000 effective from July 01, 2020.

    Section 23 of Sales Tax Act, 1990 requires the registered persons to provide the details of unregistered persons while issuing tax invoice.

    “Section 23. Tax Invoices.– (1) A registered person making a taxable supply shall issue a serially numbered tax invoice at the time of supply of goods containing the following particulars, in Urdu or English language, namely: –

    (a) name, address and registration number of the supplier;

    (b) name, address and registration, number of the recipient and NIC or NTN of the unregistered person, as the case may be, excluding supplies made by a retailer where the transaction value inclusive of sales tax amount does not exceed rupees fifty thousand, if sale is being made to an ordinary consumer.

    Explanation. – For the purpose of this clause, ordinary consumer means a person who is buying the goods for his own consumption and not for the purpose of re-sale or processing:

    Provided that the condition of NIC or NTN shall be effective from 1st August, 2019;

    (c) date of issue of invoice;

    (d) description including count, denier and construction in case of textile yarn and fabric, and quantity of goods;

    (e) value exclusive of tax;

    (f) amount of sales tax; and

    (ff)

    (g) value inclusive of tax:

    Provided that the Board may, by notification in the official Gazette, specify such modified invoices for different persons or classes of persons;

    Provided further that not more than one tax invoice shall be issued for a taxable supply:

    Provided also that if it is subsequently proved that CNIC provided by the purchaser was not correct, liability of tax or penalty shall not arise against the seller, in case of sale made in good faith.

    (2) No person other than a registered person or a person paying retail tax shall issue an invoice under this section.

    (3) A registered person making a taxable supply may, subject to such conditions, restrictions and limitations as the Board may, by notification in the official Gazette, specify, issue invoices to another registered person electronically and to the Board as well as to the Commissioner, as may be specified.

    (4) The Board may, by notification in the Official Gazette, prescribe the manner and procedure for regulating the issuance and authentication of tax invoices.”

  • PSX to collect 3pc income tax on payments to non-residents

    PSX to collect 3pc income tax on payments to non-residents

    The Pakistan Stock Exchange (PSX) has been mandated to apply a reduced rate of three percent income tax on payments to non-residents, according to officials from the Federal Board of Revenue (FBR).

    (more…)
  • Persons not on ATL to pay advance tax on educational fee

    Persons not on ATL to pay advance tax on educational fee

    ISLAMABAD: Persons not appearing on Active Taxpayers List (ATL) are liable to pay advance income tax at the time of paying educational fee.

    Officials at Federal Board of Revenue (FBR) said that through Finance Act, 2020 the condition of paying advance tax under Section 236I of Income Tax Ordinance, 2001 on educational fee had been abolished for persons appearing on ATL.

    However, those persons not appearing on ATL shall remain required to pay advance income tax on payment of educational fee.

    Similarly, the educational institutions are required to provide details of those persons who are not ATL and making fee above Rs200,000 per annum.

    The rate of collection of tax under section 236I shall be 5 percent of the amount of fee for persons not appearing on ATL.

    The collection of advance income tax on payment of educational fee was introduced through Finance Act, 2013. The purpose of introducing the advance tax on such transaction was to bring those people into tax net who have taxable income but not paying their tax liability.

    The FBR officials said that after changes brought through Finance Act 2020, only those persons who are not on the ATL shall pay advance income tax.

    However, this tax shall be adjustable against income tax liability in case that person files his income tax return and ensure his name on the ATL.

  • Banks, exchange companies no more required to give details of remittances sent abroad for education

    Banks, exchange companies no more required to give details of remittances sent abroad for education

    ISLAMABAD: Federal Board of Revenue (FBR) shall not ask banks and exchange companies to provide details of persons sending remittances abroad related to education.

    Through Finance Act, 2020, the Section 236R of Income Tax Ordinance, 2001 has been omitted. This section was introduced for collection of advance tax on education related expenses remitted abroad.

    This section was introduced through Finance Act 2015 under which banks, financial institutions, foreign exchange companies or any other person responsible for remitting foreign currency abroad shall collect advance tax at the rate of five percent from the payer of education related expenses.

    Tax collected under the section was adjustable against the income of the person remitting payment of education related expenses.

    The section defined “education related expenses” as tuition fee, boarding and lodging expenses, any payment for distant learning to any institution or university in a foreign country and any other expense related or attributable to foreign education.

    This section was an important source of gathering information of those persons having taxable income in Pakistan and sending foreign exchange abroad taking advantage of education expenses.

    Under Section 165 of Income Tax Ordinance, 2001, withholding agents are required to provide details of persons including CNIC, NTN and addresses, whose tax was deducted at the time of transaction.

    However, deletion of this section the banks and exchange companies would no more required to share details of persons who are sending foreign exchange abroad for education related expenses.

  • Advance ruling for classification of goods implemented

    Advance ruling for classification of goods implemented

    ISLAMABAD: The law of advance ruling for classification of goods or determination of origin has been implemented through Finance Act, 2020 from July 01, 2020.

    The National Assembly has approved the law of advance ruling that was proposed through Finance Bill, 2020.

    According to explanation issued by PWC A F Ferguson Chartered Accountants, the concept of advance ruling presently there in the Customs Act, has been revamped.

    Previously, the mechanism is relevant only in respect of classification for assessment of duties on goods intended to be imported/ exported.

    Through the Finance Act 2020 the meaning and scope of advance ruling has been enhanced to include the determination of classification, origin, the applicability of particular relief/ exemption on goods and any other matter as Federal Board of Revenue (FBR) may specify.

    A new section 212B has been inserted to Customs Act, 1969 which stated:

    “212B. Advance Ruling –

    (1) An applicant desirous of Advance Ruling may make an application in such form and in such manner as may be prescribed under the rules, stating any of the questions as contained in sub-section (3) hereinafter on which the Advance Ruling is sought.

    (2) The question on which advance ruling is sought shall be in respect of.-

    (i) Classification of goods under the First Schedule to this Act;

    (ii) Determination of origin of the goods under the rules of origin notified for bilateral and multilateral agreements;

    (iii) Applicability of notification issued in respect of duties under this Act or any tax or duty chargeable under any other law for the time being in force in the same manner as duty of customs leviable under this Act; or

    (iv) Any other matter as the board [FBR] may specify by notification in the official Gazette.

    (3) The proceedings for issuance of advance ruling shall be completed within 90 days.

    (4) The Ruling issued under sub-section (1) shall be binding on the applicant.

    (5) The Ruling issued under sub-section (1) shall be binding on the Customs for a period of one year unless there is a change in law or facts or circumstances on the basis of which the advance ruling was pronounced.

    (6) The appeal against the Ruling issued under sub-section (1) shall lie with the Member Customs (Policy) within 30 days of issuance of the Ruling;

    Provided that during the appeal period of 30 days, the operation of the Ruling shall remain suspended unless the applicant accepts the Ruling.”

  • Big retail units to be sealed till integration with FBR

    Big retail units to be sealed till integration with FBR

    ISLAMABAD: Big retail units shall be sealed till their integration with the online system of the Federal Board of Revenue (FBR) for sharing sales and purchases.

    Sources in the Federal Board of Revenue (FBR) said that the big retail units are required to integrate their outlets with the FBR under Sales Tax Act, 1990.

    However, those retailers who failed to integrate their outlets with the FBR would face punitive action as defined in the statute.

    The sources said that through Finance Act, 2020 amendment has been made related to penalty for non-compliance for linkage of sales and purchase data with the FBR.

    According to amendment made to Sales Tax Act, 1990, any person, who is required to integrate his business for monitoring, tracking, reporting or recording of sales, production and similar business transactions with the board or its computerized system, fails to get himself registered under the Act, and if registered, fails to integrate in the manner as required under law.

    “Such person shall be liable to pay a penalty up to one million rupees, and if continues to commit the same offence after a period of two months after imposition of penalty as aforesaid, his business premises shall be sealed till such time he integrates his business in the manner as stipulated under sub-section (9A) of Section 3 or Section 40C, as the case may be.”

    All tier-1 retailers are required to integrate all their POSs with FBR’s computerized system.

    Tier-1 retailer is defined in section 2(43A) of the Sales Tax Act, 1990, to be a person who falls in any of the following categories:

    (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 twelve hundred thousand;

    (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; and

    (e) a retailer, whose shop measures one thousand square feet in area or more.

    The FBR extended date for retailers to integrate their Point of Sale (POS) up to August 31, 2020.

    The last date for integrating the POS for Tier-1 retailers was previously June 30, 2020.

    The FBR said that only those retailers can integrate their POS by August 31 who submit their intention to RTOs/LTUs by August 20, 2020.

    FBR sources said that the decision had been taken due to lockdown in the many parts of the country in order to prevent spread of coronavirus the business activities had become stand still.

    The deadline was expired on December 15, 2019 which was given by the FBR to tier-1 retailers to integrate their POSs with the FBR online system. However, the date was extended in order to give opportunity to big retailers to make compliance.

  • Import of heavy electric vehicles allowed at 1 percent customs duty

    Import of heavy electric vehicles allowed at 1 percent customs duty

    ISLAMABAD: Federal Board of Revenue (FBR) has allowed import of heavy electric vehicles at one percent customs duty.

    Through Finance Act, 2020 the duty at one percent has been made part of Customs Act, 1969.

    According to the Finance Act, 2020 the imports of electric buses, electric trucks and electric prime movers have been allowed at one percent of customs duty and there is no condition attach to the imports.

    However, imports of other electric vehicles including auto rickshaw, 3-wheeler loader and motorcycle have been allowed reduced duty rate at 50 percent of the prevailing tariff rate of customs duty as specified in the First Schedule to the Customs Act, 1969.

    There are conditions attached to the imports of such motor vehicles. The FBR said that the concession shall be admissible for a period of five years with effect from July 01, 2020, on import of 10 electric vehicles (CBU – Completely Buildup Unit) of the same variant to the assembled / manufactured to the extent of maximum 200 units, to 2-3 wheeler segment, duly approved / certified by the Engineering Development Board (EDB).

    The EDB shall monitor compliance with the EV Policy 2020 and intimate FBR immediately in case of violation by any manufacturer to stop further clearance at the concessional rate.

  • Advance tax on cable operators abolished

    Advance tax on cable operators abolished

    ISLAMABAD: The government has abolished advance tax on cable operators and other electronic media that was collected under Income Tax Ordinance, 2001.

    Through Finance Act, 2020 the Section 236F of the Income Tax Ordinance, 2001 has been deleted.

    The Section 236F was related to advance tax on cable operators and other electronic media, officials at Federal Board of Revenue (FBR) said on Thursday.

    After the deletion of the section the advance tax under this has no more required to be collected from July 01, 2020.

    The omitted section was as:

    236F. Advance tax on cable operators and other electronic media.— (1) Pakistan Electronic Media Regulatory Authority, at the time of issuance of licence for distribution services or renewal of the licence to a licencee, shall collect advance tax at the rates specified in Division XIII of Part IV of the First Schedule.

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

    (3) For the purpose of this section, “cable television operator” “DTH”, “Distribution Service”, “electronic media”, “IPTV”, “loop holder”, “MMDS”, “mobile TV”, shall have the same meanings as defined in Pakistan Electronic Media Regulatory Authority Ordinance, 2002 (XIII of 2002) and rules made thereunder.

    Division XIII of Part IV of the First Schedule

    1) The rate of tax to be collected under section 236F in the case of Cable Television Operator shall be as follows:—

    (License Category as provided in PEMRA RulesTax on License FeeTax on Renewal
    HRs. 7,500Rs. 10,000
    H-IRs. 10,000Rs. 15,000
    H-IIRs. 25,000Rs. 30,000
    RRs. 5,000Rs. 12,000
    BRs. 5,000Rs. 40,000
    B-1Rs. 30,000Rs. 35,000
    B-2Rs. 40,000Rs. 45,000
    B-3Rs. 50,000Rs. 75,000
    B-4Rs. 75,000Rs. 100,000
    B-5Rs. 87,500Rs. 150,000
    B-6Rs. 175,000Rs. 200,000
    B-7Rs. 262,500Rs. 300,000
    B-8Rs. 437,500Rs. 500,000
    B-9Rs. 700,000Rs. 800,000
    B-10Rs. 875,500Rs. 900,000

    (2) The rate of tax to be collected by Pakistan Electronic Media Regulatory Authority under section 236F in the case of IPTV, FM Radio, MMDS, Mobile TV, Mobile Audio, Satellite TV Channel and Landing Rights, shall be 20 per cent of the permission fee or renewal fee, as the case may be.]

    “(3) In addition to tax collected under paragraph (2) Pakistan Electronic Media Regulatory Authority shall collect tax at the rate of fifty per cent of the permission fee or renewal fee, as the case may be, from every TV Channel on which foreign TV drama serial or a play in any language, other than English, is screened or viewed.”

  • FBR to prescribe valuation method for used vehicles

    FBR to prescribe valuation method for used vehicles

    ISLAMABAD: Federal Board of Revenue (FBR) will prescribe method for valuation of used vehicles for the purpose of sales tax.

    FBR sources said that amendment has been made to Sales Tax Act, 1990 through Finance Act, 2020 related to value of supply of used vehicles.

    According to the amendment, in case of registered person who is engaged in purchasing used vehicles from general public on which sales tax had already been paid at the time of import or manufacturing, and which paid at the time of import or manufacturing, and which are, later on, sold in the open market after making certain value addition, value of supply will be difference between sale and purchase price of the said vehicles on the basis of the valuation method prescribed by the board [FBR].