ISLAMABAD: The Federal Board of Revenue (FBR) has issued the updated Income Tax Rules, 2002, as of September 8, 2020. These rules elucidate the method for determining the value of bonus shares issued by companies that are not listed on the stock exchange.
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NTN mandatory for commercial transactions
In a move to enhance transparency and streamline tax-related processes, the Federal Board of Revenue (FBR) has made it mandatory for all individuals and entities involved in commercial transactions to display and quote their National Tax Number (NTN).
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Special procedure for capital gain tax computation
The Federal Board of Revenue (FBR) has recently implemented a comprehensive update to the special procedure governing the computation of capital gain tax and the collection of tax.
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Procedure for registration of tax informer
ISLAMABAD: Federal Board of Revenue (FBR) has issued rules for registration of a person as an informer under income tax, sales tax and federal excise laws.
According to Income Tax Rules, 2002 (updated September 08, 2020), the FBR said that any person desirous of getting himself registered as an informer may make an application to the Chief Commissioner for registration.
The application shall be accompanied by the following documents namely:
(a) copy of the Computerized National Identity Card of the applicant;
(b) copy of national tax number (NTN) certificate; and
(c) a duly sworn in affidavit stating therein that the information being provided is correct and nothing has been concealed there from and that in case any incorrect information is provided or any information is concealed he shall be liable to penal action under the laws for the time being in force.
The FBR said that an informer shall submit any information regarding concealment or evasion of tax leading to detection or collection of taxes, fraud, corruption or misconduct that is in his possession to the Chief Commissioner giving precise details of the alleged act along with all supporting evidences that are in his possession:
Provided that no information shall be entertained unless it gives precise details of the alleged act and is accompanied with the supporting evidences.
On receipt of the information, the Chief Commissioner shall scrutinize the information and forward it to the concerned Commissioner.
On receipt of the information from the Chief Commissioner, the concerned Commissioner shall conduct such further enquiry as he may deem fit and submit his report to the Chief Commissioner.
On completion of the enquiry, the concerned Commissioner shall take such further action as may be required under the tax laws or any other law for the time being in force, as may be necessary on the basis of the facts of the case, and furnish his report to the Chief Commissioner.
Notwithstanding anything contained in these rules, an informer, who −
(a) has knowingly provided false information under these rules; or
(b) has provided the information under these rules with the intention to intimidate or blackmail a person, or to bring him into disrepute, or to otherwise cause him financial loss, shall be liable to punishment and fine under the tax laws and other laws for the time being in force.
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FBR notifies rules making mandatory for banks to share deposit, withdrawal details
ISLAMABAD: Federal Board of Revenue (FBR) on Monday made it mandatory for banks to provide details of transactions including deposits and withdrawals during a month. Besides, the banks are also required to provide information of transactions made through credit/debit cards and details of persons making profit on debt through banking deposits.
The FBR issued SRO 773(I)/2020 dated August 24, 2020 to make amendment in Income Tax Rules, 2002. The FBR previously issued draft of these rules through SRO 686(I)/2020 dated August 05, 2020.
According to the amendments, the banks are required to provide information of persons who have deposited Rs10 million or more during a month.
The information of person making transactions must include: CNIC/NICOP/Passport Number; Name/Title of Account; Resident/Non-Resident; Address; Telephone Number; Account Opening Date; Account Number (BAN); Business/Professional/Occupation; and Amount Deposited during a month.
The banks are also required to provide similar information to the tax authority of a person making cash withdrawal exceeding Rs1 million during a month.
According to the rules, the FBR also made it mandatory for banks to provide details of persons making payment through credit card payment of Rs250,000 or more during a month. The FBR sought similar information of persons making transactions from banks.
Besides, the banks will furnish information of persons making profit on debt during a year. The banks will provide similar information of persons drawing profit on debt.
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FBR issues draft rules for allowing reduced income tax rate on import of raw materials
ISLAMABAD: Federal Board of Revenue (FBR) has issued draft rules for grant of concessional tax rate on import of raw materials and capital goods by manufacturers and exporters.
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FBR drafts rules for online income monitoring of services sector
ISLAMABAD: Federal Board of Revenue (FBR) will make it mandatory for providers of services to install electronic fiscal device (EFD) for real-time monitoring and collection of income tax.
The FBR issued SRO 296(I)/2020 on Thursday to unveil draft rules for various services sectors to share online data of transactions in order to determine their income and subsequent contribution of income tax.
Through the SRO the FBR proposed amendment to Income Tax Rules, 2002 and invited comments from stakeholders within seven days before making the rules part of the statute.
The FBR proposed a new Chapter VIIA to the Income Tax Rules, 2002 namely ‘Online Integration of Businesses.’ All the companies operating in the country shall require installing EFD. In case other than company the taxpayers shall require to install the device operating in eight major cities, which included: Karachi, Lahore, Islamabad, Rawalpindi, Faisalabad, Multan, Peshawar, and Gujranwala.
Through the proposed amendment, the FBR is intending to make it mandatory the installation of EFD for services, included:
01. Restaurants;
02. Hotels, motels, guest houses, marriage halls, marquees, clubs, including race clubs.
03. Inter-city travel by road.
04. Courier Services and cargo services.
05. Services provided for personal care by beauty parlors, clinics and slimming clinics, body massage centers, pedicure centers, including cosmetic and plastic surgery by such parlors/clinics.
06. Medical practitioners and consultants.
07. Pathological laboratories, medical diagnostic laboratories including X-Ray, CT Scan, M.R. Imaging etc.
08. Hospitals or medical care centers providing medical consultation, hospitalization or other ancillary services.
09. Health clubs, gyms, physical fitness centers, and body or sauna massage centers.
10. Photographers.
11. Accountants.
12. Pharmacies.
According to the rules, the services provider has been defined as integrated enterprise. Such kind of service provider is required to install such fiscal electronic device and software.
Through the device, following tasks will be performed:
Receive, record, analyze and store fiscal data;
Format fiscal data into fiscal invoices or bills;
Transmit the fiscal data to the board’s computerized system through secure means; and
Print invoice or bills.
The FBR said that every transactions made through EFD shall be recorded by a CCTV camera and the recording shall be retained for a period of at least three months.
In case ancillary services or sale of goods are made from notified establishment, the transactions shall also be recorded and the invoice or bill issued in the same manner. Such data shall also be communicated to the board’s computerized system in the same manner.
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Return filed on CNIC basis to be treated as registered
KARACHI: A person files income tax return on the basis of Computerized National Identity Card (CNIC) shall be treated as registered taxpayer on the day the person files income tax return.
The following will be treated as registered person under Income Tax Rules, 2002:
(1) An individual having CNIC required to file return of total income manually shall be treated as registered under sub-section (4) of section 181 on the day he files the return manually.
(2) An individual having CNIC required to e-file return of total income shall be treated as registered, when the individual is e-enrolled.
(3) A company, an association of persons (AOP) or foreign national shall be treated as registered when the company, AOP or the foreign national, is e-enrolled.
(4) An individual having CNIC who failed to file return, shall be registered by the Commissioner having jurisdiction on the basis of CNIC or NICOP when he is satisfied after providing opportunity to be heard that the income of the individual is taxable and is required to file return of income.
(5) An individual not having CNIC and required to file return of total income manually shall be registered in the same manner as specified in sub-rules (1) and (4), either on application by the individual or if Commissioner is satisfied that income of individual is taxable after providing opportunity to be heard.
(6) A company, an AOP or foreign national shall be treated as registered as per sub-rule (3), if the Commissioner, having jurisdiction over the company, an AOP or foreign national, is satisfied after providing opportunity to be heard that the company, the AOP or foreign national requires registration.
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Jewelers, real estate agents to maintain register, report suspicious transactions: draft rules issued
ISLAMABAD: Federal Board of Revenue (FBR) has proposed to make mandatory for jewelers and real estate agents to report suspicious transactions. In this regard the FBR issued draft rules through SRO 1320(I)/2019 to make amendments in Income Tax Rules, 2002.
As per the draft rules, the designated persons as jewelers and real estate agents should maintain documents and records, where the value of transaction exceeds Rs2 million in case of immovable properties and Rs one million in other cases.
The FBR said that the designated persons would require to obtain and maintain the following relating to its buyers and sellers, namely:
In case of an individual any of the following documents should be obtained by jewelers and real estate agents:
i. copy of computerized National Identity Card (CNIC) issued by National Database and Registration Authority (NADRA).
ii. copy of National Identity Card for Overseas Pakistanis (NICOP) issued by NADRA.
iii. copy of Pakistan Origin Card (POC) issued by NADRA.
iv. copy of Alien Registration Card (ARC) issued by NADRA, and
v. copy of passport, having valid visa on it or any other proof of legal stay along with the passport (foreign nationals only).
The jewelers and real estate agents also required to keep a list of all such customers where the business transaction was refused or needed to be closed either on account of failure of the customer to provide the relevant documents or the original documents for viewing as required.
Regarding furnishing of information, according to the draft rules, the sale and purchase register for the immediately preceding calendar month shall be uploaded by the designated persons on the IRIS online system within 15 days of the end of the preceding calendar month for transactions.
The draft rules said that the designated persons would mark a transaction as suspicious in the IRIS online system if the person has reason to believe that the transaction or a pattern of transactions of which the transaction is a part:
(a) involves funds derived otherwise than from the business activity or assets declared to the income tax authorities;
(b) is designed to evade any requirement of the Income Tax Ordinance, 2001 or to conceal the beneficial owner or his activity.
(c) has no apparent economic or lawful purpose after examining the available facts, including the background and possible purpose of the transaction; or
(d) involves financing of terrorism, including fund collected, provided, used or meant for, or otherwise linked or related to, terrorism, terrorist acts or organization and individual concerned with terrorism.
According to the draft rules, the designated persons have also been asked to mark as suspicious transaction if the buyer or seller –
(a) frequently changes bank accounts;
(b) uses a bank account other than an account maintained in the name of beneficial owner;
(c) makes or receives payment in cash or primarily in cash; or
(d) maintains a creditor or debtor account with the designated person and instructs the designated person to adjust the balance of his account against a creditor debtor account of another buyer or seller.
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FBR issues rules for filing biannual withholding statement
ISLAMABAD: Federal Board of Revenue (FBR) on Wednesday notified amendments to Income Tax Rules, 2002 under which withholding agents are required to file withholding statements biannually instead monthly.
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