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Tag: Inland Revenue

  • Inland Revenue examines persons buying motor vehicles through customs auction

    Inland Revenue examines persons buying motor vehicles through customs auction

    KARACHI: The office of Inland Revenue (IR) of Federal Board of Revenue (FBR) has launched examination of persons who purchased large number of vehicles through customs auctions.

    Sources in IR said on Monday that the probe had been initiated on the directives of the Federal Tax Ombudsman (FTO) regarding some bidders were frequently indulged in participating in bidding and buying large number of vehicles.

    The FTO in a case of stuck up motor vehicles at ports, which were brought into Pakistan through personal baggage, transfer of residence or under gift schemes in violation of SRO 52(I)/2019 dated January 15, 2019 issued by the ministry of commerce.

    As per details till November 25, 2020 the number of stuck up vehicles were 587 at the MCC East and West. Around 167 vehicles were auctioned till the date under review.

    During the investigation of the case the FTO was told that a small number of so-call professional bidders purchased large number of vehicles regularly and then sell the same on huge profit in the open market.

    “One of the reasons of purchase of vehicles by these bidders is that many interested persons from the general public either do not possess NTN or they don’t want to bring their names on record due to various reasons including subsequent taxation, hence, they prefer to purchase goods or vehicles through these bidders,” the FTO was informed.

    The FTO was further informed that 62 bidders had purchased 167 vehicles auctioned during the period from July to November 2020, which 20 bidders purchased 117 vehicles.

    The sources said that the FTO was told that an e-auction was to be introduced by the FBR and in this regard SRO 1174(I)/2020 dated October 26, 2020 was already issued.

    However, date for implementation of e-auction rules would not be notified by the FBR later on as the e-auction module is still under development.

    Customs authorities assured the FTO stating that after implementation of e-auction, the goods ripe for auction would be disposed of without delay, besides, the mafia of professional bidders would be addressed, resulting in improvement in revenue realization.

    The findings of the FTO revealed: “During investigation, another aspect came to surface i.e. whether the bidders who participate in the auction proceedings declare their economic activities in their income tax returns.

    “It is most probable that these economic activities may not be monitored by the IRS Wing, which if monitored carefully with due diligence may enhance legitimate revenue of the government.

    “Thus, there is a need to share data/information with the concerned field formations of Inland Revenue so that this sector is brought into the tax net.”

    The FTO recommended that the Collector, MCC Appraisement and Facilitation East and West, Karachi to pass on information about the bidders who participated in auctions on regular basis to respective IRS field formations.

  • Fake, flying invoices: IR intelligence unearths mega sales tax evasion

    Fake, flying invoices: IR intelligence unearths mega sales tax evasion

    ISLAMABAD: The Directorate of Intelligence and Investigation, Inland Revenue, Faisalabad has unearthed huge sales tax evasion and arrested culprits for issuing fake and flying invoices.

    A spokesman of Federal Board of Revenue (FBR) on Wednesday said that I&I IR Faisalabad had arrested proprietor of M/s SAYTEX INTERNATIONAL, one of the major culprits running the racket of fake and flying invoices, causing huge loss of revenue to the national exchequer.

    The directorate unearthed a big sales tax evasion scam of issuing/adjusting fake and flying invoices involving tax fraud of millions of rupees.

    Accordingly, prosecution proceedings against the members of the fraudsters’ gang were initiated and the First Information Report (FIR) was lodged against M/s Arrow International, its buyers, suppliers and other beneficiaries under section 37(a) of the Sales Tax Act 1990.

    The person arrested had issued fake invoices worth 104.446 million to M/s Arrow International and thus defrauded payment of due taxes thereon.

    Imran Zafar, Deputy Director, who arrested the accused has obtained physical remand of the accused from the learned Special Judge (Customs, Taxation & Anti-Smuggling), Lahore. The accused is currently under further investigation.

    Investigation from arrested persons subsequently led the Intelligence and Investigation Directorate to identification of real culprits behind establishment and running of this network of tax fraudsters involving 65 units and total invoice value amounts to Rs.1.3 billion.

  • Inland Revenue officers empowered to recover non-tax revenue

    Inland Revenue officers empowered to recover non-tax revenue

    ISLAMABAD: The officers of Inland Revenue have been empowered to recover non-tax revenue by invoking provisions of Income Tax Ordinance, 2001.

    The finance ministry has issued Public Finance Management Act, 2019, which was amended up to June 30, 2020 through Finance Act, 2020.

    According to Section 40E of the Act, a commissioner of Inland Revenue has been empowered to make recovery of non-tax revenue.

    “40E. Recovery of non-tax revenue by Commissioner (Inland Revenue).-

    (1) If the amounts as per sections 40B and 40D are not paid within ninety days of having been due, the Finance Division, in consultation with the concerned Division may refer any defaulter’s case to the Commissioner (Inland Revenue) concerned for recovery as it were an arrear of income tax.

    (2) The Commissioner (Inland Revenue) shall recover the arrear in accordance with the provisions of the Income Tax Ordinance, 2001(XLIX of 2001) and deposit the receipt in the Federal Consolidated Fund as per section 40C.”

    Section 40B. Levy and collection.

    (1) Non tax revenue shall be levied and charged in accordance with the provisions of relevant laws and such other applicable instruments.

    (2) Notwithstanding anything to the contrary contained in any other law for the time being in force, public entities as defined under section 36 shall pay non tax revenue representing-

    (a) mark up on loans lent by the Government, as per the amortization schedule attached with the financing agreement;

    (b) dividend against the Government’s equity investments as declared by the respective board of directors out of accrued profits of the entity:

    Provided that if public entity is wholly or substantially owned by the Government, proposals with regard to declaration of dividend and allocation for reserve fund, capital requirements etc shall be examined by the controlling Division in consultation with the Finance Division before deliberations and decision in the board of directors.

    (c) surplus profits as per the provisions of relevant laws; and

    (d) any other amount owed to the Government as accrued:

    Provided that the public entities shall pay accrued amounts of non-tax revenue as per clauses (a) to (d) being the first charge on their gross revenues or profits, as the case may be.

    (3) Non tax revenue representing foreign grants and payments, receipts from provision of services, rents, recovery of over-payments, sale of property etc shall accrue on completion of the prescribed process.

    (4) The revenue collection offices shall be responsible for collection of all the accrued amounts of non tax revenue from liable public entities, individuals, firms, companies etc as per the time specified in the relevant laws and rules. Finance Division shall prescribe procedures for monitoring and reporting of non tax revenue by the revenue collection offices.

    Section 40D. Late payment surcharge.-

    (1) Notwithstanding anything to the contrary contained in any other law for the time being in force, an amount equal to monthly weighted financing cost of Government’s domestic borrowings shall be payable during the period of default, in addition to the amount due under section 40B, if not paid within the stipulated time.

    (2) Finance Division may prescribe procedure for levy and collection of the surcharge under sub-section (1).

  • Inland Revenue offices to observe extended working hours on June 29 – 30

    Inland Revenue offices to observe extended working hours on June 29 – 30

    ISLAMABAD: The offices of Inland Revenue have been directed to observe extended working hours on last two days of current fiscal year in order to facilitate taxpayers in payment of duty and taxes.

    In an office order issued on Monday, the Federal Board of Revenue (FBR) said that all Large Taxpayers Units (LTUs), Corporate Regional Tax Offices (CRTOs) and RTOs would remain open and observe extended working hours till 9:00 PM on Monday June 29, 2020 and till 11:00PM on Tuesday June 30, 2020 to facilitate taxpayers in payment of duty and taxes.

    The FBR directed chief commissioners to establish liaison with State Bank of Pakistan (SBP) and authorized branches of National Bank of Pakistan (NBP) to ensure transfer of tax collection by these branches on June 30, 2020 as per SBP’s letter dated June 18, 2020.

  • IR barred from arresting women on tax default

    IR barred from arresting women on tax default

    KARACHI: The offices of Inland Revenue are prohibited for arresting women on charge of tax default. Besides, the offices also cannot arrest a minor.

    According to Income Tax Rules, 2002 there is prohibition against arrest of woman or minor.

    The commissioner of Inland Revenue shall not order the arrest or detention in the civil prison of: a woman; or any person who, in his opinion, is a minor or of unsound mind.

    The rules also envisaged certain conditions on IR officers regarding entry into dwelling house for arresting tax defaulter.

    For the purpose of making an arrest under these rules,-

    (a) no dwelling house shall be entered after sunset and before sunrise;

    (b) no outer door of a dwelling house shall be broken open unless such dwelling house or a portion thereof is in the occupancy of the defaulter and he or any other occupant of the house refuses or in any way prevents access thereto; but, when the person executing any such warrant has duly gained access to any dwelling house, he may break open the door or any room or apartment if he has reason to believe that the defaulter is likely to be found there; and

    (c) no room, which is in the actual occupancy of a woman who, according to the custom of the country, does not appear in public shall be entered into unless the officer authorized to make the arrest has given notice to her that she is at liberty to withdraw and has given her reasonable time and facility for withdrawing.

    In case of illness of a tax defaulter the commissioner can release by cancelling the warrant for the arrest.

    Release on ground of illness.-

    (1) At any time after a warrant for the arrest of a defaulter has been issued, the Commissioner may cancel it on ground of the serious illness of the defaulter.

    (2) Where a defaulter has been arrested, the Commissioner may release him if, in the opinion of the Commissioner of Tax, he is not in a fit state of mind to be detained in the civil prison.

    (3) Where a defaulter has been committed to the civil prison, he may be, released therefrom by the Commissioner on the ground of the existence of any infectious or contagious disease or on the ground of his suffering from any illness.

    (4) A defaulter released under this rule may be re-arrested, but the period of his detention in the civil prison shall not in the aggregate exceed that authorized by rule 164.

  • IR commissioners empowered to issue trial registration number

    IR commissioners empowered to issue trial registration number

    KARACHI: Commissioners of Inland Revenue have been empowered to issue trial registration number to taxpayers, who failed to comply with notices issued in this regard.

    Officials in Federal Board of Revenue (FBR) said that tax laws empowered IR commissioners to enforce income tax registration.

    They said that a commissioner having jurisdiction over a case may register a person as a taxpayer where he is satisfied that the income of the person is taxable and is required to file a return of income under section 114 of Income Tax Ordinance, 2001.

    The Commissioner shall issue to the taxpayer a letter under sub-section(2) of section 181 to submit an application for registration prescribed under rule 80 along with documents specified therein within a reasonable time given in the said letter.

    In case of compliance NTN certificate shall be issued accordingly.

    “In case of failure of the taxpayer to comply with the letter issued under sub-section (2) of section 181, the Commissioner shall register the taxpayer on a Trial Registration Number (TRN) for which a serially numbered Trial Register shall be maintained by the Commissioner.”

    The Trial Register shall contain the basic information of the taxpayer like name of the person or business, available address, CNIC “if provided”, nature of income generating activity and any other information regarded useful by the Commissioner. In such case, statutory notices shall be issued for assessment of income or other legal obligation of the taxpayer under the Ordinance on TR Number:

    Provided that before allotment of Trial Registration Number the Commissioner shall verify and match the particulars of the taxpayer from the NTN Master Index to avoid duplication of registration.

    In case any assessment is made or any liability is created by the Commissioner under the Income Tax Ordinance, 2001 against the taxpayer, the Commissioner on the basis of information as contained in Trial Register, allot an NTN to the taxpayer within fifteen days of the date of completion of assessment or creation of a liability under the Ordinance.

  • Tax officials empowered to recover short payment without notice

    Tax officials empowered to recover short payment without notice

    KARACHI: Tax officials have been authorized to recover short payment of sales tax through freezing bank accounts of taxpayers without serving show cause notice.

    Officials in Federal Board of Revenue (FBR) said that the officers of Inland Revenue had been authorized to make recovery of short payment of sales tax as declared in return of a taxpayer by taking measures including freezing bank account without issuing a show cause notice.

    The officials said that under Section 11A of Sales Tax Act, 1990, the powers of Inland Revenue officers had been explained.

    Section 11A: Short paid amounts recoverable without notice

    Notwithstanding any of the provisions of this Act, where a registered person pays the amount of tax less than the tax due as indicated in his return, the short paid amount of tax along with default surcharge shall be recovered from such person by stopping removal of any goods from his business premises and through attachment of his business bank accounts, without giving him a show cause notice and without prejudice to any other action prescribed under section 48 of this Act or the rules made thereunder:

    Provided that no penalty under section 33 of this Act shall be imposed unless a show cause notice is given to such person.

  • RTO-II Karachi to assess incomes of lawyers, doctors, CAs, other professionals

    RTO-II Karachi to assess incomes of lawyers, doctors, CAs, other professionals

    KARACHI: Regional Tax Office (RTO) – II Karachi has been authorized to assess incomes of professionals including lawyers, doctors, chartered accountants etc. for assessment of their incomes and enforce income tax returns.

    The Federal Board of Revenue (FBR) has revised jurisdiction of Chief Commissioner and Commissioners of Inland Revenue, RTO-II Karachi.

    The Zone-I of the RTO-II, Karachi has been assigned jurisdiction over: (i) lawyers, advocates, auditors and chartered accountants, legal consultants, architects and engineers; (ii) doctors, hakeems, homeopathic, doctors, hospitals, clinics, laboratories, diagnostic centers, X-Ray centers, CT-Scans centers, MRI centers, ultrasound centers, nursing homes etc.

    Under Section 114 of Income Tax Ordinance, 2001 the filing of income tax returns is mandatory for persons registered with any chamber of commerce and industry or any trade or business association or any market committee or any professional body including Pakistan Engineering Council, Pakistan Medical and Dental Council, Pakistan Bar Council or any Provincial Bar Council, Institute of Chartered Accountants of Pakistan or Institute of Cost and Management Accountants of Pakistan.

    The zone has also been assigned jurisdiction over: (iii) chemicals and dyes manufacturers, importers, exporters, distributors and wholesalers; (iv) pharmaceutical manufacturers, importers, distributors/wholesalers including drug stores and chemists.

    The FBR said that the commissioner of Zone I of RTO-II Karachi would have jurisdiction over all cases or classes of cases, persons or classes of persons of non-corporate sector including individuals and association of persons (AOPs) of mentioned above sectors other than those specifically assigned to Large Taxpayers Unit (LTU)/LTU-II Karachi, Corporate RTO Karachi or RTO-III or any other zone of RTO-II Karachi whose place of business is situated in the areas falling within the limits of former Baldia Town, Jamshed Town, Liaquatabad Town, Orangi Town, Saddar Town, SITE Town and within the limits of Clifton Cantonment, Karachi Cantonment, Kimari Cantonment and Manora Cantonment.

    The Zone-III of the RTO-II, Karachi has been assigned jurisdiction over falling under: education/training/vocational institutions; real estate developers, contractors, dealers builders and cooperative housing societies; travel agents, hajj and umrah operators and visa and immigration consultants.

    The FBR has also assigned jurisdictions on various sectors to remaining zones of the RTO-II Karachi.

  • FBR directs IR, Customs offices to ensure taxpayer friendly environment

    FBR directs IR, Customs offices to ensure taxpayer friendly environment

    ISLAMABAD: Federal Board of Revenue (FBR) on Thursday directed all offices of Inland Revenue and Pakistan Customs to ensure a clean and friendly environment in the offices across the country.

    The FBR directed that all the offices of Inland Revenue and Pakistan Customs should maintain the highest level of cleanliness.

    Sitting areas for visitors should be clean and well lit. Janitorial staff should be directed to maintain the cleanliness of offices and washrooms for officers, staff and visitors.

    Parking space for officers should be clearly market and there should be reserved parking space for visiting taxpayers, tax practitioners, lawyers, chartered accountants and other visitors. The concerned officers should carry out periodic inspection of their respective premises and take necessary steps to ensure a clean working environment.

    As FBR and its field formations receive a very large number of visitors on a daily basis, the concerned staff should extend necessary courtesy and respect to visiting taxpayers.

    All sitting areas specified for visitors should have ample seating arrangements with availability of clean drinking water.

    Keeping in view the overall security situation, each field office must chalk out a detailed security plan which must be strictly adhered.

    The FBR further said that all security cameras should be made operational and video feed must be constantly monitored.

    The FBR also directed the offices to contribute towards tree plantation campaign of the government by planting trees in their offices and residential colonies. The respective staff be directed to ensure maintenance and care of the green areas.

    The FBR would conduct spot visit of field offices to verify compliance of the directions.

  • IR officers barred from suspending registration, raiding business premises of tax defaulters

    IR officers barred from suspending registration, raiding business premises of tax defaulters

    ISLAMABAD: The offices of Inland Revenue have been barred from taking harsh action against tax defaulters such as suspending registration and raiding business premises on suspicions of tax evasion.

    The newly appointed chairman of Federal Board of Revenue (FBR) Shabbar Zaidi issued more directives on Tuesday to restrict the IR officers for using discretionary powers.

    The federal government appointed the chairman from private sector for enhancing revenue collection through strengthening operation side. The policy side of taxation matters has already been with the ministry of finance.

    The chairman soon after assuming the charge issued directives to the field offices of the FBR that no bank account would be attached of a taxpayer without informing 24 hours prior taking any action. Further obtaining permission from FBR chairman has been made mandatory for freezing any bank account.

    The chairman on Tuesday issued more instructions to the field offices of Inland Revenue, which stated: “There will be no suspension from active taxpayers list unless there is personal interaction with CEO/owner of the business 24 hours before suspension, list of all cases of suspension after suspension will be sent to chairman FBR and Member IR operations with reasons of suspension and evidence of personal interaction as discussed above.”

    The chairman further directed: “There will no be no raid or any premises of any existing taxpayer without prior approval of Member IR Operations and Chairman. If there are evidences of economic transactions which are chargeable to tax and the organization/entity is not a tax registered person then officer of that jurisdiction will report it to the Member IR Operations and Chairman FBR who will provide necessary direction for future course of action.”