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Tag: KTBA

  • FBR advised to use withholding statements for identifying new taxpayers

    FBR advised to use withholding statements for identifying new taxpayers

    KARACHI: Tax practitioners have advised the Federal Board of Revenue (FBR) to examine withholding statements and extract information of persons not paying taxes and not filing their annual returns.

    The members of Karachi Tax Bar Association (KTBA) in their pre-budget 2021/2022 seminar urged the FBR for mining of its database to identify new taxpayers & those not fully discharging their liabilities

    FBR should extract information from withholding statements, details of government supplies and maintain a database of above third party information, according to a presentation made by Haider Patel, former president, KTBA.

    He further suggested that relevant organizations, departments, institutions including utility companies, banks, NADRA and information obtained related to offshore transactions should submit prescribed information on quarterly basis to the FBR.

    The FBR has been further advised effective enforcement for compliance of filing of Return of Income under section 114 of Income Tax Ordinance, 2001.

  • Karachi Tax Bar highlights issues in input tax adjustment on provincial invoices

    Karachi Tax Bar highlights issues in input tax adjustment on provincial invoices

    KARACHI: Karachi Tax Bar Association (KTBA) on Wednesday wrote a letter to chairman of the Federal Board of Revenue (FBR) highlighting issues faced by taxpayers on disallowance of input adjustment against entry of provincial invoices.

    The tax bar said: this is with reference to above cited subject and the following intimation uploaded on the web portal of Federal Board of Revenue:

     “Manual entry of provincial invoices for input tax credit of services in Annex A is disallowed from 01 April 2021 for the tax period from March 2021, Taxpayers as buyers will get monthly input tax credit based on submission of sales invoices and Return in respective tax authority for which the data is made available in Purchase Data Tab. For previous data please contact at [email protected] subject Services data.”

    KTBA highlighted the following issues which the Members of KTBA in general and Taxpayers in particular are facing due to the sudden change made through intimation on the web portal:

    Till the filing of this letter, the data/invoices of all provinces are not synchronized and are not readily available automatically; this is not only creating problems for the Taxpayers to claim the Provincial Input Tax (Services Input Tax), but the Taxpayers would not be able to submit their monthly Sales Tax Returns for the Tax Period of March 2021 (last date of e-filing April 18, 2021) due to non-availability of Service Input Tax.

    In most of cases, the KTBA observed that Service Input Tax data prior to Tax Period March 2021 is not available; due to which the Taxpayers are unable to claim Service Input Tax for tax periods prior to tax period March 2021.

    At present, banks and other businesses such as courier services etc., as a routine deposit Provincial Sales Tax (Service Tax) as a bulk entry instead of depositing the same against each Taxpayer which is affecting in claiming the Service Input Tax.

    At present, Service Input Tax of only those Taxpayers is being retrieved who have e-filed / submitted their returns which is unnecessarily delaying the filing of Sales Tax Returns as Service Input Tax is not available.

    Our Members have informed that in certain cases, Taxpayers in some cases are unable to claim Service Input Tax in the Sales Tax Returns though the same is available under Annexure A.

    Apart from above, there are other teething issues which are practically creating issues for the Taxpayers and Members of KTBA alike which are including but not limited to withholding tax on Service Tax showing as payable, Service Input Tax entries once deleted are not uploaded again and deferment of Service Input Tax, etc.

    In view of above, the KTBA highlighted the following for your kind perusal and ready action:

    Till the time this new system is fully functional; KTBA suggest to use both old as well as new system for claim of Service Input Tax to allow taxpayers to claim genuine Service Tax paid by them;

    Old system of claim of Service Input Tax should be phased out in gradually instead of sudden disallowance;

    Once the system is fully functional, KTBA suggests providing an option to claim Service Input Tax manually, which for any reason is not available up by the system, through manual entry with the option to upload the Service Tax Invoice not uploaded automatically. Such entry should then be checked and if found otherwise be routed through S. No. 7 (a) (b) (c) of the Sales Tax Return;

    Ensure invoice wise entry by all Taxpayers ensuring entry against NTN / STRN of each Taxpayer in order not only to streamline the process but to proper claim of Input Tax both Federal and Provincial;

    Claim of Service Input Tax be allowed instead of marking the same is “input tax not claimable”;

    Field relating to Withholding tax on provincial sales tax should be removed from the Federal Sales Tax return; and

    Feature of re-uploading of Service Input Tax be made available.

    Although, KTBA feels that use of IT based technology/digitalization of records is the only way to resolve the multi-faceted complex issues vis-à-vis to address the issues of flying / fake input tax; however, sudden implementation of new scheme in the midst of MOU signed by the Federation and the Provinces to develop one Sales Tax Return is likely to create chaos and disorder for the Taxpayers.

    In view of above submissions, KTBA feels that appropriate measures including but not limited to extension of date for the Tax Period of March 2021 for filing of Sales Tax Return and resolution of above highlighted issued be addressed forthwith to ease the pressure of the Taxpayers and Members of KTBA alike.

  • KTBA to discuss tax profile update problems with FBR chairman

    KTBA to discuss tax profile update problems with FBR chairman

    KARACHI: Karachi Tax Bar Association (KTBA) to take up problems faced by taxpayers at a meeting with the chairman of the Federal Board of Revenue (FBR), according to a communication received on Thursday.

    In the communication to its members, the KTBA said it was well aware about many issues faced by the members while updating taxpayers’ profile, which is mandatory under Section 114A of the Income Tax Ordinance, 2001.

    The KTBA advised its members to send the nature of problems they faced while updating taxpayers’ profiles on the IRIS portal.

    The tax bar also advised the members to send their issues by March 25, 2021 to enable the KTBA to take up the issues with the FBR chairman for resolution.

    Updating the taxpayer profile has been made mandatory through insertion of Section 114A to the Income Tax Ordinance, 2001 through Finance Act, 2020.

    The last date for updating the profile was December 31, 2020. However, it was extended to March 31, 2021.

    The FBR through various statements has made it clear that those who failed to update the profile would be excluded from the Active Taxpayers List (ATL).

    The FBR has also imposed monetary penalty for failure in updating the profile. Under the Income Tax Ordinance, 2001 an amount of Rs2500 per day with minimum penalty of Rs10,000.

  • Zeeshan Merchant elected KTBA president for second consecutive term

    Zeeshan Merchant elected KTBA president for second consecutive term

    KARACHI: Muhammad Zeeshan Merchant has been elected as president of Karachi Tax Bar Association (KTBA) for the second consecutive time in the elections of the bar held on Thursday.

    Merchant secured 401 votes for the slot of president. The other candidate Muhammad Imtiaz Zubairi could get only 141 votes.

    It is pertinent to mention that it was the first time in the past 20 years that the KTBA members were casting their votes for all the slots.

    Merchant has been elected as the president of the KTBA for the second consecutive term for the year 2021. He already served on the same portfolio for the year 2020.

    He was contesting for the presidentship of the KTBA from the platform of United Panel. All the candidates of the United Panel have been elected with a big margin.

    Muhammad Memood Bikiya has been elected vice president.

    Syed Faiq Raza Rizvi, Shiraz Khan and Haris Tufail have been elected for the slot of honorary general secretary, librarian and honorary joint secretary, respectively.

    The successful members of the executive committee are included: Asim Rizwani Sheikh, Abdul Wahab, Irfan Ghafoor, Muhammad Mustafa Rahim, Raeel Fatima, Syed Ejaz Ahmed Jafry, Saud ul Hasan and Atif Nawaz.

  • FBR criticized for restricting servicing of tax notices through electronic means

    FBR criticized for restricting servicing of tax notices through electronic means

    KARACHI: Karachi Tax Bar Association (KTBA) has criticized the tax authorities for restricting the service of tax notices to electronic means.

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  • KTBA recommends daily update of ATL file; banks not relying on online verification

    KTBA recommends daily update of ATL file; banks not relying on online verification

    KARACHI: Karachi Tax Bar Association (KTBA) has advised the Federal Board of Revenue (FBR) to update Active Taxpayers List (ATL) on daily basis instead weekly as banks were not relying on the online verification of the active taxpayers for purpose of withholding tax deduction.

    The KTBA on Saturday said that many taxpayers are making payment of surcharge U/s.182A of the Income Tax Ordinance, 2001 (Ordinance) for inclusion of their names in the ATL and upon the payment the status of taxpayer is immediately updated in the ATL on the web portal.

    However, the excel file available on the FBR web portal of is not being updated which is causing severe problems to the taxpayers as far as withdrawals from banks are concerned.

    “The banks are not relying on the online verification available on the web portal of FBR,” the KTBA said.

    The KTBA suggested that the excel file (lists) available on the web portal of FBR is updated on daily basis and the banks are also informed to rely on the online verification before withholding deducting the tax on banking transactions in order to facilitate the taxpayers.

    The tax bar said that it had received many complaints that where manual extensions were filed/submitted and where no reply was received (whether granted or refused) and the returns were filed within the time applied for; the names of such taxpayers are also not appearing in the ATL though such cases are liable to be treated as filed within the time allowed.

    The KTBA advised that where taxpayers have filed the manual extensions within time and where the returns have been filed within the time applied for, the names of such taxpayers should be included in the ATL and the ATL be updated immediately without payment of surcharge as prescribed U/s.182A of the Ordinance.

    There are several instances where the taxpayers have opted rightly to file their returns, in time, manually (paper returns) as they were legally not bound to file their returns electronically, their names are also not appearing in the ATL for which we are being informed by our members continuously. We feel that the manual returns have not been digitized and such taxpayers are facing severe problems due to non-appearance of their names in the ATL.

    The tax bar suggested that where taxpayers have rightly filed/submitted their returns manually (paper turns), the names of such taxpayers should be included in the ATL forthwith for their facilitation.

    The KTBA also received complaints from members and have also noticed that there are instances where extension applications have been submitted via IRIS within time and the same are appearing in the outbox of IRIS unattended by the concerned Commissioners and the returns have also been filed within the time applied for but their names are not appearing in the ATL.

    The tax bar said that there is no fault of the taxpayers who have filed the extensions in time that remains unattended and the returns have also been filed within the time applied for.

    It suggested that where taxpayers have applied for extensions on IRIS in time, whose applications have remained unattended and the returns have been filed within the time, the names of such taxpayers should also be included in the ATL forthwith for their facilitation

  • KTBA urges FBR to issue form for updating taxpayers’ profile

    KTBA urges FBR to issue form for updating taxpayers’ profile

    KARACHI: Tax practitioners have urged the Federal Board of Revenue (FBR) to issue form for updating taxpayers’ profile and provide suitable time for making compliance.

    In a letter sent to Member Inland Revenue (Operations) FBR, the KTBA said that the last date for updating taxpayers’ profile is December 31, 2020 but the prescribed form is still not issued.

    Although, the FBR issued draft rules for updating profile through SRO1341(I)/2020 on December 16, 2020 but the finalized format is still awaited, said KTBA President Muhammad Zeeshan Merchant.

    The KTBA president said that the prescribed form as mentioned in clause (a) of sub-section (2) of Section 114A of the Income Tax Ordinance, 2001 has still not been issued and or made available on IRIS.

    “It was, though, discussed in our meeting at length and also agreed by your goodself that when the information sought under section 114A of the Ordinance is already available on IRIS in the registration form under Section 181 of the Ordinance, this new form would simply be a repetitive and arduous exercise in the presence of the information already available on IRIS (in the form under section 181), the KTBA president told the Member.

    In addition to above, Merchant said that it was also discussed that as and when the form is prescribed, the timelines available under the Ordinance would suitably be extended/amended accordingly and at least 90 days time would be given from the date of the form is prescribed. “It is needless to say that for the form to be prescribed and uploaded on IRIS, has first to be issued in draft form for public seeking comments and objection, if any, and after that only the said form can be legally prescribed or notified.”

    Considering the issue, the KTBA requested the Member to immediately take urgent measures to prescribe the said form as soon as possible and also provide/allow proper time available under the law which is minimum for 90 days which is not only the right of the taxpayers but at present also genuinely needed as the delay is not part of the taxpayers.

  • KTBA declares online income tax return form as defective

    KTBA declares online income tax return form as defective

    KARACHI: Karachi Tax Bar Association (KTBA) on Thursday declared the available income tax return form at IRIS – the web portal of Federal Board of Revenue (FBR) – as defective and taxpayers are unable to file their returns for tax year 2020.

    “Needless to state that the return of income is still defective and incomplete as certain fields are missing to date. The time prescribed of 90 days under Section 118 to file return will not start until all defects in the return of income are completely removed and the return is error free and taken to have been finalized,” the KTBA said in a letter sent to the FBR chairman.

    It is pertinent to mention here that the last date for filing income tax returns for tax year 2020 was September 30, 2020. The FBR finalized the return form on September 08, 2020. On the demand of tax bars the FBR extended the last date by 90 days to December 08, 2020.

    The tax bar further said that to incorporate/correct certain fields/errors, appropriate Rules needs to be amended which can only be made through a notification as required under section 237(3) of the Income Tax Ordinance, 2001, the KTBA added.

    Muhammad Zeeshan Merchant, President, KTBA in its letter to the FBR chairman said that the incorrect computational issues in the return of income still persist and members were facing severe difficulties and were in extreme pressure because of two main situations, which are:

    (1) they cannot file the returns on the forms presently available on the IRIS, with wrong formulas, calculating erroneous tax; and

    (2) resurgence of the currently ongoing, since many past days, the dangerous life threatening second wave of COVID-19 which has not only gripped the taxpayers but have also affected the members of KTBA in particular and tax consultants in general and their staff.

    The KTBA through its letter explained in detail about the incorrect computation of tax under various heads of income.

    The tax bar said that the members were working very hard during such extraordinary extreme and testing time, however, due to non-removal of above irritants and rising COVID-19 cases, the members are unable to file their returns of income which could transpire in low number of returns that have been filed till date.

  • Tax bar opposes making phone SMS as mode of service

    Tax bar opposes making phone SMS as mode of service

    KARACHI: Karachi Tax Bar Association (KTBA) on Tuesday opposed making mobile phone SMS as a legal mode for serving notices.

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  • KTBA identifies flaws in online tax return filing

    KTBA identifies flaws in online tax return filing

    KARACHI: Karachi Tax Bar Association (KTBA) on Saturday said that it has detected calculation errors on the online return filing portal of the Federal Board of Revenue (FBR).

    In this regard the tax bar sent a letter to Dr. Muhammad Ashfaq, Member Inland Revenue (Operations), Federal Board of Revenue (FBR) apprising him that the issues were discussed with o November 17, 2020 but the problems were same unresolved till to date.

    It is pertinent to mention that the last date for filing income tax return is December 08, 2020. Such problems may adversely affect the total number of return filing.

    The tax bar in its latest letter to the Member IR Operations highlighted the same issues for early resolution for smooth return filing.

    The tax bar said that IRIS Portal was not correctly calculating the tax on Behbood Saving Certificate and others. It said that till today working of tax on yield from Behbood Saving Certificate or Pensioners Benefit Account and Shuhada Welfare Account is still incorrect where average rate of tax exceeds 10 percent of total income.

    The tax bar suggested that to show the yield as a separate block of income in order to avoid the calculation issues.

    The KTBA said that minimum tax calculation was also showing incorrect working. The tax bar suggested that for tax year 2020, there has been a paradigm shift in taxation of incomes previously taxed under final tax regime and now are being taxed at minimum.

    “Although, the law had been amended yet there are not instructions given by the FBR as to how to cater to these situations.”

    Working under these situations is showing incorrect tax amount which renders the return defective and there is need to correct the working, the tax bar added.

    The tax bar highlighted issue in tax deducted/paid under Section 233A by a stock exchange registered in Pakistan, and said they were unable to claim tax deducted/paid in case of sale/purchase of shares under section 233A of the ordinance as the same is not available in adjustable tax regime. The tax bar suggested to provide the column for the tax year 2020.

    Similarly, in case of tax deducted/paid under section 236W on purchase of immovable property, it said that they were unable to claim tax deducted/paid in respect of property purchased before June 30, 2019 and tax under section 236W of the Ordinance is paid subsequently i.e. during the tax year 2020; as the same is not available in description/heads of Final Tax Regime (FTR)/Minimum Tax Regime (MTR).

    Therefore, it is suggested to provide the column for the tax year 2020.

    The KTBA pointed out that through Finance Act, 2019, tax regime for various income entities was changed from FTR to Minimum Tax. Accordingly, entities following special tax year are required to file January-June under FTR and July – December under minimum tax. However, IRIS portal does not cater for such situation.

    “For the income stream having special tax year where taxation regime is changed from final tax to minimum tax, the IRIS portal should cater both regimes,” the KTBA suggested.