The Karachi Tax Bar Association (KTBA) addressed significant challenges in filing income tax returns during a meeting with Dr. Muhammad Ashfaq, Member, Inland Revenue – Operations, on Saturday. The meeting aimed to shed light on the difficulties encountered by taxpayers and tax consultants while using the online tax filing system.
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KTBA advises FBR to update tax laws on its website
KARACHI: Federal Board of Revenue (FBR) has been advised to update tax laws with latest amendments on its official website to facilitate taxpayers as well as tax practitioners.
The Karachi Tax Bar Association (KTBA) in a letter to FBR Chairman Muhammad Javed Ghani on Tuesday pointed out that the available tax laws such as income tax, sales tax, federal excise and customs are not updated and required to insert latest amendments made through Finance Acts or other legislations.
In the letter, KTBA President Zeeshan Merchant said that FBR had provided soft copies of certain tax laws on its official website i.e. fbr.gov.pk for the facilitation of taxpayers as well as tax practitioners.
Merchant invited attention of the FBR chairman towards the fact that the important tax laws had been frequently amended and updated in the recent past through budgetary and other amendments. “However, it has been observed that the income tax laws as well as sales tax, federal excise and customs duty laws, which were available on the website of the FBR, have not yet been updated to incorporate such recent amendments.”
Since up to date tax laws are presently not available on the website, the same may lead to an inadvertent mistake by the taxpayer while ensuring compliance to the relevant provisions of law.
KTBA president said that the taxpayers should apply correct, up to date and valid laws in its true letter and spirit in order to be a compliant taxpayer.
The FBR chairman has been urged to issue necessary instructions for the updating the important direct and indirect tax laws which are available on the FBR’s website.
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KTBA demands time for return filing as per law
KARACHI: The Karachi Tax Bar Association (KTBA) on Monday demanded the Federal Board of Revenue (FBR) to allow extension for filing income tax return for tax year 2020 as per time prescribed under the law.
In a letter send to FBR chairman, Zeeshan Merchant, President, KTBA praised the FBR for issuing return of income for business, salaried individuals, AOPs and companies concurrently via Notification dated September 08, 2020.
Additionally simplified return of income for retailer/traders has also been notified per Notification dated September 17, 2020.
Consequently in line with Section 118(2) and (3) of Income Tax Ordinance 2001 the time prescribed/suggested for filing return in case of a company is 180 days and in other cases is 90 days from the date the relevant amendments have been incorporated in the return of income officially.
Merchant said that the media campaign launched by the FBR pressing people to file their return of income by due date i.e. September 30, 2020.
“The BAR members have however quested the soundness of FBR’s media campaign which otherwise represents September 30, 2020 as last date for filing return of income in tax year 2020,” the KTBA president said, and asked the FBR chairman to allow taxpayers and tax professionals to file return of income in tandem with law.
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Zeeshan Merchant elected unopposed KTBA president
KARACHI: The office bearers and members of executive committee have been elected unopposed for the term 2020 in the election of Karachi Tax Bar Association (KTBA). This was announced at 63rd Annual General Meeting (AGM) of the bar held on Thursday.
All the candidates for the KTBA elections have been elected unopposed. The AGM announced the successful candidates as: Syed Zeeshan Merchant, President; Syed Hassan Naeem, Vice President; Syed Faiq Raza Rizvi, General Secretary; Muhammad Mehmood Bikiya, Joint Secretary; and Shiraz Khan as librarian.
The managing committee of the KTBA includes: Arshad Siraj, Asim Rizwani Sheikh, Haris Tufail, Imran A. Karim, Imran Hyder, Irfan Ghafoor, Muhammad Yasin Merchant and Syed Wasimuddin Hashmi.
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KTBA advises FBR to suspend notices amid alarming rise in COVID cases
KARACHI: Karachi Tax Bar Association (KTBA) has advised Federal Board of Revenue (FBR) to suspend notices for various tax matters with immediate effect considering the alarming increase in cases of COVID-19 in the country.
The KTBA in a letter to FBR chairperson sent on Friday, informed that the bar members were receiving notices issued by the tax officials right in the month of June when the COVID-19 pandemic was in its worst phase in the country, and the city of Karachi is passing through its hardest times.
The grim situation at hand, in terms of helplessness and number of deaths of both taxpayers and the tax officers, cannot possibly be remained devoid of any mindful sight.
It is rather what today has the fullest attention of everyone concerned and the FBR as the tax regulator cannot simply be an exception. It cannot keep shooting notices mindlessly to the taxpayers for tax compliance when the taxpayers or their counselors cannot even reach their offices these days. The Bar equally feels compassionately about officers. “You must be aware of the deaths of tax officials posted at LTU, Karachi and at Regional Tax Office, Karachi due to Coronavirus.”
Around 160,000 coronavirus positive cases have been registered in the country out of which, almost 55,000 are in Sindh. Among the cities of Sindh, Karachi is at the top with 45,000 plus cases.
Keeping the above in view, the number of notices being issued these days is beyond ones comprehension. The members, like other service providers (shops, markets and manufacturing units are an exception), are largely not operating from their offices and are working from home, which has its own limitations. As such, in these testing times, it is not humanly possible for our members to respond to the notices issued for various proceedings discuss below.
Even otherwise responding to these notices is not possible without provision of details/ information by clients/ taxpayers who are also suffering from the short comings discussed above. On the other hand, IRIS still has its own limitations.
Any assignment created especially in ‘completed tasks’ cannot be replied via IRIS. Even if a notice can be responded to via IRIS, attachments containing details beyond a specific size are not acceptable by IRIS i.e. not every notice can be responded to via IRIS.
This would mean that bar members have to come to the tax office for making the compliance. Under the present scenario of infections (tax offices are not immune from this), this poses a great threat for the visitors.
What has been observed that as a matter of fact, the notices, which are being issued can broadly been categorized under the following categories:
(i) Audit notices for the Tax Years 2015 to 2019
(ii) Audit notices for the TY 2014 including notices for making amendment under section 122(5) of the Income Tax Ordinance, 2001
(iii) Monitoring of withholding tax
(iv) Set-aside proceedings
(v) Appeal effect proceedings
For Audit notices relating to the Tax Years 2015 to 2019, the bar is of the view that there should not arise any issue of getting barred due to any time limitation. As such, these proceedings can well be taken up at a later stage as well, say after two to three months when gravity of the spread of Coronavirus will be subsided.
The notices for monitoring of withholding tax are again not poised with any time limitation issue.
As for the notices related to the set aside and appeal effect proceedings, it would be advisable to seek an advice from the Ministry of Law as to any possible waiver from the application of calculation of limitation period under the Income Tax Ordinance, 2001 read with Section 4 of the Limitation Act, 1908 for these extra ordinary days; alternatively, some moratorium should be asked for. This will be in utter necessity for saving precious lives from any jeopardy due to any insensitivity.
The tax bar urged the FBR to suspend the notices at least till the end of July 2020. Further that no adverse action would be taken on the notices already issued.
This is acutely necessary to defuse the tension in the atmosphere and for instilling the much-needed confidence in the taxpayers of the country towards the single most pivotal federal tax regulator of the country.
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FBR urged to extend date for tax amnesty payment
KARACHI: Karachi Tax Bar Association (KTBA) has urged Federal Board of Revenue (FBR) to extend the date for making payment for amnesty scheme declarants.
The KTBA in a letter to FBR chairperson on Thursday pointed out that the due date of payment of tax under section 6 of the Assets Declaration Ordinance, 2019 (“ADO, 2019”), which in terms of section 6 of the ADO was June 30, 2019.
A declarant was also provided with an option to pay the tax on deferred payment basis in installment till the date of June 2020.
This late payment, however, had to be made along with default surcharge at the rates given in Clause (2) of the Schedule to the ADO, 2019.
The KTBA said that the maximum rate of default surcharge is 40 percent which would apply if the tax payment is made by 30 June 2020.
The ongoing circumstances in the wake of current pandemic of COVID-19 which, undisputedly, has affected the life and business of every individual, adversely and taxpayers are no exception.
The fall out of the cessation of business activities in the last three (03) months due to intermittent lockdown orders has effected every ones’ taxpaying capacity as well.
“It has become quite difficult for the taxpayers to make the payment of tax as per the proviso discussed above, by 30 June 2020,” the KTBA said.
In this connection, on behalf of our members, we would suggest that the following may be considered:
1. the due date of payment of tax may be extended up to 31 December 2020 without increasing the rate of default surcharge further
AND
2. allow adjustment from tax refund, if any, available to the taxpayer, against the aforesaid payment.
The measures will not only repose confidence to the taxpayers but will also show the resolve of the FBR to address a genuine issue.
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Tax authorities consider reducing minimum tax rate: Zeeshan Merchant
KARACHI: Tax authorities have agreed to consider reducing minimum tax rate for corporate sector and individuals in the upcoming budget, especially in the wake of financial losses due to coronavirus pandemic, a senior tax consultant said.
“In different meetings with Dr. Abdul Hafeez Shaikh, Finance Advisor to Prime Minister, Razak Dawood, Commerce Advisor to PM and senior officers of Federal Board of Revenue (FBR) have agreed to reduce minimum tax rate for providing relief to mitigate adverse impact of coronavirus,” Zeeshan Merchant, former vice president of Karachi Tax Bar Association (KTBA) said this while talking to PkRevenue.com.
Merchant, who is also honorary consultant to Federation of Pakistan Chambers of Commerce and Industry (FPCCI), said that the actual proposal for the budget 2020/2021 is to reduce minimum tax rate for corporate sector to 0.5 percent and abolish this tax for two years in case of individuals and Association of Persons (AOPs).
He said that in meetings Dr. Abdul Hafeez Shaikh and Abdul Razak Dawood appreciated the proposals and promised to consider in the budget for providing maximum relief to businesses.
Merchant further said that the FBR chairperson also pledged to move this proposals after consideration for incorporation in the Finance Bill 2020.
He said that due to coronavirus and subsequent lockdown many corporate entities would not able to post significant profits or declare substantial losses for the year.
Merchant further said that the minimum tax applied on turnover when a taxpayer declare lower profit or declare gross losses to the year.
The FPCCI in its proposals for fiscal year 2020/2021 said that the existing rate of 1.5 percent minimum tax is very high and results in financial hardships to the taxpayers.
Due to the current economic conditions and its negative impact on productivity, the businesses are not operating at optimum level.
According to changes vide Finance Act, 2016 threshold of turnover for individual and AOP for turnover tax at the rate of 1.25 percent decreased from Rs50 million to Rs10 million. This had adversely affected the true declaration of turnover and has created hardship for the taxpayers.
After changes made in Section 113(1) of Income Tax Ordinance, 2001, now companies have to pay turnover tax even in case of gross loss before charging of depreciation. This has adversely affected the industry.
Under section 113(2) (C) where Minimum Tax paid under sub section (1) exceeds the actual tax payable under Part I, Clause (1) of Division I, or Division II of the first Schedule, the excess amount is carried forward for adjustment against tax liability of the subsequent tax year(s).
The FPCCI also proposed to reduce the minimum tax rate and enhance the limit of turnover to Rs50 million.
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KTBA asks FBR to grant general adjournment for cases during lockdown
KARACHI: Karachi Tax Bar Association (KTBA) on Tuesday urged Federal Board of Revenue (FBR) to grant general adjournment for cases as taxpayers may not appear due to lockdown.
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KTBA highlights difficulties in claiming exemption
KARACHI: Karachi Tax Bar Association (KTBA) on Tuesday highlighted issues faced by taxpayers in obtaining exemption against import of raw material and plant and machinery.
The KTBA in a letter to Member Inland Revenue (Operations), Federal Board of Revenue (FBR) highlighted the issues being faced by taxpayers while claiming exemption from income tax deduction on import of raw materials and plant and machinery.
The desired exemption certificate against tax deduction on import of raw material is though being auto generated by IRIS portal on the basis of annual quota allowed by the Commissioner Inland Revenue, the same however, for the past 6-7 days is not being uploaded on WeBOC portal. Consequently, the Custom authorities are unable to allow any exemption as the same is not being reflected on their WeBOC portal.
Secondly the IRIS portal has not been enabled to distinguish exemption application applied for raw material and the one applied for exemption on plant and machinery.
The KTBA said that consignment/LC wise exemption certificate is allowed against tax deduction on import of plant and machinery. However, while trying to apply for the said exemption certificate, following error message pops up on IRIS portal:
“You are not allowed any quota”Any quota related objection can only be relevant in case of import of raw material and not otherwise.
The issues highlighted above are not more than IT Glitches and can be brought to correction with minimum due attention on the details of the system requirements.
In view of the foregoing, the KTBA requested the Member to kindly issue directions for resolutions of these issues on urgent basis so as to facilitate taxpayers.
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KTBA suggests automatic stay against recovery on 10% tax payment
KARACHI: Karachi Tax Bar Association (KTBA) has suggested an automatic stay should be granted where a taxpayer paid 10 percent of the defaulted amount.
The stay should be granted till the decision by the Commissioner Inland Revenue (Appeals), the KTBA said in a letter sent to Member Inland Revenue (Policy) on Thursday.
The tax bar through the letter submitted its observations on the draft rules recently notified by the FBR related to third party recovery.
Through the draft rules, it is proposed that recovery may not be made where the taxpayer has voluntarily paid 10 percent of the tax demand until the decision of the appeal filed with the commission inland revenue (appeals).
“The condition to consider only voluntary payments, while issuing recovery notice, is contrary to the proviso to section 140(1) of Income Tax Ordinance, 2001 where the term ‘tax paid’ has been used which invariably includes any recoveries made by the department as well.”
It is therefore, suggested that where partial recovery up to 10 percent of the tax demand has already been made, the taxpayer should be entitled to automatic stay against any further recovery till the decision by the Commissioner Inland Revenue (Appeals), the KTBA said.
The KTBA observed that notice of recovery issued under Section 140 has to be complied with immediately. Meanwhile, Rule 210D proposes for dispute resolution relating to execution, discharge or satisfaction of a recovery notice.
A combined reading of the provisions suggests that the recovery could be affected before institution of any dispute with the Commissioner Inland Revenue.
“A minimum three working days time may be allowed for payment of the outstanding demand (after due date of service of recovery notice) to enable the defaulter to raise any genuine concerns arising from execution, discharge or satisfaction of such a notice.”