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  • PTBA advises FBR stop interfering judicial function of Commissioner Appeals

    PTBA advises FBR stop interfering judicial function of Commissioner Appeals

    ISLAMABAD: Pakistan Tax Bar Association (PTBA) has urged the Federal Board of Revenue (FBR) to stop interference in judicial function of Commissioner Appeals.

    In a letter to FBR Chairman Muhammad Javed Ghani on Tuesday, the PTBA while referring to the instructions by the Legal Wing of the FBR to Commissioners Appeals, expressed serious concerns in interference in the judicial independence of the Appeal forum of the Commissioner Appeals and over the language of the letter which clearly indicates the direct influence in the judicial work/power of Commissioner Appeals.

    The Legal Wing of the FBR in its letter directed the commissioner appeals that they may exercise powers under tax laws however unnecessary annulment of orders with directions may be avoided.

    “Frequent annulled with directions orders will reflect adversely on the performance of the officers,” it added.

    The PTBA said that the letter is a clear demonstration of the overt and covert pressure that is exerted on commissioner appeals by the FBR and the field officers.

    “It is prima facie a travesty of justice in eyes of a taxpayer who is an aggrieved taxpayer is to seek relief from the departmental authorities which could be susceptible to overt and covert pressure from FBR.”

    This letter of February 15, 2021 issued by the FBR Legal Wing clearly established direct interference of the FBR in judicial function of Commissioner Appeals. “This is just not acceptable to PTBA and its membership.”

    An independent and fair appeal forum of the commissioner appeals is sine qua non for a taxpayer to have confidence in the tax administration.

    The Supreme Court of Pakistan had elaborated this principle in a leading case by holding that ‘separation of judiciary from executive is the cornerstone of independence of judiciary.’

    “If the taxpayer has confidence in a fair and just appeal forum of the FBR, he will come forward and be compliant taxpayer.

    “An independent appeal forum of commissioner appeals free from influence and inference of the FBR and FBR field units will also reduce unethical practices prevalent in the field units.”

    The PTBA demanded the FBR to withdraw the letter and re-assure all the commissioner appeals to adjudicate and decide appeals in a fair and just manner according to law and facts without any fear or influence from FBR or the FBR field units.

  • PTBA demands 90-day date extension for taxpayers’ profile update

    PTBA demands 90-day date extension for taxpayers’ profile update

    ISLAMABAD: Pakistan Tax Bar Association (PTBA) has demanded the Federal Board of Revenue (FBR) to extend the last date for taxpayers’ profile update at least for 90 days as system glitches creating hurdles in making compliance.

    The PTBA on Monday sent a letter to FBR chairman Muhammad Javed Ghani highlighting issues related to updating the profiles of the taxpayers up till December 31, 2020 in compliance of the provisions of Section 114A of the Income Tax Ordinance, 2001 inserted through Finance Act, 2020.

    The Section has made it compulsory for the taxpayers to update their profile electronically containing various information such as bank account, utilities etc. Furthermore, failure to file the prescribed form will also trigger the penal provisions as well as exclusion of the taxpayers from ATL list.

    The PTBA highlighted that there are several issues which needs to be addressed in this cumbersome and time consuming process of updating profile of around 2.5 million taxpayers across the country.

    The apex tax bar pointed out that the in the prescribed format for updating profile, the date can be put into it but there is no option for submission or is it just need to be entered into the said form? Hence, needs clarification in this regard.

    “Whether the salaried individuals are also required to update their profile as there is no provision under Section 114A of the Ordinance, ibid requiring them to do so? Furthermore, the persons applying for registrations under section 181 are also required update their profiles. Will the same apply for the salaried individuals apply for registration under Section 181?”

    The PTBA also pointed out that the tab/icon for the profile update is also appearing in the portals of the e-intermediary however, it does not work to update the profiles of the taxpayers appearing the portal of such e-intermediaries. The said issue needs to be rectified as most of the taxpayers rely on their representatives to do the e-filing work in this regard.

    The necessary amendments needs to be made into IRIS system to allow the taxpayers to update their profile at the time of registration as the said updating is time consuming, cumbersome process as well as duplication of the information put through form 181.

    Keeping in view the glitches, shortfall, issues the member has been requested to issue directions to the concerned IT department in order to do the needful in this regard as early as possible.

    Furthermore, till such time these issues are resolved by the relevant IT department, the time line for updating the profile under the provisions of the Section 114A of the Ordinance, ibid may kindly be extended for further reasonable time (preferably 90 days).

  • PTBA demands 60-day extension for filing income tax returns

    PTBA demands 60-day extension for filing income tax returns

    ISLAMABAD: Pakistan Tax Bar Association (PTBA) has demanded the tax authorities to extend the date for filing income tax returns for two months considering resurgence of coronavirus, calculation errors on IRIS portal and newly launched simple return form for small manufacturers.

    In a letter sent to FBR Chairman, the PTBA sought extension for filing of income tax returns for tax year 2020.

    It is pertinent to mention here that the FBR had already extended the date from September 30, 2020 to December 08, 2020.

    The PTBA, the representative of all tax bars in the country, apprised the FBR chairman that the second wave of COVID-19 had already emerged and reportedly it was more dangerous than the first wave.

    The tax bar said that several areas of the country were under lockdown/smart lockdown and micro lockdown due to the latest situation.

    Besides, the FBR has also instructed its field offices to reduce the staff strength to half to prevent the spread of the pandemic.

    “It is worth mentioning here that normal life and business activities are not going on due to the COVID situation which can be evaluated from the fact that even the government of India has further extended time for filing of return till January 31, 2021 from the original due date i.e. July 31, 2020,” the PTBA said, adding that timely filing of returns of income for tax year 2020, in this situation, is not possible.

    Apart from the COVID situation, the PTBA also highlighted the situation of wrong calculation of minimum tax on the IRIS portal at the time of filing income tax return. “Moreover, the other issues like tax calculation of Behbood Saving Certificates, profits etc. is also required to be deployed correctly in the system.”

    Previously, the PTBA on November 13, 2020 communicated with the FBR on such issues. The tax bar said that the issues pertaining to calculation of minimum tax liability by the system are persistent and not resolved.

    The PTBA further pointed out the newly introduced single page income tax return form for individuals and Association of Persons (AOPs) having turnover less than 50 million through SRO 1261(I)/2020. “It is not understandable that the manufacturers having less than 50 million turnover, can file their returns within available time left i.e. 12 days which is humanly impossible.”

    Considering these extraordinary circumstances due to COVID, calculation errors on IRIS and newly introduced income tax return form, the PTBA demanded the FBR to extend the last date for filing the income tax returns for further 60 days or up to January 31, 2021.

  • PTBA urges form issuance for updating taxpayers’ profile

    PTBA urges form issuance for updating taxpayers’ profile

    ISLAMABAD: Pakistan Tax Bar Association (PTBA) has urged the Federal Board of Revenue (FBR) to launch form for mandatory profile update by registered taxpayers as compliance date is fast approaching.

    The PTBA on November 13, 2020 sent a letter to Muhammad Javed Ghani, Chairman, FBR, urging him to publicize prescribed form for updating business profile by taxpayers under section 114A of Income Tax Ordinance, 2001.

    “The PTBA had tried to highlight this issue on September 26, 2020 but unfortunately no action whatsoever has been taken by the FBR authorities in this regard,” the PTBA said.

    An important amendment was made through Finance Act, 2020 regarding updation of business profile by the taxpayers under section 114A of the Ordinance, 2001 but not specific prescribed form for the purpose is still introduced by the FBR.

    “It is very unfortunate for the PTBA that why said prescribed form is still not publicized by the concerned FBR authorities because it is also a time consuming work for the taxpayers / tax consultants and last date for updating the same is December 31, 2020 as per provisions of law.”

    The PTBA also highlighted the issue of calculation errors of minimum tax for tax year 2020.

    “The last date for submission of return has been notified as December 08, 2020 and till the settlement of issue regarding determination of minimum tax liability, the taxpayers would not be able to submit returns within due date, so action in this regard be taken at priority basis otherwise PTBA would have no other option but to ask for further extension for which the body of PTBA is not desirous.”

    The PTBA said the scheme of the Income Tax Ordinance, 2001 is based on universal self assessment. “Self assessment does not mean only assessment of income, rather assessment of tax liability is also not only the prerogative and right but also obligation of the taxpayer,” the PTBA said, adding that the relevant columns related to attributable taxable income against minimum tax liability which have been blocked in the portal be opened for the taxpayers to incorporate his/its own attributable income as the said option has been provided in the columns related to tax collections made under section 148 of the Income Tax Ordinance, 2001.

  • Letter to FBR chairman: PTBA explains timeline for filing return under tax law

    Letter to FBR chairman: PTBA explains timeline for filing return under tax law

    ISLAMABAD: Pakistan Tax Bar Association (PTBA) on Saturday demanded the tax authorities to extend the last date for filing income tax return for at least three months as provided under the law.

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  • FBR urged to allow time extension making audit notice compliance

    FBR urged to allow time extension making audit notice compliance

    KARACHI: Pakistan Tax Bar Association (PTBA) has urged the tax authorities to allow time extension to taxpayers for making compliance in audit notices of tax year 2014.

    In a letter sent to Ms. Nausheen Javaid Amjad, Chairperson, Federal Board of Revenue (FBR) on Friday, the PTBA urged to grant an extension of time under Section 214A of the Income Tax Ordinance, 2001 to complete the amendment of assessment proceedings for the tax year 2014 in order to provide sufficient time to taxpayers for compliance of such notices issued by the department in the best possible interest of the taxpayers at large.

    The apex tax bar said that it had been brought to the notice that the officers of Inland Revenue had initiated amendment of assessment proceedings by issuing various notices under Section 177/174/176/122 of the Ordinance, ibid in the last month of June 2020 to the taxpayers for the year 2014 as the said tax year is going to be time barred as on June 30, 2020 under Section 122(2) of the Income Tax Ordinance, 2001.

    Furthermore, the said notice have been issued with a short margin of only 2-3 days for compliance (which is not possible) and the officers are also reluctant to allow sufficient time to the taxpayers and their respected authorized representatives to respond against the notices in order to finalize it till June 30, 2020 to achieve budgetary targets by the end of this month.

    The tax bar said: “This, once again, put the credibility of the FBR officials in question as there were six years available to those officers to complete the assessment proceedings after filing of income tax returns for the tax year 2014 but the department has been slept over all this time and now suddenly awake just to show efficiency by issuing such vague notices in order to complete the proceedings before it gets time barred.”

    The PTBA informed the FBR chairperson that it had been held in a number of judgments as well as many directions had been given from time to time by the board to the officials to provide sufficient time/opportunity to the taxpayers to defend their case and provide sufficient explanation before an adverse order is passed against them. “But this has not been adhered to in the prevailing situation as the officers of FBR are busy in achieving their budgetary targets as well as to show their efficiency at the end of the financial year.”

    Hence, such notices issued by the department not only torment the taxpayers but also lacks confidence of the taxpayers / consultants upon the department, it added.

    “Nevertheless, the current pandemic situation of COVID-19 prevailing all over the country where many of the businesses and areas are still in lockdown situation, the taxpayers are unable to reach their as well as FBR offices to respond such notices issued by the department in such a short compliance period.”

  • Tax officials’ power to select income tax return for audit should be withdrawn

    Tax officials’ power to select income tax return for audit should be withdrawn

    Tax practitioners have called for a significant reform in the income tax audit process, urging that the Federal Board of Revenue (FBR) alone should have the authority to select income tax returns for audit, withdrawing this power from the commissioners.

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  • Online verification of tax withheld should be available

    Online verification of tax withheld should be available

    KARACHI: Tax practitioners have urged the Federal Board of Revenue (FBR) to ensure verification of tax withheld on the IRIS portal in order to facilitate taxpayers in making adjustment or claiming refunds.

    Pakistan Tax Bar Association (PTBA) submitted proposals for budget 2020/2021 saying that withholding tax regime should be simplified by reducing the categories of withholding taxes and the rates thereon.

    It said that the withholding agent should be facilitated through robust IRIS; wherein the visibility of tax deduction should be provided to the taxpayer instead of relying on the withholding agents’ certificates.

    The rates of tax for all withholding taxes under one provision of law should be minimized and the differentiation should be on the basis of Active and Non-Active Taxpayer only.

    Withholding agents should be given incentive in the form of tax credit for facilitating the Government withholding/collecting taxes and in identifying potential tax evaders.

    The withholding tax challans should be made available on the IRIS to every registered person, instead of collecting the same from registered person(s) deducting and depositing the tax.

    The concept of Minimum Tax should be done away with for all the corporate Sector companies, who file their tax returns and pay tax on actual income regular basis.

    The government departments including defence should pay the tax withheld on FBR IRIS instead of book adjustment.

    Sales tax (including provincial sales tax on services) and other government levies should be excluded for the purpose of withholding collection of tax.

    A ‘Small Company’ including company having similar business and turnover should be brought at par with an Individual or AOP having turnover limit up to Rs 50 million.

  • CNIC should be made mandatory for purchase of moveable, immovable properties

    CNIC should be made mandatory for purchase of moveable, immovable properties

    KARACHI: Federal Board of Revenue (FBR) has been proposed to make computerized national identity card (CNIC) mandatory for purchase of movable and immovable properties for bringing potential taxpayers into the tax net.

    A presentation made on behalf of Pakistan Tax Bar Association (PTBA) for submission of proposals for budget 2020/2021, it is highlighted that Pakistan has a lower tax-to-GDP ratio as compared to regional and other countries, which is causing serious disparity between various sectors of the Economy.

    All the segments of the society are not contributing their due share of tax on their income in accordance with their contribution in the GDP.

    The number of Active Taxpayers are substantially low, as such broadening of tax base at fast pace is the needed.

    For broadening the tax base and to improve the tax to GDP ratio following recommendations are made:-

    FBR should extract information from withholding statements, details of government supplies and maintain a database of above third party information. Conduct the data mining and data analysis to generate complete profile for cross verification of data of the existing taxpayers as well as discovery of new taxpayers;

    CNIC/NICOP/Passport should be made mandatory for purchase of any moveable or immovable properties, assets and major expenditure;

    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.

    Exemption under Section 111(4) of the Income Tax Ordinance, 2001 may be allowed only to the foreign remittance brought into Pakistan through proper banking channel for investment for Balancing, Modernization and Replacement (BMR) of existing industrial undertakings or for making fresh investment in industrial undertakings;

    Effective enforcement should be ensured for compliance of filing of Return of Income under section 114 of the Ordinance, 2001;

    Atleast for five years jurisdiction (other than LTUs, CRTOs) should be made and fixed on territorial basis to avoid slippages of potential taxpayers.

  • PTBA recommends restoring Rs1.2 million threshold for salaried persons

    PTBA recommends restoring Rs1.2 million threshold for salaried persons

    KARACHI: Pakistan Tax Bar Association (PTBA) has recommended to restore basic threshold of Rs1,200,000 for salaried persons in the budget 2020/2021.

    According to a presentation of Zeeshan Merchant, advocate high court, given on behalf of the PTBA, urged the government to restore the basic threshold of Rs1.2 million that was available for tax year 2019 and the rates applicable for tax year 2019 for salaried persons, individuals and Association of Person (AOPs).

    Alternatively, the tax bar urged the authorities to allow a tax reduction of at least 25 percent of the tax payable to individuals and AOPs, who are subject to tax under Part I of First Schedule to the Income Tax Ordinance, 2001.

    The tax bar highlighted that income under the head ‘salary’ is currently taxed on the gross amount. This policy was introduced by bringing down the corresponding rates of tax for each income slab. However, gradually the income slabs as well as rates of tax were enhanced without restoring the deductible allowances when income from salary was taxed at higher rates.

    The PTBA proposed that either rationalize the rates of tax or restore the deductible allowances on account of house rent, utilities, conveyance etc. to minimize the tax burden of salaried individuals.

    Giving rationale, the PTBA said that it is not justified to tax the salaried individuals (particularly in high income slabs) at such a high rate when other taxpayers are subject to tax on their net profits at much lower rates.

    The limit of Rs1,000,000 for loan to employees below benchmark rate provided under Section 13(7) of the ordinance should be increased to Rs3,000,000.