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Tag: withholding tax

  • Withholding tax imposed on motor vehicle sale to discourage ‘on money’

    Withholding tax imposed on motor vehicle sale to discourage ‘on money’

    ISLAMABAD: The federal government has approved an additional withholding tax on motor vehicles sold within 90 days of delivery in order to discourage ‘on money’ trend, sources said on Wednesday.

    The federal cabinet in its meeting on February 09, 2020 approved the Tax (Amendment) Ordinance, 2021 to implement through a presidential ordinance.

    The sources said that through the Tax (Amendment) Ordinance, 2021 withholding tax on vehicles had been imposed in case the motor vehicle was sold within 90 days of delivery.

    The tax has been imposed in order to discourage investors and ‘on money’ trend.

    The levy has already been approved by the economic coordination of the cabinet.

    The sources said that the withholding tax will be applicable after promulgation of the ordinance.

  • FBR exempts withholding tax on wheat import

    FBR exempts withholding tax on wheat import

    In a move to facilitate the import of essential commodities, the Federal Board of Revenue (FBR) issued a notification on Tuesday, exempting withholding income tax on the import of 300,000 metric tons of wheat.

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  • Committee may recommend reduction in withholding tax provisions

    Committee may recommend reduction in withholding tax provisions

    ISLAMABAD: A committee constituted to simplify taxation procedures may recommend a reduction in the number of withholding tax provisions and measures for enhancing the revenue collection.

    Sources in the Federal Board of Revenue (FBR) said that a technical committee was constituted on September 17, 2020, for simplification of all taxation procedures.

    They said that the committee likely to submit its recommendations during next month for incorporation into the budget.

    The committee was assigned to propose measures to reduce the dependence on withholding taxes, minimum tax, advance tax, etc.

    According to the terms of reference (TOR), the committee would identify distortion, anomalies, and inequalities in the taxation system which cause difficulties for taxpayers, or discourage investment, industrialization, and documentation, and propose solutions.

    Further, the committee is also required to propose measures for simplification of all taxation procedures, in a manner that does not compromise revenue collection and documentation.

    The committee is also required to propose measures for improvement in the temporary importation and manufacturing bond schemes in order to enhance their scope and facilitate direct and indirect exporters throughout the value chain.

    The committee has been asked to propose remedies for issues relating to adjustment of input tax paid against services subjected to sales tax by the provinces.

    Meanwhile, the committee shall also identify issues hindering the smooth processing of refund claims through the FASTER system.

  • Withholding tax from cash withdrawal plunges by 52 percent; remains in top 10 revenue spinners

    Withholding tax from cash withdrawal plunges by 52 percent; remains in top 10 revenue spinners

    ISLAMABAD, September 15, 2024 – The Federal Board of Revenue (FBR) has reported a sharp decline in the collection of withholding tax (WHT) by 52% during the tax year 2020, following the abolishment of the tax for income tax return filers.

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  • Period for filing withholding tax statement reduced

    Period for filing withholding tax statement reduced

    ISLAMABAD: Withholding agents are required to file statement of deduction and collection on quarterly basis instead bi-annual.

    The change has been brought through Finance Act, 2020 by amending section 165 of the Income Tax Ordinance, 2001.

    Sources in Federal Board of Revenue (FBR) said that the change was brought on the proposal of business community as submission of record bi-annual was creating difficulties.

    The withholding statement was required to file on monthly basis. However, through Finance Supplementary (Second Amendment) Act, 2019 the relevant law was amendment and it was made on bi-annual basis.

    And now it is again reduced to quarterly basis through Finance Act 2020.

    The FBR sources said that the withholding statement is required to be submitted on:

    (a) in respect of quarter ending on the 31st day of March, on or before the 20th day of April;

    (b) in respect of quarter year ending on the 30th day of June, on or before the 20th day of July;

    (c) in respect of quarter ending on the 30th day of September, on or before the 20th day of October; and

    (d) in respect of quarter ending on or before the 31st day of December, on or before the 20th January.

    The FBR sources said that the withholding agents would provide following details of persons whose tax were deducted along with the statement, which would include:

    (a) the name, Computerized National Identity Card Number, National Tax Number and address of each person from whom tax has been collected under Division II of this Part or Chapter XII or the Tenth Schedule or to whom payments have been made from which tax has been deducted under Division III of this Part or Chapter XII or the Tenth Schedule in each quarter.

    (b) the total amount of payments made to a person from which tax has been deducted under Division III of this Part or Chapter XII or the Tenth Schedule in each quarter.

    (c) the total amount of tax collected from a person under Division II of this Part or Chapter XII or the Tenth Schedule or deducted from payments made to a person under Division III of this Part or Chapter XII or the Tenth Schedule in each quarter; and

    (d) such other particulars as may be prescribed:

    Provided that every person as provided in sub-section (1) shall be required to file withholding statement even where no withholding tax is collected or deducted during the period.

    Explanation.— For the removal of doubt, it is clarified that this sub-section overrides all conflicting provisions contained in the Protection of Economic Reforms Act, 1992 (XII of 1992), the Banking Companies Ordinance, 1962 (LVII of 1962), the Foreign Exchange Regulation Act, 1947 (VII of 1947) and the regulations made under the State Bank of Pakistan Act, 1956 (XXXIII of 1956), if any, on the subject, in so far as divulgence of information under section 165 is concerned.

  • Exemption from withholding tax on foreign remittances may not practical for banks

    Exemption from withholding tax on foreign remittances may not practical for banks

    The Pakistani government has announced a significant tax relief measure, granting withholding tax exemption on the transfer of foreign remittances to Pak Rupee (PKR) accounts. However, tax experts have raised concerns about the practical implementation of this exemption, particularly regarding the bifurcation of transactions for banks.

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  • Details of transactions exempted from withholding tax

    Details of transactions exempted from withholding tax

    ISLAMABAD: The Finance Bill, 2020 has proposed to withdraw withholding tax collection on nine different types of transactions under Income Tax Ordinance, 2001.

    According to budget commentary issued by PwC A F Ferguson, as part of reforms for ease of doing business, the government has proposed to withdraw following withholding tax provisions, which in government’s view were not generating enough revenues:

    01. Section 148A – Tax on local purchase of cooking oil or vegetable ghee by certain persons

    Two percent tax was chargeable on the purchase of locally produced edible oil by the manufacturers of cooking oil or vegetable ghee.

    02. Section 156B – Withdrawal of balance under Pension Fund

    A pension fund manager making payment from individual pension accounts, maintained under any approved Pension Fund, was required to deduct tax at the average rate of tax as calculated in section 12, from the amount so withdrawn by the pensioner before or after his retirement.

    03. Section 235B – Tax on steel melters and composite units

    Tax under this section was required to be collected from every steel melter, and composite steel units, registered for the purpose of Chapter XI of Sales Tax Special Procedure Rules, 2007 at the rate of one rupee per unit of electricity consumed for the production of steel billets, ingots and mild steel (MS products) excluding stainless steel.

    04. Section 235D – Advance tax on functions and gatherings

    Advance tax under this section was required to be collected by the prescribed person on the total amount of the bill from a person arranging or holding a function in a marriage hall, marquee, hotel, restaurant, commercial lawn, club, a community place or any other place used for such purpose including the food, service or any other facility is provided by any other person, from the person arranging or holding the function.

    05. Section 235F – Advance tax on cable operators and other electronic media

    Under this section, Pakistan Electronic Media Regulatory Authority was required to collect advance tax, at the time of issuance of licence for distribution services or renewal of the licence to a licencee.

    06. Section 236J – Advance tax on dealers, commission agents and arhatis etc

    Advance tax under this section was required to be collected by every market committee from dealers, commission agents or arhatis, etc. at the time of issuance or renewal of licences

    07. Section 236R – Collection of advance tax on education related expenses remitted abroad

    Advance tax was required to be collected by Banks, financial institutions, foreign exchange companies or any other person responsible for remitting foreign currency abroad for the purpose of education related expenses remitted abroad from the payer of education related expenses.

    08. Section 236U – Advance tax on insurance premium

    Advance tax was required to be collected under this section, by the insurance company at the time of collection of insurance premium from the person in respect of general insurance premium and life insurance premium.

    09. Section 236X- Advance tax on tobacco

    Pakistan Tobacco Board or its contractors, at the time of collecting cess on tobacco, directly or indirectly, shall collect advance tax at the rate of five percent of the purchase value of tobacco from every person purchasing tobacco including manufacturers of cigarettes.

  • 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.

  • New slab for withholding tax on motor vehicle purchase recommended

    New slab for withholding tax on motor vehicle purchase recommended

    KARACHI: Regional Tax Office (RTO) – II Karachi has recommended revision in slab for withholding tax collection on purchase of new motor vehicles from next fiscal year.

    The RTO-II Karachi in its proposals for budget 2020/2021 suggested revision in existing slabs for withholding tax collection on motor vehicles.

    The RTO-II Karachi proposed to create a new rate of withholding tax on purchase of motor vehicle engine capacity below 850CC.

    At present the FBR is collecting Rs7500 as withholding tax on registration of new motor vehicle engine capacity up to 850CC. The RTO-II Karachi proposed to exempt withholding tax on vehicles of engine capacity up to 250CC.

    The tax office suggested to create slab of Rs3,000 for registration of new motor vehicles with engine capacity between 251CC to 650CC.

    Similarly, the RTO-II Karachi also suggested to bring change slabs of withholding tax rate on transfer of ownership of motor vehicles.

    At present motor vehicles up to 850CC is exempted from tax at the time of transfer first tax rate is applicable at Rs5000 on engine capacity between 851CC to 1000CC.

    The RTO-II Karachi suggested that the withholding tax rate should be exempted on transfer of motor vehicle up to 650CC. The tax office suggested that the tax rate for first slab should be Rs5000 for the motor vehicle transfer of engine capacity between 651CC to 1000CC.

    The regional tax office recommended change in slabs of motor vehicle tax. Whereas, at present the motor vehicle tax on engine capacity up to 1000CC is Rs800.

    The tax office proposed that motor vehicle tax rate should be exempted on vehicle with engine capacity up to 250CC. Meanwhile, the motor vehicle tax should be Rs800 on engine capacity between 251CC to 1000CC.

  • FBR proposed to ensure CPR for deposited withholding tax

    FBR proposed to ensure CPR for deposited withholding tax

    KARACHI: Federal Board of Revenue (FBR) has been advised to ensure Computerized Payment Receipt (CPR) for deposited withholding tax in order to avert chances of revenue leakages.

    Pakistan Business Council (PBC) in its proposals for budget 2020/2021 submitted to the FBR, said that presently the taxpayer has to deposit the withholding tax deducted fortnightly, i.e. within seven days from the end of each week ending on every Sunday.

    In addition, certain WHT agent do not deposit on time and some agents do not deposit at all. This also includes agencies/govt. organizations in respect of withholding tax, where CPR is not provided hence revenue leakages to government in the absence of withholding tax deposit.

    On the other hand, where withholding tax is deducted by agencies/government organization, but do not provide system (IRIS) generated CPR as they do not enter in the system. Therefore assesse cannot get input benefit due to non-availability of CPR from IRIS system on account of withholding tax in spite of reminders.

    The PBC recommended that timeline of 7 to 13 days should be extended to one week after the month.

    Besides, IRIS system should be applicable for all with holding agent including agencies/government organizations and CPR in respect of withholding tax facing authority should be available from IRIS.

    This will help in ease of doing business and facilitate withholding tax agents.

    Furhter, the proposed amendment will help in controling revenue leakages as well as assesse can claim input tax properly.

    Thus neither it is loss to authority nor the assesse. In the absence of non-availability of CPR , this is an extra cost for doing business.