Taxaholic Law Associates

24/02/2020

24/02/2020

10/02/2020

ISLAMABAD: Federal Board of Revenue (FBR) will impose penalty on withholding agents for failure in submitting withholding statement or information of taxpayers for the period July – December 2019.

The last day for filing withholding statement electronically was January 31, 2020. Most of the withholding agents had filed the statements as per requirement. However, some of them are still non-compliant and will be liable to fine and penalty, FBR sources said on Monday.

As per Section 182 of Income Tax Ordinance, 2001, where any person fails to furnish a statement as required under Section 115, 165, 165A of 165B within the due date. “Such person shall pay a penalty of Rs5,000 if the person had already paid the tax collected or withheld by him within the due date for payment and the statement is filed within 90 days from the due date for filing the statement and, in all other cases, a penalty of Rs2,500 for each day of default from the due date subject to a minimum penalty of Rs10,000.”

The FBR officials said that under Section 165 of the Income Tax Ordinance, 2001, every person collecting tax or deducting tax from a payment shall furnish to the commission a biannual statement in the prescribed form setting out:

(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 half-year

(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 half-year

(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 half-year; 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 (###III of 1956), if any, on the subject, in so far as divulgence of information under section 165 is concerned.

(2) Every prescribed person collecting tax under Division II of this Part or Chapter Xll or the Tenth Schedule or deducting tax under Division III of this Part of Chapter Xll or the Tenth Schedule shall furnish statements under sub-section (l) as per the following schedule, namely:-

(a) in respect of the half-year ending on the 30th June, on or before the 31st day of July; and

(b) in respect of the half-year ending on the 31st December, on or before the 31st day of January.

(2A) Any person who, having furnished statement under sub-section (1) or sub-section (2), discovers any omission or wrong statement therein, may file a revised statement within sixty days of filing of statement under sub-section (1) or sub-section (2), as the case may be.

(2B) Notwithstanding anything contained in this section, the Commissioner as he deems lit may by notice in writing require any person, collecting or deducting tax under this Ordinance, to furnish a statement for any period specified in the notice within such period of time as may be specified in the notice.

(3) Board may prescribe a statement requiring any person to furnish information in respect of any transactions in the prescribed form and verified in the prescribed manner.

(4) A person required to furnish a statement under sub-section (1), may apply in writing, to the Commissioner for an extension of time to furnish the statement after the due date and the Commissioner if satisfied that a reasonable cause exists for non-furnishing of the statement by the due date may, by an order in writing, grant the applicant an extension of time to furnish the statement.

(5) The Board may make rules relating to electronic furnishing of statements under this section including,-

(a) mandatory electronic filing of statements; and

(b) determination of eligibility of the data of such statements and e-intermediaries, etc.

(6) Every person deducting tax from payment under section 149 shall furnish to the Commissioner an annual statement in the prescribed form and manner.

06/02/2020

Attention to Chartered Accountant Firms regarding the tax certificate issued with respect to input adjustment.

Any auditor of professional accountancy firm is liable to penal action in case found guilty of misconduct in furnishing false tax certificate, sources in Federal Board of Revenue (FBR) said.

Referring to Section 8B of Sales Tax Act, 1990, the sources said that tax authorities allowed input tax adjustment to a taxpayer on the basis of certificate issued by auditors of professional accountancy firms.

“Any auditor found guilty of misconduct in furnishing the certificate mentioned in sub-section (2) shall be referred to the Council for disciplinary action under section 20D of Chartered Accountants, Ordinance, 1961,” according to Sales Tax Act, 1990.

05/02/2020

Find out more about Taxaholic Law Associates by following them on Google

03/02/2020

Attention to all suppliers regarding CNIC condition.

02/02/2020

Federal Board of Revenue (FBR) has said that registered persons to pay Rs5,000 as penalty amount on each invoice for failure to obtain CNIC information of buyers.

Sources in the FBR said that as per updated Sales Tax Act, 1990 up to December 31, 2019 any person who fails to issue an invoice when required under this Act, then such person shall pay a penalty of five thousand rupees or three percent of the amount of the tax involved, whichever is higher.

The penal amount has been specified for Section 23 of the Sales Tax Act, 1990, which mainly deals with tax invoices issued by registered persons, who are also liable to obtain information of Computerized National Identity Card (CNIC) of buyers on sales above Rs50,000.

The mandatory condition of obtaining CNIC information of unregistered persons has been applicable from February 01, 2020, which was to be applied from August 01, 2019.

As per the updated Sales Tax Act, 1990, the section said:

23. Tax Invoices.– (1) A registered person making a taxable supply shall issue a serially numbered tax invoice at the time of supply of goods containing the following particulars, in Urdu or English language, namely:

(a) name, address and registration number of the supplier;

(b) name, address and registration, number of the recipient and NIC or NTN of the unregistered person, as the case may be, excluding supplies made by a retailer where the transaction value inclusive of sales tax amount does not exceed rupees fifty thousand, if sale is being made to an ordinary consumer.

Explanation. – For the purpose of this clause, ordinary consumer means a person who is buying the goods for his own consumption and not for the purpose of re-sale or processing:

Provided that the condition of NIC or NTN shall be effective from 1st August, 2019;

(c) date of issue of invoice;

(d) description including count, denier and construction in case of textile yarn and fabric, and quantity of goods;

(e) value exclusive of tax;

(f) amount of sales tax; and

(g) value inclusive of tax:

Provided that the Board may, by notification in the official Gazette, specify such modified invoices for different persons or classes of persons; Provided further that not more than one tax invoice shall be issued for a taxable supply.

31/01/2020

Extention has been granted till 28th Feb 2020 !

31/01/2020

The Federal Board of Revenue (FBR) has proposed tax recovery from the bank lockers of its defaulters – a move that does not have any legal backing and may also create ripples in the market.

The FBR has proposed that a new chapter should be inserted into the Income Tax Rules of 2002 aimed at regulating the recovery of taxes from the people who hold money on behalf of taxpayers.

The rules have been framed under the Income Tax Ordinance 2001, which is completely silent on the word “locker”.

The FBR has proposed draft amendments to the Income Tax Rules 2002 and has sought suggestions within seven days. The draft rules will soon be placed on the FBR website.

In case the FBR does not receive objections or turns down any reservations expressed by the stakeholders, the rules will come into effect within two weeks of its placement on the website.

Tax authorities have proposed a definition with a wide scope where the FBR can recover taxes from an employer owing or who may owe salary to its employee, a tenant owing or who may owe rent to its landlord, or a debtor owing or who may owe money to the taxpayer.

According to the proposed rule 210A (b), the money or an asset placed in bank lockers has also been recommended to be brought under the scope of the FBR and it may now get access to the lockers.

“Holding or who may hold” includes bank accounts, TDRs (Term Deposit Receipts), CDRs (Call Deposit Receipts), fixed deposits or money held in lockers, states the rule 210A (C).

However, the Income Tax Ordinance 2001 does not allow the FBR to recover money from the bank lockers of citizens.

When contacted, FBR spokesman Dr Hamid Atiq Sarwar said the recovery rules were being framed on the directives of the Lahore High Court. Once cleared by the court, the proposed rules would be placed on the FBR website to seek comments of the stakeholders, he said.

The purpose of the proposed rules was to streamline FBR’s discretion in the recovery cases, and not to give it more discretionary powers, said Sarwar, who is also the member FBR Inland Revenue Policy.

He pointed out that the recovery powers would be limited to the legal mandate given in Section 140 of the Income Tax Ordinance. The proposed rules would also be vetted by the Ministry of Law and Justice, the spokesman said.

However, Section 140 does not give the FBR powers to recover money from the bank lockers of citizens.

Recently, the provincial governments of Punjab and Sindh have also complained to the federal government about the FBR’s unbridled powers to make recoveries from their accounts.

Taxpayers, including big corporate firms, have also been consistently complaining about the FBR’s moves to take out money from their bank accounts without their consent, particularly during June to meet the tax targets.

Now, the FBR also wants to bring bank lockers under its ambit, which may cause more uncertainty.

According to the draft rules, the powers to serve notice of recovery are proposed to rest with the Inland Revenue Service commissioner who, in case where any tax is due under Section 137 of the Income Tax Ordinance, can serve a notice on any person.

A copy of the notice will be forwarded to the defaulter at his last known address, and in case an account or money is held jointly, to all the joint holders on their last known address, according to the rules.

Recovery of tax from the bank accounts, lockers, salary and house or land rent will be made only to the extent of tax due by the taxpayer.

According to the proposed rules, in case the money is held jointly with any person other than the defaulter, the share of the joint holders in such an account will be presumed, until the contrary is proved, to be equal.

In case of a dispute, the commissioner will decide the matter under this rule within one month of preference of claim or making of objection.

Where a person fails to comply with a notice in the manner provided in rule 210C, the person will be personally liable to pay the amount to the commissioner who may pass an order to that effect and seek to recover the same, recommended the FBR