SS Advisory

31/07/2023

Every seller of the immovable property is bound to obtain an exemption certificate from the Commissioner Inland Revenue or pay 1 percent tax under section

21/06/2023

12/02/2021

State Bank of Pakistan has proposed a new type of loan for supporting startups to meet the specific needs in raising capital for setting up business and operations on a sustainable basis.

State Bank of Pakistan has proposed a new type of loan for supporting startups to meet the specific needs in

21/12/2020

Businesses have established shell or small setups to evade taxes

08/08/2020

ISLAMABAD: Federal Board of Revenue (FBR) has updated withholding income tax rates for exporters for tax year 2021.

04/04/2020

KARACHI: Karachi Chamber of Commerce and Industry (KCCI) has demanded the Sindh government to suspend the sales tax collection by Sindh Revenue Board (SRB) for six months.

29/11/2019

ISLAMABAD: Any cash gift received by a person other than banking channel will be treated as chargeable to tax, sources in Federal Board of Revenue (FBR) said on Thursday. The sources said that in the past people were taking advantage of incentives granted on gifts and concealed their income to evade...

23/11/2019

ISLAMABAD: Federal Board of Revenue (FBR) has issued procedure to facilitate taxpayers in amending their personal details for filing tax returns and making transactions.

31/07/2019

The FBR issued Income Tax Circular No. 09 dated July 30, 2019 and said that through the Finance Act, 2019, the rate of tax on purchase of immovable property under Section 236K of Income Tax Ordinance, 2001 has been reduced to 1 percent from 2 percent.


Prior to the Finance Act, 2019, no tax was collected under Section 236K on purchase of property where the value of property up to Rs4 million.

“Through the Finance Act, 2019, the threshold of Rs4 million for collection of tax has been removed. Now tax on purchase of property will be collected on all transactions irrespective of the value of immovable property,” the FBR said.

The FBR said that tax under section 236C is collected from the seller or transfer at the rate of one percent of the gross amount of consideration received.

Prior to the Finance Act 2019, this tax was not collected if the property was held for a period exceeding three years.

Through the Finance Act, 2019, the period of three years has been extended to five years which means that tax under section 236C shall be collected if the immovable property is held for a period up to five years.

The FBR further explained that as per section 236W read with clause (c) of sub-section (4) of Section 111, every person responsible for registering, recording or attesting transfer of any immovable property was required to collect tax at the rate of 3 percent of the difference between the FBR value of property and the value recorded by the authority registering or attesting the transfer in cases where FBR value was greater than the recorded value.

So by paying three percent on the difference, the purchaser was not required to explain the source of difference of amount between FBR value and the recorded value.

Through Finance Act, 2019, section 236W as well as clause (c) of sub-section (4) of Section 111 have been omitted. Consequently, the purchasers are not required to explain the source of investment of property up to the FBR value of property whereas previously such purchasers were required to explain the source of investment to the extent of recorded value of property.

ISLAMABAD: Federal Board of Revenue (FBR) has removed threshold amount to purchase of immovable properties for collection of withholding tax.

03/07/2019

ISLAMABAD: Federal Board of Revenue (FBR) has notified rules for persons not appearing on the Active Taxpayers List (ATL). The rules have been approved and made part of statute through Finance Act, 2019.

RULES FOR PERSONS NOT APPEARING IN THE ACTIVE TAXPAYERS’ LIST

1. Rate of deduction or collection of tax: Where tax is required to be deducted or collected under any provision of this Ordinance from persons not appearing in the active taxpayers’ list, the rate of tax required to be deducted or collected, as the case may be, shall be increased by hundred percent of the rate specified in the First Schedule to this Ordinance.

2. Persons not required to file return or statement:

(1) Where the withholding agent or the person from whom tax is required to be collected or deducted is satisfied that a person not appearing in the active taxpayers’ list was not required to file a return of income under section 114, or a statement under sub-section (4) of section 115, as the case may be, he shall before collecting or deducting tax under this Ordinance, furnish to the Commissioner a notice in writing electronically setting out—

(a) the name, CNIC or NTN and address of the person not appearing in the active taxpayers’ list;

(b) the nature and amount of the transaction on which tax is required to be collected or deducted; and

(c) reason on the basis of which it is considered that the person was not required to file return or statement, as the case may be.

(2) The Commissioner, on receipt of a notice under sub-rule (1), shall within thirty days pass an order accepting the contention or making the order under sub-rule (3).

(3) Where the withholding agent or the person from whom tax is required to be collected or deducted has notified the Commissioner under sub-rule (1) and the Commissioner has reasonable grounds to believe that the person not appearing in the active taxpayers’ list was required to file return or statement, as the case may be, the Commissioner may, by an order in writing, direct the withholding agent to deduct or collect tax under rule 1:

Provided that in case the Commissioner does not pass any order within thirty days of receipt of notice under sub-rule (1), the Commissioner shall be deemed to have accepted the contention under sub-rule (2) and approval shall be treated to have been granted.

3. Provisional assessment:

(1) Where for a tax year a person’s tax has been collected or deducted in accordance with rule 1 and the person fails to file return of income or statement, as the case may be, for that tax year within the due date provided in section 118 or as extended by the Board, the Commissioner shall notwithstanding anything contained in sub-sections (3) and (4) of section 114 or sub-section (5) of section 115, within sixty days of the due date provided in section 118 or as extended by the Board make a provisional assessment of the taxable income of the person and issue a provisional assessment order specifying the taxable income assessed and tax due thereon.

(2) In making the provisional assessment under sub-rule (1), the Commissioner shall impute taxable income on the amount of tax deducted or collected under rule 1 by treating the imputed income as concealed income for the purposes of clause (d) of sub-section (1) of section 111:

“Provided that the provision of section 111 shall be applicable on unexplained income, asset or expenditure in excess of imputed income treated as concealed income under this rule.”

“Explanation.— For the removal of doubt it is clarified that the imputable income so calculated or concealed income so determined shall not absolve the person so assessed, from requirement of filing of wealth statement under sub-section (1) of section 116, the nature and source of amounts subject to deduction or collection of tax under section 111, selection of audit under section 177 or 214C or subsequent amendment of assessment as provided in rule 8 and all the provisions of the Ordinance shall apply.”

4. Finalization or abatement of provisional assessment:

(1) The provisional assessment under rule 3, shall be treated as the final assessment order after the expiry of forty-five days from the date of service of order of provisional assessment and the provisions of this Ordinance shall apply accordingly.

(2) The provisional assessment shall stand abated and shall be taken to be assessment finalized under sub-section (1) of section 120 where the returns of income and wealth statement for the relevant tax year and the preceding tax year along with prescribed forms, statements or documents are filed by the person within a period of forty-five days of receipt of provisional assessment order.

(3) Where returns have been filed before provisional assessment or under sub-rule (2), the tax deducted or collected under rule 1 shall be adjustable against the tax payable in the return filed for the relevant tax year.

5. Where the provisional assessment has been treated as final assessment under sub-rule (1) of rule 4, the Commissioner may within thirty days of the final assessment initiate proceedings for imposition of penalties under section 182 on account of non-furnishing of return and concealment of income.

6. For the purposes of this Schedule, imputed income means:

(a) income for individuals and association of persons which would have resulted in the amount of tax given in paragraph (1) of Division I of the First Schedule equal to the tax collected or deducted under rule 1 for not appearing in the active taxpayers’ list; or

(b) income for companies which would have resulted in the amount of tax given in Division II of the First Schedule equal to the tax collected or deducted at the higher rate under rule 1 for not appearing in the active taxpayers’ list.

7. Where the withholding agent fails to furnish in the withholding statement complete or accurate particulars of persons not appearing on active taxpayers’ list, the Commissioner shall initiate proceedings under sections 182 and 191 against the withholding agent within thirty days of filing of withholding statement under section 165.

8. Amendment of assessment:

(1) The Commissioner may amend an assessment order where the imputed income is less than the amount on which tax was deducted or collected under rule 1 or on the basis of definite information acquired from an audit or otherwise, the Commissioner is satisfied that—

(a) any income chargeable to tax has escaped assessment; or

(b) total income has been under-assessed, or assessed at too low a rate, or has been the subject of excessive relief or refund; or

(c) any amount under a head of income has been misclassified.

(2) Notwithstanding the provisions of sub-rule (1), where a provisional assessment has been treated as final assessment or where in response to the provisional assessment, return has been filed within forty- five days or where assessment has been amended under sub-rule (1) and the assessment order is considered erroneous in so far it is prejudicial to the interest of revenue, the Commissioner may, after making or causing to be made, such enquiries as he deems necessary, amend the assessment order.

(3) For the purposes of sub-rule (1), “definite information” shall have the same meaning as defined in sub-section (8) of section 122.

9. Provisions of Ordinance to apply—The provisions of this Ordinance not specifically dealt with in the aforesaid rules shall apply, mutatis mutandis, in the case of proceedings against the persons not appearing on active taxpayers’ list.

10. The provisions of this Schedule shall not apply on tax collectible or deductible in case of the following sections:-

(a) tax deducted under section 149;

(b) tax deducted under section 152 other than sub-section (1), (1AA), (2), (2A)(b) and (2A)(c) of section 152

(c) tax collected or deducted under section 154;

(d) tax deducted under section 155;

(e) tax deducted under section 156B.

(f) tax deducted under section 231A;

(g) tax deducted under section 231AA;

(h) tax collected under section 233AA;

(i) tax deducted under section 235;

(j) tax deducted under section 235A;

(k) tax collected under section 235B;

(l) tax collected under section 236;

(m) tax collected under section 236B;

(n) tax collected under section 236D;

(o) tax collected under section 236F;

(p) tax collected under section 236I;

(q) tax collected under section 236J;

(r) tax collected under section 236L;

(s) tax collected under section 236P;

(t) tax collected under section 236Q;

(u) tax collected under section 236R;

(v) tax collected under section 236U;

(w) tax collected under section 236V;

2019-2020 Finance Act 2019: Non-ATL persons to pay 100 percent more tax; income to be treated as concealed Faisal Shah — July 3, 2019 add comment ISLAMABAD: Federal Board of Revenue (FBR) has notified rules for persons not appearing on the Active Taxpayers List (ATL). The rules have been approved ...

09/06/2019

Some highlights of new taxes !

1) Unregistered industrial / commercial entities (not having STRN) having electricity / gas bill amount in excess of Rs 20,000 per month, extra sales tax would be increased from 5% to 20%

2) Residential consumers be made liable to provide NTN in case electricity bill amount exceeds Rs 1.2 million per year or levy advance income tax withholding of 20%.

3) All exemptions (like exemption on agricultural income) under the Income Tax Law should only be made available to filers so that exempt income is also reported and wealth is reconciled with income reported in the return.

4) Withholding tax on International business class tickets under section 236L is same Rs 16,000 for filer and non-filer, it would be increased to Rs 50,000 for non-filers.

5) Withholding income tax on interest income u/s 151 is 10% for filer and 17.5% for non-filer. Rate would be increased to 30% for non-filers.

6) Annual private motor vehicle tax u/s 234 for non-filers is Rs 30,000 for 2000 CC and above. Rate for non-filers would be increased to Rs 200,000 for 2000 CC and above.

7) Rate of income tax on Filer as well as Non-Filer Commercial / industrial connections of electricity is 12% and 5% respectively. Rate of tax for Non Filer Commercial / industrial connections would be increased to 25%

8) At present, 12% WHT is being collected from owners of marriage halls on their electricity bills, which does not represent actual tax on their income. Moreover, the same is somehow minimized through use of generators. In order to avoid this, Capacity Tax would be imposed on marriage halls on the basis of per square feet coverage area.
List of registered Marriage halls paying capacity tax on per square foot basis would be on internet and accessible to all so that it can easily be identified who is not on the list thereby forcing them to get themselves register and pay tax.

09/05/2019

Federal Board of Revenue (FBR) has been proposed for imposing digital tax at 30 percent in the budget 2019/2020.

Chartered Accountants have suggested the imposition of digital tax from next tax year as OECD had started thinking of appropriately taxing the digitalized economy.

Institute of Chartered Accountants of Pakistan (ICAP) in its budget proposals recommended the FBR that till the time proper mechanism was devised, a digital tax can be initially introduced at the rate of 30 percent (on non-resident companies having no establishment in Pakistan) only on their income from advertisements from Pakistan.

It further added that policies should be developed in line with best practices from other countries, which should later be implemented with special consideration for companies setting up businesses in Pakistan.

International social networking and retail websites, such as Alphabet, Facebook and Apple, are earning massive revenues from corporates and consumers in Pakistan by way of:

— Advertisement on their websites,

— Sharing consumer profiles / data with the corporates in Pakistan and to corporates and governments outside Pakistan, etc.

“Despite all the revenues collected from consumers in Pakistan, these companies are not adequately taxed as they are not established within the country,” the ICAP said.

These companies are also denting Pakistan’s local tech industry by eating up majority of the local advertisements, whereas their interests are not to set up business in Pakistan.

Despite there are companies, like Ali Pay, who are now investing in Pakistan and have put their money in tech companies, like ‘Daraz’ and ‘Telenor Bank’.

These businesses should be rather incentivized by charging high tax on non-resident companies not having their stakes in Pakistan despite earing significantly.

“This will also encourage local software service providers to get registered and earn from local advertisements.”

The ICAP further suggested identifying tax leakage areas / sectors prone to easy-escape tax net

An efficient and effective collection platform is required to replace cash economy through digitization e.g. Jazz Cash or Easy Paisa or replacing this with a State Platform.

The chartered accountants recommended that banks, insurance companies and branchless banking networks should be the ones recovering the taxes.

The FBR together with firms / institutions must organize tax education campaigns (in digital, print and social media) in both Urban and Rural Areas.