Mubushir Baig Law Associates

28/11/2025

12/09/2025

Agriculture Rates for 2024-25

12/07/2025

12 July 2025 Business Recorder

10/07/2025

08/07/2025

New Verification Method Introduced in Tax Return 2025

In the Tax Year 2025, a significant change has been introduced in the return submission process. Instead of using the traditional PIN-based verification, the FBR has now made it mandatory to verify the return using a Verification Code sent to the registered mobile number of the taxpayer.

While the intent behind this change is to enhance security and prevent misuse, it may bring practical difficulties for taxpayers and consultants, especially during peak workload periods:

Delays in receiving SMS

Mobile network issues

Difficulty in accessing registered mobile phones, especially in institutional or corporate cases

Problems for senior citizens or less tech-savvy users

This change is expected to create serious challenges during the last days of filing, when the system is already under heavy load and communication channels become unreliable.

It is respectfully suggested that the FBR should consider alternate options such as:

Allowing either PIN or OTP-based verification, or

Integrating email-based OTP, or

Introducing a secure App-based verification method.

Regards
Mirza Mubashir Baig
Advocate High Court
Former General Secretary Lahore Tax Bar Association

08/07/2025

S.R.O1212(I)/2025 - Draft Electronic Income Tax Return Forms for Tax Year 2025

06/07/2025

Section 73(1) – Mode of Payment for Sales Tax Compliance

Sales Tax Act, 1990 (Pakistan)

Legal Provision (Simplified):

> Notwithstanding anything in any law, if the transaction value exceeds Rs. 50,000 in aggregate to a single supplier within a tax period,
the payment must be made through a crossed banking instrument,
excluding payments against utility bills.

Accepted Modes of Payment:

To ensure input tax credit and deduction eligibility, payment must be made via:

Crossed cheque drawn on a bank

Crossed bank draft

Crossed pay order

Any other crossed banking instrument
— ensuring clear transfer from the business bank account of the buyer to the supplier's account

Purpose:

To document transactions

Prevent tax evasion

Ensure traceability of payments linked to sales tax invoices

Key Requirements:

Requirement Details

Transaction Value Limit Exceeds Rs. 50,000 in aggregate to a single supplier per tax period
Mode of Payment Crossed instrument via business bank account
Ineligible Payment Methods Cash, uncrossed cheques, or personal accounts
Exception Utility bills are exempt from this provision

Consequence of Non-Compliance:

Input tax credit (adjustment) may be disallowed

Potential audit or penalty by FBR

Practical Advice:

Use business bank account for all supplier payments

Maintain proper invoice and payment trail

Avoid cash payments above Rs. 50,000 in B2B transactions

Mirza Mubashir Baig
Advocate High Court
Former General Secretary
Lahore Tax Bar Association

06/07/2025

Section 21(s) – Disallowance of Large Cash Payments

Income Tax Ordinance, 2001 (Pakistan)

Purpose:

To promote transparency and documentation, Section 21(s) discourages large cash transactions and encourages the use of banking/digital channels.

Key Provision:

Threshold: Cash payment exceeding Rs. 200,000
(to a single person in a single day)

Disallowance: 50% of such payment is disallowed as a business expense when calculating taxable income

Quick Summary:

Topic Detail

Section 21(s) of ITO, 2001
Applicable to All taxpayers claiming business expense deductions
Cash Limit Rs. 200,000 per person per day
Disallowed Portion 50% of total cash paid (if limit is breached)
Exceptions Specific situations as notified by FBR

Example:

A business pays Rs. 300,000 in cash to a supplier in one day.

This exceeds the Rs. 200,000 threshold

Rs. 150,000 (50% of Rs. 300,000) will be disallowed

Result: Higher taxable income → More tax liability

Advice:
Always prefer bank transfers, cheques, or digital payments for large business transactions to ensure full deductibility of expenses and compliance with tax laws.

Regards
Mirza Mubashir Baig
Advocate High Court
Former General Secretary
Lahore Tax Bar Association