Latest news with #SalesTaxAct
Business Recorder
2 hours ago
- Business
- Business Recorder
Duty relief on 479 items' import scrapped
ISLAMABAD: The Federal Board of Revenue (FBR) has withdrawn customs duty exemption on the import of 479 items including those covered under the category of miscellaneous goods from July 1, 2025. According to the FBR's instructions to the Collectors of Customs, to streamline and reduce the cost of exemptions, 479 entries in part-1, part-III, and part-II of the Fifth Schedule to the Customs Act, 1969, have been deleted. It has been taken care of to retain serial numbers in the Fifth Schedule to match previous year, or ease in data comparison and statistics. 'Disputed scrap' FBR directs Customs to enforce new law Second, Part-VII (miscellaneous goods) of the Fifth Schedule has been omitted. However, two entries first with the description, 'live (baby/brood stock) fish and shrimp/prawns for breeding and production in commercial farms and hatcheries', and the second with the description, 'Unmanufac-tured tobacco; tobacco refuse' have been shifted to Part-II of the Fifth Schedule at Sr Nos 153 and 154. Third, the condition for registration with erstwhile Ministry of Textile Industry (now Ministry of Commerce) under Part-IV of the Fifth Schedule has been done away with. It has been amended as 'Machinery and equipment, not manufactured locally, if imported by textiles and apparel industrial units registered as manufacturers-cum-exporters under Sales Tax Act, 1990,' the FBR's instructions added. The existing SRO 928(I)2024 dated 30th June2024, for levy of regulatory duty (RD), has been replaced with SRO 11520(I)2025, dated 30.06.2025. The FBR has further conveyed to the Collector of Customs that downward revision of regulatory duty (RD) has been made on 1011 PCT codes. The RD rate on 473 PCT codes has been reduced by 50 per cent and RD rate on 538 PCT codes has been reduced by 20 percent. The maximum rate of RD has been reduced from 90 per cent to 50 per cent. The RD on 970 PCT codes has been retained at previous year rates. The RD on plums (allocha) has been imposed at the rate of 28 per cent. This is to ensure that plums is charged RD at the rate of 28 percent irrespective of their PCT codes. The chief collectors of appraisement and collectors of appraisement are directed to ensure that RD is correctly charged on plums, the FBR's instructions added. Copyright Business Recorder, 2025
Business Recorder
2 hours ago
- Business
- Business Recorder
No integration with system: FBR orders hefty fines on corporate taxpayers
ISLAMABAD: The Federal Board of Revenue (FBR) has ordered the imposition of huge penalties on corporate sales taxpayers across Pakistan, who failed to integrate with the board's system. Resultantly, field formations are issuing penalty notices to the corporate sales taxpayers despite the FBR's commitment of extension in deadline for corporate taxpayers during last meeting of Senate Standing Committee on Finance. For corporate registered persons, the date of registration/integration was July 1, 2025 and non-corporate registered persons August 1, 2025. FBR extends tax returns filing deadline to Aug 4 According to the FBR's recent instructions to the field formations, 'I am directed to state that the worthy Director General (IT&DT) has issued instructions regarding issuance of penalty notices to taxpayers who have as yet not integrated themselves with FBR as per provisions of Rule 150Q of the Sales Tax Rules, 1990 read with SRO.709(I)/2025. The matter may please be accorded top priority in accordance with the above and Board's ongoing drive of integration of un-registered taxpayers, the FBR's instructions added.' During the last meeting of Senate Standing Committee on Finance, the FBR has assured to extend deadline for integration of sales taxpayers. The FBR has decided to implement policy of sales tax integration in phases and sector wise. Similarly, non-corporate taxpayers would be given extension in this regard. The FBR had assured the committee that the FBR will soon issue sales tax explanatory circular to address all concerns of the business community. Meanwhile, the FBR has officially reconstituted the committee responsible for evaluating applications related to the integration of registered persons under the Sales Tax Rules, 2006. A formal notification in this regard was issued by the FBR on Monday/28.07.2025. The move comes amid growing anticipation within both the corporate and non-corporate sectors for an extension in the deadline for sales tax integration. Tax professionals have indicated that businesses are awaiting clarity from the FBR regarding future compliance timelines. According to the new notification, the FBR has rescinded its earlier directive issued under Notification (IR-Ops)/2025-R dated 16.06.2025. The reconstitution exercise has been carried out under the powers granted by the Sales Tax Act, 1990; the Sales Tax Rules, 2006; the Income Tax Ordinance, 2001; and the Income Tax Rules, 2002. The newly-formed committee will now oversee the evaluation process of licence applications for integration. It will be chaired by Mr. Abid Mehmood, Director General (IT & DT), with the other members. The committee's Terms of Reference (ToRs) include: Scrutinising submitted documents and determining eligibility for new registrations; Reviewing additional documents in previously approved registrations under updated rules; Preparing Requests for Proposal (RFP) in line with the new regulations; Assessing complaints and making recommendations for licence cancellations to the FBR. The FBR confirmed that this notification replaces all prior orders concerning this matter and has been issued with the approval of the competent authority. The step reflects FBR's continued efforts to streamline tax administration and promote transparent integration processes. Copyright Business Recorder, 2025
Business Recorder
2 days ago
- Business
- Business Recorder
FBR forms body to review licences for ST integration
ISLAMABAD: The Federal Board of Revenue (FBR) has reconstituted committee to evaluate applications for grant of licence for integration of registered persons under the Sales Tax Rules, 2006. In this regard, the FBR has issued a notification here on Monday. When contacted, a tax expert said that both the corporate and non-corporate sectors are waiting for the extension in time period for sales tax integration. According to the notification, the FBR has superseded Notification (IR-Ops)/2025-R dated June 16, 2025. IMF links 4pc further ST abolition to 50,000 new ST registrations: FBR In exercise of powers conferred under Sales Tax Act, 1990, Sales Tax Rules, 2006, Income Tax Ordinance, 2001 and Income Tax Rules, 2002, the FBR has reconstituted the committee to evaluate applications for grant of licence for integration of registered persons under the Sales Tax Rules, 2006. The committee shall comprise of the following members: Abid Mehmood, Director General (IT & DT) would be Chairman of the committee. Arshad Nawaz Chheena, Chief (Revenue-Operations), Member; Aamar Javed, Chief (Systems), Member/Secretary of the Committee; Abdul Hameed, Secretary (STB), Member; Abid Naeem, CIO, PRAL, Member and Mehboob-ur-Rehman, Sr Manager (Development), PRAL would be Member of the committee. The terms of reference (ToRs) of the committee shall be as follows: (i); To scrutinize the documents, evaluate the eligibility of the applicant for new registration. (ii); To scrutinize further documents required as per new rule in cases where registration hasearlier been granted. (iii); To prepare Request for Proposal (RFP) as per new rules and cope. (iv); To evaluate the complaints and to make recommendations to the Board for cancellation of licence. This notification is issued with the approval of the competent authority and supersedes the already issued notifications in this regard, the FBR added. Copyright Business Recorder, 2025
Business Recorder
5 days ago
- Business
- Business Recorder
SRO 706 (I)/2010 tractor tax refund: FBR to seek Law Division's opinion
ISLAMABAD: The Federal Board of Revenue (FBR) will legally file reference with the Law and Justice Division seeking clarification whether SRO 706 (I)/2010 was legally issued under which input tax on agricultural tractors was exempted to the tractor manufacturers through refund. Federal Board of Revenue (FBR) Member Inland Revenue (Operations) Dr Hamid Ateeq Sarwar, Friday, informed the Public Accounts Committee that the FBR has accurately issued SRO706 (I)/2010 to ensure that the prices of tractors should not increase at that time. To clear ambiguity, the Auditor General of Pakistan (AGP) and the FBR can seek clarification from Law and Justice Division about the legality of this SRO. Tractor-manufacturing company: FBR raises Rs18bn sales tax demand During the PAC meeting, officials of the AGP directed the FBR to submit the update on the demand of Rs18 billion raised against a tractor company during an internal audit conducted on the directions of the Federal Tax Ombudsman (FTO). The officials of the AGP further pointed out whether the farmers were able to get the benefit of SRO706 (I)/2010. As the matter involves interpretation of law, the same should be referred to the Law and Justice Division, FBR Member Inland Revenue operations added. According to the audit brief submitted by the AGP before the PAC on Friday, as provided in Section 13(1) read with Sixth Schedule of the Sales Tax Act, 1990, the supply of tractors has been exempted from the chargeability of sales tax. Conflicting with the above provision of the law, FBR issued SRO706 (I)/2010 dated 2nd August 2010 by exercising its powers under Section 13(2) of the law, wherein, the input tax on agricultural tractors was exempted to the tractor manufacturers by way of refund subject to the condition that 'manufacturer shall sell exempt agricultural tractors against proper tax invoice with zero sales tax at the price agreed with federal government'. The condition 'at the price agreed with the Federal Government' was also deleted on 28.04.2007. Audit is of the view that through said SRO, supply of tractors has been turned zero rated whereas it was an exempt commodity as contained in the 6th Schedule to the Act. The refund of input tax against supply of tractors by treating them as zero rated through an SRO was in conflict with the basic provisions of the Act. Hence, refund sanctioned in this way was unlawful causing a loss of government revenue to the tune of Rs7,069.311 million during tax periods in case of one manufacturer only, as per information available to Audit. The LTU, Lahore informed that refund of sales tax was allowed as per existing law/rules/instructions of FBR. As per Sections 72 and 42 of the Sales Tax Act, 1990 and Federal Excise Act, 2005, the field officers were bound by such law/rules/instructions of FBR. As such no loss occurred on the part of officers of LTU. Audit is of the view that administrative officers were bound to comply with the provisions of the Act of the parliament in public interest rather than to blindly follow the instructions of FBR while sanctioning such refunds. Hence, the reply given by the department is irrelevant and not tenable. The AGP objected that special excise duty was levied under Section 3A of the Federal Excise Act, 2005 on goods specified in SRO 655(1)/2007 dated 29-06-2007. Later on, special excise duty was exempted vide SRO 675 (1)/2011 dated 01.07.2011 issued under Section 16(2) of the Act, effective from 01.07.2007 by way of refund to the purchaser i.e. manufacturer of tractors. After issuance of SRO of 2007, vendors of agricultural tractors kept on charging this duty and the same was also being paid by the tractor manufacturers while making taxable supplies. Tax authorities of FBR allowed a refund of special excise duty (SED) to M/s Millat Tractors (Pvt) Ltd by giving the benefit of SRO dated 01.07.2011 from back date i.e. July 1, 2011 to the taxpayer. Audit is of the view that Section 16(2) of the Federal Excise Act, 2005 does not empower the federal government to exempt duty from retrospective effect as specifically allowed in case of sales tax under Section 13(4) of the Sales Tax Act, 1990. Hence, refund of SED of Rs242.826 million to Millat Tractors (Pvt) Ltd, allowed during July 2007 to May 2011, was unlawful. Moreover, the amount of special excise duty became part of the price of tractor and was passed on to consumers/farmers. In this way, tractor manufacturers enjoyed double benefit i.e. higher prices of product and refund. The officers of LTU allowed refund of special excise duty as per Sections 72 and 42 of Sales Tax Act, 1990 and Federal Excise Act. The reply was irrelevant and did not address the issue. The lapse was pointed out to the department during June to October 2013. In this regard, it is stated that recovery notice dated 03.07.2025 has been issued to M/s Millat Tractors Limited for payment of sales tax amounting to Rs1,847,840 by 15.07.2025. Further, DGAIR (North)'s letter dated 03.01.2017 has been forwarded to the board for necessary guidance and its reply is awaited. The DAC directed the LTO, Lahore to get its stance verified from audit in the light of board's clarification issued on 07.04.2017 and submit progress to audit and FBR by 30.07.2025. The PAC may like to direct the department to: i)expedite recovery of government dues; ii) justify issuance of SROs conflicting with Acts of the Parliament and fix responsibility on person(s) at fault; iii) submit SROs pertaining to exemptions, concessions and zero rating of supplies, issued during a financial year, for Parliamentary approval; and iv) conduct a fact finding enquiry on the issue as FBR has already conducted internal audit of a tractor company for the subsequent period(s) on the directions of honourable FTO and raised demand of Rs.18.7 billion on the same issue, the AGP report added. Copyright Business Recorder, 2025
Business Recorder
6 days ago
- Business
- Business Recorder
IMF links 4pc further ST abolition to 50,000 new ST registrations: FBR
ISLAMABAD: Federal Board of Revenue (FBR) Member, Inland Revenue, (Operations) Dr Hamid Ateeq Sarwar said Thursday that International Monetary Fund (IMF) has linked abolition of four percent 'further sales tax' on supplies to un-registered persons with sales tax registration of 50,000 persons. Explaining the rationale of retaining four percent additional sales tax on supplies to un-registered persons, FBR Member informed Senate Standing Committee on Finance on Thursday that the FBR had proposed abolition of four percent 'further sales tax' in budget (2025-26). When we took the proposal to the fund for approval, the IMF has asked the FBR to increase the number of sales taxpayers before abolition of the said tax. In 2023, the FBR had increased the rate of 'further sales tax' from three to four percent in the amended Finance Bill 2023. FBR extends deadline for electronic integration of sales tax system by one month Presently, the rate of further tax is four percent on the supplies made to the un-registered persons. The rate of 'further sales tax' was increased by one percent to discourage supplies made to the unregistered persons. If a person intended to remain out of the sales tax net, he is required to pay higher rate of further tax at the rate of four percent. Under the law, the 'further tax' is charged on supplies of taxable goods made by a registered person to a person who has not obtained a sales tax registration number or has obtained a registration number but is not an active taxpayer. The said rate of sales tax under sub-section (1A) of Section 3 of the Sales Tax Act was enhanced to four per cent through the Finance Act, 2023. The FBR Member said that the level of tax compliance in Pakistan is evident from the data that out of 200,000 registered sales taxpayers, only 60,000 are paying sales tax. Out of this, only 30,000 manufacturers are paying sales tax. 'We have 3 lakh 80,000 industrial consumers and over 5 million commercial connections.' About the cyber security arrangements of the FBR, he added that the government has averted 1,684 Indian cyber attacks including those on FBR. There was no data leakage of taxpayers as a result of these attacks, he added. Copyright Business Recorder, 2025
