mid assignment

8/7/2019 mid assignment

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Taxation

Mid Assignment

Presented to:Prof. Arif Hussain Ejaz

Presented by:M. Imran 10102Attiq-ur-Rehman 10133M. Rizwn 10149M. Asif Tufail 10138Farhan Siddiqui 10135Abid Idrees 10111

Superior University Lahore.


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Executive summary:-I n this assignment we tried to explore the TAX procedures of Pakistan define TAX in an easy

way it is, to submit the right TAX in the right Place, at the right time and at the right Ratio.

We can easily understand TAX, if we set our focus on the timely changes comes in this

ordinance t without concentrating on them, a TAX payer or a TAX consultant would never

achieve his economic goals

As we understood the importance of TAX theoretically, it was essential for us to practice our

learning as well as business prospective especially for students who are new in this field and

ready to go in a practical environment in corporate sector.

We summed up a couple of terms of TAX, which we thought those are most important

information given on the websiteTAX Ordinance 2001

Different TAXES within one ordinance

y C ustoms

y Sales TAX

y I ncome TAX

y F ED( F ederal Excise Duty

To get the main purpose out of this website, it was very essential for us to understand the depthof the ordinance as well as how to get the exemption from tax of how to get benefits after givingTAX.


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In troductio n :-The C entral Board of Revenue ( C BR) was created on April 01, 1924 through enactment of the

C entral Board of Revenue Act, 1924. I n 1944, a full-fledged Revenue Division was created

under the Ministry of F inance.

After independence, this arrangement continued up to 31 st August 1960 when on the

recommendations of the Administrative Re-organization C ommittee, F BR was made an attached

department of the Ministry of F inance.

I n 1974, further changes were made to streamline the organization and its functions.

C onsequently, the post of C hairman F BR was created with the status of ex-officio AdditionalSecretary and Secretary F inance was relieved of his duties as ex-officio C hairman of the F BR.

I n order to remove impediments in the exercise of administrative powers of a Secretary to the

Government and effective formulation and implementation of fiscal policy measures, the status

of F BR as a Revenue Division was restored under the Ministry of F inance on October 22, 1991.

However, the Revenue Division was abolished in January 1995, and F BR reverted back to the

pre-1991 position. The Revenue Division continues to exist since from December 01, 1998.

By the enactment of F BR A C T 2007 in July 2007 the C entral Board of Revenue has now

become F ederal Board of Revenue.

F ederal Board Of Revenue Act, 2007

Article on F BR Act, 2007


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Customs:-Pakistan C ustoms is the guardian of Pakistan borders against movement of contra band goods

and is facilitator of bona fide trade. I t provides a major source of revenue to the Government of

Pakistan in the form of taxes levied on the goods traded across the borders. I t also helps to

protect the domestic industry, discourage consumptions of luxury goods and stimulate

development in the under -developed areas.

C ollectors:

y C ustom House karachiy L ahorey Sambrialy Exports Karachiy Port Qasimy C ustom House Quettay Preventivey Hyderabady Peshawar

C ustom act / rules 1969:

C ustom act, 1969 (amended up to 30th June 2010)

I t includes following chapters.

C hapter1 PreliminaryC hapter2 Appointment of officers of customs and their powersC hapter3 Declaration of ports, airports, land custom-stationC hapter4 Prohibition and restriction of importation and exportationC hapter5 L evy of exemption form and prepayment of customs dutiesC hapter6 Drawback C hapter7 Arrival and departure of conveyanceC hapter8 General provisions affecting conveyances at custom stationC hapter9 Discharge of cargo and entry inward of goodsC hapter10 C learance of goods for home consumptionC hapter11 Warehousing


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C hapter12 TransshipmentC hapter13 Transit tradeC hapter14 Exportation or shipment and relendingC hapter15 Special provisions regarding baggage and goods imported or exported by postC hapter16 Provisions related to costal goods and vessels

C hapter17 Offences and penaltiesC hapter18 Prevention of smuggling-powers of search, seizure and arrestC hapter19 Appeals and revisionsC hapter20 Miscellaneous

C ustom act, 1969 (amended up to 30 th June 2009) C ustom act, 1969 (amended up to 30 th June 2008) C ustom act, 1969 (amended up to 30 th June 2007)

C ustom rules 2001:

C ustom rules include;

y Definitionsy Baggagey I mport by privileged personnely Prior release of consignmenty Auction and auctioneersy

Temporary importation of motor vehiclesy L icensingy V aluation proceduresy Maintenance of accountsy Recovery of arrears

C ustoms Notifications:

Notifications import

P are n t Active SRO

SRO# Issue DateLastAme n dedDate

Title

Notifications export


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Customs Active/Operative Notifications/SROs Export

Parent Active SRO

SRO# Issue Date Last Amended Date Title

323 (I)/2010 May 13 2010 Jun 4 2010 Levy of regulatory duty at the rate of fifteen percent advalorem on export of all types of yarn for sixty days withimmediate effect

----(I)/2010 Mar 13 2010

Imposing of regulatory duty at the rate of twenty-five percent (25%) ad valorem on export of waste and scrap of copper and aluminium and on bars, rods, ingots, slabs, andbillets

888(I)/2009 Oct 15 2009 Oct 20 2009 Federal Board of Revenue is pleased to make the followingfurther amendment in the Export Oriented Units and Small& Medium Enterprises Rules, 2008

805(I)/2009 Sep 16 2009 Sep 19 2009 Federal Government is pleased to rescind its NotificationNo. S.R.O.1185 (I)/2007, dated the 5th December, 2007with immediate effect.

594(I)/2009 Jun 25 2009 Apr 2 2010 Regulatory duty at the rate of twenty-five per cent advalorem levied on Export of goods classifiable under theH.S. codes in the table on the above mentioned SRO.

321(I)/2009 Apr 10 2009 Apr 10 2009 The Federal Government is pleased to direct that aregulatory duty at the rate of fifteen per cent ad valoremshall be levied on export of molasses with immediate effect.

209(I)/2009 Mar 5 2009 Mar 5 2009 This notification allows duty drawback rates on export of textile and allied products

210(I)/2009 Mar 5 2009 Mar 5 2009 This notification allows duty drawback rates on export of leather and allied products and sports goods

211(I)/2009 Mar 5 2009 Mar 5 2009 This notification allows duty drawback rates on export of engineering/metal and allied products

212(I)/2009 Mar 5 2009 Mar 5 2009 This notification allows duty drawback rates on export of miscellaneous products like packing metarials, edibleproducts, plastic products, etc.

946(I)/2008 Sep 4 2008 Oct 18 2008

Regulatory duty equivalent to the Price Differential Claims

(PDC), in Rupees per litre, of High Speed Diesel (HSD) andSuperior Kerosene Oil (SKO) as notified by the Ministry of Petroleum & Natural Re

326(I)/2008 Mar 29 2008 Mar 29 2008

The Federal Government is pleased to exempt from thewhole of customs duties, sales tax and federal excise dutyleviable on all the goods imported into and exported froman Export Oriented Unit subjec

327(I)/2008 Mar 29 2008 Mar 29 2008 The Federal Board of Revenue is pleased to make the rules.

1185(I)/2007 Dec 5 2007 Dec 13 2008 Regulatory duty at the rate of thirty-five percent ad-valorem on export of wheat products

1186(I)/2007 Dec 5 2007 Dec 5 2007 Rescind the notification No .S.R.O 474(I)/2006, dated the22nd May,2006 ______(I)/2007 Jul 28 2007 Jul 28 2007 ATA Carnet Rules

482(I)/2007 Jun 9 2007 Jun 13 2009 Regulatory duty on ferrous and non ferrous waste andscrap. 492(I)/2006 May 26 2006 Jun 20 2006 35% Regulatory duty on export of Pulses

1211(I)/2005 Dec 9 2005 Dec 9 2005 Amendment in SRO.450(I)/2001 dated 18.6.2001 CustomsRules,2001

1080(I)/2005 Oct 22 2005 Mar 28 2009

CBR is pleased to direct that blankets, tens and tarpaulinsshall be deemed to have been exported if supplied for theearthquake victims subject to the following conditions,namely:

1065(I)/2005 Oct 20 2005 Aug 11 2007 This Notification issued in suppersesion of SRO 410/2001dated 18th June 2001.According to the new Notification,the facility of temporary importation is available to


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exporters also registered as manu 1011(I)/2005 Sep 27 2005 Sep 27 2005 20% Regulatory duty on export of raw & wet blue hides. 782(I)/2005 Aug 6 2005 Aug 6 2005 This notification rescinded 96 individual DDB notifications 783(I)/2005 Aug 6 2005 Aug 6 2005 This notification rescinded 7 standard DDB notifications 315(I)/2004 May 21 2004 Jan 1 2005 Duty Draw Back - Artificial leather (PVC binding material) 259(I)/2004 May 7 2004 Jan 1 2005 Duty Draw Back - Fiber Cement Pipes

1028(I)/2003 Nov 6 2003 Jan 1 2005 Duty Draw Back - Central Excise on export of LubricatingOil

416(I)/2002 Jun 26 2002 Dec 15 2004 Reward Rules (Customs)

Sales tax:-Sales Tax was a provincial subject at the time of partition. I t was being administered in the

provinces of Punjab & Sindh as provincial levy. Sales tax was declared a federal subject in 1948

through the enactment of General Sales Tax Act, 1948 and in 1952; this levy was transferred

permanently to the C entral Government. Sales tax was levied at the standard rate of 6 pies per

rupee at every stage whenever a sale was affected. The trading community protested against this

system, and this resulted in the enactment of Sales Tax Act 1951.

A system of licensed manufacturers & wholesalers was instituted whereby they were allowed to

purchase goods free of sales tax from each other and pay tax on sales to unlicensed traders.

I mports were chargeable to Sales Tax but the licensed manufacturers & wholesalers were

allowed to import goods without the payment of Sales Tax. L ater on Sales Tax becamechargeable on locally produced & imported goods at the time of their sales & import,

respectively. The sales tax was collected under the F inance Ordinance, 1956, on goods which

were chargeable to C entral Excise Duty, as if it were a duty of C entral Excise. I n April 1981, by

virtue of an amendment in the Sales Tax act, 1951, the collection of Sales Tax on non-excisable

goods was also entrusted to the C entral Excise Department.

I n the late eighties the government decided to replace Sales Tax with the V alue Added Tax in the

country as a part of its structural adjustment program which was undertaken to correct anomalies

& distortions both in our tax & non-tax regimes. Accordingly new enactment titled Sales Tax

Act 1990 replaced Sales Tax Act 1951 with effect from 1-11-1990.


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L iability to Sales Tax:-

F ollowing sectors are required to get registration for sales tax and charge sales tax on their

supplies/ services:

y Manufacturingy I mport

y Services

y Distribution and Wholesale

Previously it was being charged at the manufacturing & import stage, and its scope has been

extended now to remaining sectors. Sales Tax is chargeable on all locally produced and imported

goods except computer software, poultry feeds, medicines and unprocessed agricultural produce

of Pakistan and other goods specified in Sixth Schedule to The Sales Tax Act, 1990.


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S.R.O.685(1)/2010 7/26/2010 Amendment in Sale Tax Rules 2006

S.R.O 610(I)/2010 7/1/2010 Salex Tax Registration numbers or the words.

S.R.O.397(I)/2010

6/5/2010 Amendment in S.R.O 69(I)/2006, Dated 28/1/2006

S.R.O395(I)/2010 6/5/2010 Amendment in S.R.O 644(I)/2007 dated,27/06/2007

S.R.O 396(I)/2010 6/5/2010 Amendment in S.R.O 313(I)/2006, dated 31/03/2006

S.R.O 398(I)/2010 6/5/2010 Amendment in Sales Tax Procedure Rules 2007

S.R.O371(I)/2010 6/2/2010 Amendment in Sales Tax Rules 2006

346(I)/2010 5/24/2010 Fixed value of locally produced Goods/Amendment in special procedure

rules 2007

345(I)/2010 5/24/2010 Fixed value of locally produced Goods/Amendment in special procedure

rules 2007

S.R.O 317(i)/2010 5/6/2010 Federal Board of Revenue is pleased to direct that the following

amendment made in Notification No. S.R.O.308(I)/2008, dated the 24thMarch, 2008,

309(I)/2010 5/5/2010 Addition of members of adre committe.

283(i)/2010 4/29/2010 Delegation of power to the officers of D.G.Inernal Audit

282(I)/2010 4/29/2010 Delegation of power to the officers of D.G. Internal Audit.

278(I)/2010 4/28/2010 Revision of Return by a registered person

264(I)/2010 4/22/2010 Amendment in Notification No. S.R.O. 160(I)/2010, dated the 10th March,

2010,


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Registration procedures:-

The registration procedure is provided in C hapter I of the Sales Tax Rules, 2006, issued

vide SRO 555( I )/2006. F or this purpose, the prospective taxpayers have been given the option to

apply for registration directly to the C entral Registration Office ( C RO) at F ederal Board of

Revenue. This will ensure expeditious registration process by eliminating the step of filing

application in theL

ocal Registration Office (L

RO) or theC

ollectorate.Any prospective taxpayer can apply on a simple registration form STR-1to local registration

office. The registration forms are available at all facilitation counters of local Registration

Offices and also given in the SRO mentioned above. I n order to ensure that the applicants can

monitor the process, the applications are requested to be sent through mail with acknowledgment

due. Similarly, the same procedure shall be followed for deregistration by applying on

form STR-3. When there is change in particulars of registration, the taxpayer can apply on STR-

1. I n case of change in particulars, only those columns will be filled in which require change.

The taxpayers also have the option of filing application in the L RO ( C ollectorate), if they find it

convenient.

The previous requirements of furnishing supporting documents have been done away with. The

C entral Registration having online access to database of NTN as well as to that of NADRA and

shall verify the particulars declared in the application with database. On verification, it shall


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generate and issue registration certificate to the applicant. The system has been designed in such

a way that it can correct any minor mistakes automatically without bothering the taxpayers.

F or further details, C hapter I of the Sales Tax Special Procedures Rules, 2006, i.e. SRO

555( I )/2006 dated 5.6.2006, as available on the website, can be seen.

Registration & Deregistration F orms Specimen:-

Withholding tax:-

Major sources of Tax Revenue in the country are federal taxes comprising of I ncome Tax, Sales

Tax, C ustom duties and F ederal Excise Duty. Out of total collection of Rs.581 (b) for current

financial year up-to F ebruary, 2008 the share of I ncome Tax comes to Rs. 212(b) i.e. 37 % of the

taxes collected by F BR. Within total Direct Tax revenue, 41% comes from various withholding

taxes, which are characterized by their adjustable and presumptive nature.

Withholding taxes are part of tax system ever since imposition of direct taxes by the

governments. I n recent years, globalization has forced many countries to alter their economies to

harmonize tax policies and alignment thereof with new trade and investment policies embodied

in the free trade agreements. The concept of Hang Together is more relevant today than ever

before. C ountries can neither close their borders nor their economies. Tax policies cannot be

isolated from the international economies either. Tax competition is almost an un-alloyed evil,

working as a constraint on governmental over-reach. C ountries, therefore, have to take positivesteps to protect the integrity of their individual and corporate tax systems from the competition

so engendered.

Short history:-


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Withholding is an act of deduction or collection of tax at source, which has generally been in the

nature of an advance tax payment. I t is an effective mechanism and important/timely source of

revenue. Their contribution is about 41 percent of total direct tax revenues. I ncrease from Rs.5

(b) in 1991 to above Rs 169(b) in 2007 speaks of exponential growth and consequential heavy

reliance on withholding taxes in Pakistan.

Under the repealed I ncome Tax Act, 1922, tax was deducted from two main sources of income;

namely, salaries and interest on securities. Over the period of time, Withholding Tax net was

extended, by steadily introducing different Provisions in the Tax L aws. The repealed I ncome Tax

Ordinance, 1979, brought in all the provisions of the I ncome Tax Act, 1922. However, in the

1990s, withholding tax net was expanded extensively by providing for withholding tax on a

wider variety of transactions and making most of them presumptive. Provisions of the I ncome

Tax Ordinance, 2001, are more or less the same, except for a few changes and additions.I mportant withholding provisions relate to salary, imports, exports, commission and brokerage,

dividend, contracts, profit on debt, utilities, vehicles tax, stock exchange-related provisions and

non-residents, etc., with varying rates.

C hanges in withholding tax:

y Government of Pakistany Revenue Divisiony F ederal Board of Revenue

Member Direct Taxes:-I n view of the falling revenue syndromes and apparent difficulty in meeting the ever-increasing

budgetary targets, it is imperative to explore the possible avenues for bringing in the extrarevenues for the Government. Withholding taxes were unanimously considered the most

potential source. I n order to have a unified approach in streamlining this source of revenues, theDirector General (WHT) has been established.I am confident that the guidelines contained herein and those in the linked pages will beextremely helpful to all the stakeholders, to explore the potential avenues and identify the

loopholes for improving the management of Withholding Taxes thereby increasing the overallcollection of the F BR.

y Rulesy F ormsy I ncome tax deposit formy tax deposit formy computerized payment receipt


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y bulk data computerized payment receipty capital value tax depositsy statementsy monthly and annuallyy

C

ircularsy C ollection of withholding taxes

C hange in holding tax:-

Rules:-

F orms:-

I ncome tax deposit form Tax deposit form C omputerized payment receipt Bulk data computerized payment receipt C apital value tax deposits Statements Monthly and annually

Withholding agents:-

M ajor Withholdi ng Tax A gen t

P rescribed P erso n s / Withholdi ng Agen t Releva n t Sectio n s

C ollector of C ustoms 148Authorized dealer in foreign exchange 149, 154(1), 154(2)Authorized dealer (motor cars) 231B


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Association of persons 149, 152(1), 152(2), 156, 233Association of persons constituted by, or under, law

149, 152(1), 152(2), 153(1), 153(3), 156, 233

Banking C ompany 149, 151(1)(a), 151(1)(b), 151(1)(d), 152(1),152(2), 153(1), 153(3), 154(1), 154(2), 154(3),155, 156, 231A, 233

Body C orporate formed by or under lawin force in Pakistan

149, 151(1)(d), 152(1), 152(2), 153(1), 153(3),155, 156, 233

Body incorporated by or under the law of a country outside Pakistan relating toincorporation of companies

149, 152(1), 152(2), 153(1), 153(3), 155, 156,233

C NG Stations (Gas consumption bill preparer)

234A

C ompany as defined under theC ompanies Ordinance, 1984 except aSmall C ompany

149, 151(1)(d), 152(1), 152(2), 153(1), 153(3),155, 156, 233

C onsortium 149, 152(1), 152(2), 153(1), 153(3), 156C o-operative Society 149, 152(1), 152(2), 153(1), 153(3), 155, 156,

233Diplomatic Mission of a foreign state 155Direct Exporter 154(3B)Electricity C onsumption Bill PreparingAuthority

235

Export House registered under DTRE

Rule, 2001

154(3B)

Export Processing Zone Authority 154(3A)F ederal Government 149, 151(1)(a), 151(1)(c), 152(1), 152(2),

153(1), 153(3), 155, 156, 233AF inance Society 149, 151(1)(D), 152(1), 152(2), 153(1), 153(3),

155, 156, 233F oreign association, whether incorporatedor not, declared to be a company by theF ederal Board of Revenue

149, 152(1), 152(2), 153(1), 153(3), 155, 156,233

F oreign consultant 149, 152(1), 152(2), 153(1), 153(3), 156, 233F oreign contractor 149, 152(1), 152(2), 153(1), 153(3), 156, 233I ndividual 149, 152(1), 152(2), 153(1), 153(3), 156L ocal Authority 149, 151(1), 152(1), 152(2), 153(1), 153(3),

155, 156, 233

Manufacturer of motor cars 231BModaraba 149, 152(1), 152(2), 153(1), 153(3), 155, 156,


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233Motor V ehicle Tax C ollection Authority 234

Non-profit organizations 149, 152(1), 152(2), 153(1), 153(3), 155, 156,233

Persons selling petroleum products to petrol pump operators 156A

C ompany 149, 152(1), 152(2), 155, 156, 233Trusts/Non-profit Sector 149, 152(1), 152(2), 153(1), 153(3), 155, 156,

233Telephone (bill preparer) & C ards (issuer & Seller)

236

Provincial Government 149, 151(1)(c ), 152(1), 152(2), 153(1), 153(3),155, 156, 233

Resident C ompany 150

Society established or constituted by or under any law for the time being in force

149, 152(1), 152(2), 153(1), 153(3), 155, 156,233

Stock Exchange Registered in Pakistan 233AManufacturer of motor cars 231BModaraba 149, 152(1), 152(2), 153(1), 153(3), 155, 156,

233Motor V ehicle Tax C ollection Authority 234

Non-profit organizations 149, 152(1), 152(2), 153(1), 153(3), 155, 156,233

Persons selling petroleum products to petrol pump operators

156A

C ompany 149, 152(1), 152(2), 155, 156, 233Trusts/Non-profit Sector 149, 152(1), 152(2), 153(1), 153(3), 155, 156,

233Telephone (bill preparer) & C ards (issuer & Seller)

236

Provincial Government 149, 151(1)(c ), 152(1), 152(2), 153(1), 153(3),155, 156, 233

Resident C ompany 150Society established or constituted by or under any law for the time being in force

149, 152(1), 152(2), 153(1), 153(3), 155, 156,233

Stock Exchange Registered in Pakistan 233A


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Income Tax Return F orms F or Tax Year 2010:-

F or Compa n y Without Computatio n al Help ( F ormulas/Calculatio n s)

F or In dividual/AO P With Computatio n al Help ( F ormulas/Calculatio n s)

F or In dividual/AO P Without Computatio n al Help ( F ormulas/Calculatio n s)

Wealth Stateme n t


F or Compa n y Without Computatio n al Help ( F ormulas/Calculatio n s)

F or In dividual/AO P With Computatio n al Help ( F ormulas/Calculatio n s)

F or In dividual/AO P Without Computatio n al Help ( F ormulas/Calculatio n s)

Wealth Stateme n t F orm

Tax P ayme n t Receipt - IT-31 (REV - II )

Declaratio n by Salaried P erso n s


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F or C ompany

F or I ndividual/AOP

Wealth Statement F orm

M on thly/A nn ual stateme n ts of collectio n or deductio n of In come Tax

Monthly statement of collection or deduction of I ncome Tax

Tax Rate C ard-Tax year 2008

Annual statement of deduction of I ncome Tax from salary

Declaration by Salaried Persons

C omposition of the Advance Ruling C ommittee:-

The application for advance ruling is considered and decided upon by a committee headed by the

C hairman, C entral Board of Revenue, after giving due opportunity to the applicant of explaining

his case. Other members of the committee are Member (Direct Taxes), C entral Board of

Revenue, and Additional Secretary, L aw, Justice, and Human Rights Division, Government of

Pakistan.

Procedure:-

The applicant may seek advance ruling by making an application to the C entral Board of Revenue in the prescribed form and manner.

y The application for advance ruling should be presented in the form prescribed for the

purpose by the applicant in person or by an authorized representative to the Secretary,

I nternational Taxes Operations, Room No. 424, 5th F loor, F BR House, C onstitution

Avenue, I slamabad.


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y The application and the accompanying annexures may be neatly typed on one side of

plain paper of A-4 size leaving a minimum margin of 30mm on all the four sides and may

be duly indexed. L egible photocopies of the relevant documents may be attached.

y No information as required in the prescribed application form may be withheld.

Provision of complete and correct information would help the applicant in getting an

early decision.

y The question(s) of law or fact on which advance ruling is sought may be stated clearly in

the application using a text box.

Signing of Application:-

The application, its verification and the annexures, statements and documents accompanying it,

are required to be signed by a person competent to do so. Where a person signing the application

and other documents claims to have been duly authorized to do so, the application must be

accompanied by a power of attorney authorizing him to sign.

Authorized Representative:-The applicant is entitled to present his case before the Advance Ruling C ommittee either

personally or through an authorized representative. I f the applicant desires to be represented by

an authorized representative, a duly authenticated document authorizing him to appear for theapplicant should be enclosed.

Payment of F ee:-

There is no fee for seeking an advance ruling from the C entral Board of Revenue.

Withdrawal of application:-

The applicant may withdraw his application at any time before the ruling is issued.

Advantages of Advance Ruling:-

y Helps non-residents in planning their income tax affairs well in advance.y Gives clarity to the local partners of non-residents vis--vis their liabilities under the tax

laws.


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y Brings certainty in determination of the tax liability.y Helps in avoiding long drawn and expensive litigation.y I t is inexpensive, expeditious and binding.

Who can seek advance ruling?

Presently, only a non-resident person as defined in the I ncome Tax Ordinance, 2001, can seek advance ruling.

Who is a non-resident person?y Under the existing scheme of tax laws, the taxable entities are broadly divided into three

groups i.e. I ndividual, Association of Persons, and C ompany.

y These taxable entities are divided into two categories depending upon their residential

status. These categories are :-

y Resident, and

y Non-Resident

An individual is a resident individual if he is present in Pakistan for a period of, or

periods amounting in aggregate to, 182 days or more during the tax year. A company is

a resident company for a tax year if it is incorporated or formed by or under any law in

force in Pakistan; or the control and management of the affairs of the company is situated

wholly in Pakistan at any time during the year. An association of persons is a resident

association of persons for a tax year if the control and management of the affairs of the

association is situated wholly or partly in Pakistan at any time during the year.

Questions on which advance ruling can be sought:-

The advance ruling can be sought on any question of law or fact specified in the application in

relation to a transaction that has been undertaken, or is proposed to be undertaken, by the

nonresident applicant.

Time limit for issuing the advance ruling:-

The advance ruling is required to be issued by the C entral Board of Revenue within 3 months of

the receipt of a valid application.


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Is advance ruling binding?

Advance ruling issued by the C entral Board of Revenue is binding in respect of the transaction(s)

in relation to which ruling has been sought on the C ommissioner and the income tax authorities

subordinate to him in respect of the applicant. However, the advance ruling would cease to be binding, if it is subsequently found to have been obtained by fraud or misrepresentation of facts

about the nature of the transaction on which advance ruling was issued.

F ull Scope Treaties:-Sr# Cou n try Name (Alphabetical Order) Sr# Cou n try Name (Alphabetical Order)

1 Austria 2 Azerbaijan

3 Bahrain

4 Bangladesh 5 Belgium

6 Belarus 7 Bosnia & Herzegovina

8 C anada 9 C hina

10 Denmark 11 Egypt

12 F inland 13 F rance

14 Germany 15 Hungary

16 I ndonesia 17 I ran

18 I reland 19 I taly

20 Japan 21 Jordan

22 Kazakhstan 23 Korea

24 Kuwait 25 L ibya

26 L ebanon 27 Malaysia

28 Malta 29 Mauritius


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30 M oroco 31 Netherlands

32 Nigeria 33 Norway

34 Oman 35 Philippines

36 Poland 37 Portugal

38 Qatar 39 Romania

40 Singapore 41 South Africa

42 Sri L anka 43 Sweden

44 Switzerland 45 Syria

46 Saudi Arabia 47 Thailand

48 Tajikistan 49 Turkey

50 Tunisia 51 Turkmenistan

52 United Kingdom 53 United Arab Emirates

54 Uzbekistan 55 United States of America

56 V ietnam

57 Yeman

L imited Purpose Agreement:-

Sr# Cou n try Name (Alphabetical Order) Sr# Cou n try Name (AlphabeticalOrder)

1 Greece ( I ncome from Airlines)

Greece ( I ncome from Shipping)

2 I ndia ( I ncome from Airlines)

3 I ran ( I ncome from airlines)

I ran ( I ncome from Shipping)

4 Jordan ( I ncome from Airlines)

5 Kenya ( I ncome from Airlines & Shipping) 6 Saudi Arabia ( I ncome fromAirlines).


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Universal self assessment:-

I ncome Tax Ordinance, 2001 was promulgated on 13th September 2001. I t shall come into forceon July 01, 2002 and will be applicable from the said date. The new income tax law is in simplelanguage and is easy to understand. You can now prepare your income tax return and computeyour tax liability without any difficulty.

The new income tax law will bring a complete change in the philosophy of income tax proceedings and it will make life easier. The salient features are:

y No assessing officer will determine your income and compute your tax liability. Now you

will yourself declare your income and determine your tax liability.y Your income tax return shall be accepted without any conditions. There will be no

compulsory enhancement of tax liability over previous year to qualify for acceptance.

Even your loss return shall also qualify for acceptance.y F iling of your income tax return itself will be an assessment order and your eligibility for

refund will flow from your tax return.y A certain percentage of returns filed shall be selected for tax audit on the basis of risk

assessment to verify the accuracy and correctness of your income tax return.y Tax audit will not necessarily mean an amendment of the assessment originally made

based by you in your return of income.y Your original assessment can only be amended on the basis of information acquired

during tax audit or any other source.y I f selected for audit, there will be no pre-designated auditors to carry out audit. The

officials making selection for audit will be different from those who do actual audit. I n

other words you have no designated I ncome Tax Officer holding jurisdiction on you.

Thus universal self-assessment in its true sense will be available to all taxpayers

irrespective of quantum, status, location or size. This is the first such experience in this

part of the world. The new law and the universal self-assessment system will take away

the discretionary powers of the tax collectors and place great responsibility and obligation

on you as a taxpayer and an honorable citizen. The new I ncome Tax Ordinance, 2001 and

its salient features, briefly explained above, are not workable without adequate records to

support the items reported by you on the income tax return and allied statements.

The C entral Board of Revenue is fully aware of your (small taxpayers) problems and

difficulties in maintaining adequate records. Therefore only bare minimum books of


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account; documents and records (that you generally maintain to run your business) have

been prescribed.

I ND IVI DUA L , AOP

Q uarter Date of P ayme n t September 15 th September December 15 t December March 15 th MarchJune 15 th June

CO MP AN IESQ uarter Date of P ayme n t September 15 th October December 15 th JanuaryMarch 15 t AprilJune 15 th June

C alculation of quarterly income:-I n the case of individual or AOP, whose last assessed income is at least 200,000. The amount of advance tax due for a quarter shall be computed according to the following formula, namely:-

(A/4) B Where

A is the tax assessed to the taxpayer for the latest tax year or latest assessment year under therepealed Ordinance; andB is the tax paid in the quarter for which a tax credit is allowed under section 168, other than tax deducted under section 149 or 155.

y I n the case of a company, the amount of advance tax due for a quarter shall be computedaccording to the following formula, namely:-

(A/4) - B Where

A. is the tax assessed to the taxpayer for the latest tax year or latest assessment year under therepealed Ordinance; and

B. is the tax paid in the quarter for which a tax credit is allowed under section 168, other than tax

F ederal excise:-


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The F ederal Excise Act, 2005, was promulgated with effect from 1st July, 2005, repealing the

C entral Excises Act, 1944. F ollowing are some of the significant changes brought about by the

new Act:

y The word F ederal was used in place of C entral. Therefore, now the term F ederal

Excise Duty is more appropriate as compared to old C entral Excise Duty for the duties

of excise levied under the 2005 Act.

y The system of physical supervision has been entirely done away with and now all

clearances will be self-assessed and no prior permission for clearance will be required.

y The payment of duty will be on monthly basis and the duty on all clearances during the

month will be payable by the 15th of next month. This is in contrast to previous

requirement of payment of duty prior to clearance.

y No gate passes are required for clearances as in the old system.y Double taxation has been eliminated by allowing adjustment of the excise duty paid on

the input goods used directly in the manufacture of excisable goods.

y On some services and goods F ED is payable in V AT more i.e. in the same manner as

provided in the Sales Tax Act, 1990. F or details see the link Goods/Services L iable to

Excise Duty on this page.

Notifications:-

SROs for the Year [2010]

SRO Issue Date Title

1085( I )/2010 11/29/2010C oal Mined, Produced or Extracted by any Method from Thar

C oalfield

1084( I )/2010 11/27/2010 Ammendment in SRO 57( I )/2010 Dated, 2/2/2010

S.R.O 11/12/2010 Authorization officers of D.G, I nt.Audit ( I nland


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1039( I )/2010 Revenue)ST& F E

S.R.O1041( I )/2010

11/12/2010Amendment in F ederal Excise SRO 284( I )/2010 , Dated April

29, 2010

S.R.O

811( I )/20108/19/2010

Amendments shall be made in its Notification No. S.R.O.217( I )/2010

S.R.O

399( I )/20106/5/2010 Resciding in S.R.O 650( I )/2005, dated 01/07/2005

S.R.O

370( I )/2010 6/2/2010Amendment in Notification No S.R.O 162( I )/2010, dated 10th

March 2010

S.R.O342(i)/2010 5/20/2010F ederal Board of Revenue is pleased to direct that the following

amendment in Notification No. S.R.O.993( I )/2006, dated the21st September, 2006,

284( I )/2010 4/29/2010

The F ederal Boarf of Revenue invest the officers of the D.GI nternal Audit, with powers of an officer of I nland Revenue

281( I )/2010 4/27/2010 Amendment in notification no. 655( I )/2007

265( I )/2010 4/22/2010

Amendment in Notification No. S.R.O. 163( I )/2010, dated the10th March, 2010

161( I )/2010 3/10/2010The fiscal relief package to rehabilitate the economic life in

NW F P, F ATA/PATA announced by the F ederal Government on07.01.2010, incentives relating to sales tax and federal excise.




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8( I )/2010 2/13/2010 Exemption of F ederal Excise Duty on Advertisement in

periodicals

F ederal excise general orders :-

neral Order#

Issue Date Subject

. 01/2010 2nd June, 2010 S ANCTION OF REFUND CLAIM S OF IMPORT-RELATED FEDEAL EXCI S E DUTY BYTHE COLLECTORATE S OF CU S TOM S

. 02/2008 6th October, 2008 FEDERAL EXCISE DUTY ON GOODS PRODUCED BY VENDORS (TOLLMANUFACTURERS) FROM THE RAW MATERIALS SUPPLIED BY THEPRINCIPALS.

OF 2008 5th May, 2008 Drawback Of Special Excise Duty On Export

.03/2007 30th July, 2007 Issues Relating To Special Excise Duty

24th April, 2007 INTER-TAX REFUND / ADJUSTMENT PROCEDURE.

No.01/2007 10th January, 2007 MITIGATING THE HARDSHIP OF ISLAMABAD BASED TAXPAYERS.

o. 08/2006 27th December, 2006 PROCEDURE REGARDING EXEMPT SUPPLY OF SOLVENT OIL TOMANUFACTURERS OF SHOE ADHESIVES

. 07/2006 10th October, 2006 BANKS FALLING IN THE JURISDICTION OF LARGE TAXPAYERS UNIT,LAHORE.

. 06/2006 10th October, 2006 BANKS FALLING IN THE JURISDICTION OF LARGE TAXPAYERS UNIT,KARACHI

. 05/2006 5th August, 2006 LEVY AND COLLECTION OF EXCISE DUTY ON FRANCHISE FEE/ TECHNICALFEE/ROYALTY AND PAYMENT THEREOF.

.03/2006 5 June, 2006 PRINTING OF RETAIL PRICES ON CIGARETTE PACKETS

O.01/2006 19th January, 2006 LEVY OF FEDERAL EXCISE DUTY AT IMPORT STAGE ON EDIBLE OIL ANDVEGETABLE GHEE INCLUDING COOKING OIL VIDE SRO. 24(I)/2006 Dated


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07.01.2006 - CLARIFICATIONS REGARDING

O.1/2005 1 st July, 2005 ISSUES RELATING TO SWITCH-OVER TO NEW EXCISE LEGISLATION.

O.2/2005 15th August, 2005 ISSUES RELATING TO FEDERAL EXCISE DUTY.

SP& RS:-I n June, 2000, Government of Pakistan appointed a Task F orce on Reform of Tax

Administration. This Task F orce presented its report in May, 2001. The report was conceptually

approved by the government with the directions that an implementation strategy be framed in

respect of viable recommendations after due consultation with stakeholders. The report apart

from trade bodies, accounting institutes, tax bar associations was also discussed with donor

agencies. On a request from the Government of for input in its F BR reform effort, an I MF

Mission visited in August, 2001. This Mission carried out in-depth discussion with various

stakeholders including Ministry of F inance, Establishment Division, F ederal Public Service

C ommission and trade bodies. The Mission presented its draft report in August, 2001. These

reports and various other studies recommended a tax system, which has simpler laws andefficient procedures that promote self-assessment, reduce physical controls and creates reliance

on audit and risk assessment.

Profile Members :-

http://www.fbr.gov.pk/reforms/MemberProfile.asp

C hief strategic policy:-

Objectives of reform:-

a. Overall i n crease i n the reve n ue collectio n an d co n tribute to the achieveme n t of fiscaltar gets;

b. In crease i n tax to GD P ratio; c. Collectio n of optimum tax reve n ues;


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d. Broade n ing of the tax base; e. Stre ng the n ing audit a nd e n forceme n t procedures; f. Guara n tee fairer a n d more equitable applicatio n of tax laws; g. In crease i n tra n spare n cy a n d i n te grity;

h. Improve effective n ess, respo n sive n ess a n d efficie n cy; i. F acilitate & promote volu n tary complia n ce with tax laws;

j. P rovide tra n spare n t a n d hi gh quality tax services

Compo n en t of Reforms

M an ageme n t a n d In stitutio n al Developme n t

y Organizational Designy Human Resource Managementy

Trainingy I mproving Professional Ethicsy I nternal Audit F unctiony I nternal Affairs and V igilance F unctiony Managing Organizational C hange

Improvi ng Reve n ue Operatio n s

y Direct Taxesy

Sales Taxy C ustoms

Stre ng the n ing Reve n ue Services

y Establishing Audit F unctiony Establishing C ollection & Enforcement F unctiony Establishing National I ntelligence and Risk management F unctiony Establishing C ustom and Tax F raud F unction

Tax Complia n ce Culture

y Establishing Taxpayers I dentification, Registration, Return Processing and Accounts F unctiony Establishing F acilitation and Tax Education F unctiony I mpact Evaluation, Quality Assurance and Monitoring


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Adopti ng Respo n sive IT Systems

y HQ I nformation Systemsy Direct Tax I nformation Systemy

Sales TaxInformation System

y C ustoms I nformation system

Outcomes of Reforms:-a. Gaining Stakeholders' Respect

b. Substantial reduction of corruption - Transparency I nternational Reportc. On Tax F acilitation 's Ranking improved to 32 in 133 countries (recent report)

d. Improved performance - Revenue targets not only achieved but surpassed

e. I ncrease in Tax to GDP ration by 0.3 % each year from 2004-05 as against agreed KP I 's of 0.2 %f. C reating business friendly environmentg. I ntroducing professionalism, integrity, teamwork, courtesy, responsiveness, transparency and fairnessh. F acilitating and providing service to the taxpayersi. Reducing the cost of doing business

j. Adversarial relations turned to mutual trust and confidence.

C ompleted and ongoing projects:-

Re gional Taxpayers OfficesRTO Abbottabad

RTO Peshawar

RTO Rawalpindi

RTO I slamabad

RTO Gujranwala

RTO Sialkot

RTO L ahore


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RTO F aisalabad

RTO Multan

RTO Sukkur

RTO Hyderabad

RTO Karachi

RTO Quetta

Completed P rojects (Tax F acilitatio n Ce n ters) U nder TAR P

PT FC Wahga

Mansehra (N.W. F .P)

Kohat (N.W. F .P)

Mardan (N.W. F .P)

Nowsherah (N.W. F .P)

Sanghar (Sindh)

Mir Pur Khas (Sindh)

Sahiwal (Punjab)


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Bahawal Nagar (Punjab)

Jehlum (Punjab)

Ongoing Projects of Tax F acilitation C enters under (TARP):-

Hub (Bolochistan)

Gur Mandar (Karachi Sindh)

Gulshan-e- I qbal (Karachi Sindh)

Gulistan-e-Johar (Karachi Sindh)

Thatta (Sindh)

Baddin (Sindh)

Shikarpur (Sindh)

Jacob Abad (Sindh)

L arkana (Sindh)

Dadu (Sindh)

Nawab Shah(Sindh)

Article on reforms:-


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http://www.fbr.gov.pk/reforms/Artical.asp

Reform wing F BR:-

http://www.fbr.gov.pk/reforms/downloadbles/EMP%20%20TARP3%20May.pdf

http://www.fbr.gov.pk/reforms/downloadbles/EMP%20%20TARP3%20May.doc

Report of task force on reform of tax administration:-

http://www.fbr.gov.pk/reforms/taxadmin/Taxadmin.zip

mid assignment

Documents