Tag: Advance tax

  • FBR asks traders to pay advance tax of up to Rs60,000 by the 15th of every month

    FBR asks traders to pay advance tax of up to Rs60,000 by the 15th of every month

    The Federal Board of Revenue (FBR) has issued a notice to traders in Karachi, instructing them to pay an advance tax of up to Rs60,000 per month under the Tajir Dost Scheme.

    The notice, issued by the regional tax office in Karachi, specifies that the payment is due by the 15th of each month.

    The Tajir Dost Scheme, designed to simplify tax compliance for traders, has sparked concern among the business community, particularly in key markets such as Liaquatabad and the electronics market.

    Traders have expressed frustration over what they see as an additional financial burden imposed by the authorities.

    In response to the scheme, Karachi’s business community has decided not to comply with the advance tax payment. On Friday, traders announced a nationwide strike scheduled for August 28 to protest against the Tajir Dost Scheme.

    During a joint press conference, the All Pakistan Anjuman-e-Tajiran, along with other traders’ associations, demanded the immediate withdrawal of the scheme, labelling it as ‘unacceptable.’

    They also called for the reversal of the decision to impose heavy taxes on the export sector, as well as the withdrawal of the recent increase in income tax slabs for salaried individuals and business owners.

  • Proposed increase in advance tax on vehicle registration to impact expensive car buyers

    Proposed increase in advance tax on vehicle registration to impact expensive car buyers

    With the upcoming budget just days away, the Federal Board of Revenue (FBR) is deliberating on measures to increase the advance tax on motor vehicle registration, particularly targeting non-filers. The proposed plan suggests raising the tax rate by 10 to 35 per cent based on the value of vehicles.

    Currently, the advance tax is determined by engine capacity, but significant changes are being considered for the forthcoming budget, set to be revealed in the first week of June. The Resource and Revenue Mobilisation Commission (RRMC) has recommended imposing the advance tax based on the value of the vehicle.

    As per the proposed rates, the RRMC has advised the government to impose a 2 per cent advance tax on the corporate sector and 3 per cent on the non-corporate sector for individuals listed in the active taxpayers list (ATL) for the past three years. These rates would apply to motor vehicles valued up to Rs10 million.

    For individuals, the proposed tax rate stands at 10 per cent. As for motor vehicles valued between Rs10 million and Rs30 million, the recommended tax rates are 4 per cent and 5 per cent for the corporate and non-corporate sectors, respectively, provided they are part of the ATL for the past three years.

    Moving up the value scale, vehicles valued between Rs30 million and Rs100 million would face tax rates of 6-7 per cent for the corporate and non-corporate sectors. The proposed tax rate for individuals would be increased significantly to 30 per cent.

    For vehicles valued up to Rs100 million, the proposed tax rates are 8 per cent and 10 per cent for the corporate and non-corporate sectors, respectively, for individuals present in the ATL for the past three years. Individuals falling under this category would face a tax rate of 35 per cent.

    The RRMC has also recommended subjecting the transport sector to a minimum tax regime of 3 per cent of the gross turnover, applicable to transport services provided to withholding agents. Additionally, a tax rate of 3.5 per cent would be levied on the gross amount received for the provision of carriage services by transport contractors, while oil tanker contractors would face a tax rate of 2.5 per cent.

    These proposed changes in the tax structure aim to generate increased revenue for the government and incentivize compliance with tax regulations. By targeting motor vehicle registration, the FBR hopes to enhance revenue collection and promote a fair tax system.

    It is essential to note that these proposed changes are subject to approval and implementation during the budget announcement. The FBR and RRMC are carefully evaluating the potential impact of these adjustments on various sectors and taxpayers, striving to strike a balance between revenue generation and taxpayer convenience.

  • FBR surpasses revenue collection target by Rs15 billion for July

    FBR surpasses revenue collection target by Rs15 billion for July

    The Federal Board of Revenue (FBR) revealed the provisional revenue collection data for July 2022, which came to Rs458 billion.

    The FBR generated net revenues of Rs458 billion in July, which was Rs15 billion more than its goal of Rs443 billion.

    These collections—which represent an increase of roughly 10 per cent over the Rs417 billion collected during the same time last year—are the biggest ever for the month of July.

    The gross revenue increased from Rs438 billion in July of the previous year to Rs486 billion, a rise of 11 per cent. Similarly, the amount of refunds given out in July increased by 32 per cent to Rs28 billion from Rs21 billion paid in the previous year.

    Domestic taxes made up 55 per cent of the total collection while import taxes kept their 40 per cent share.

    Previously, 52–53 per cent of the total revenue was collected via taxes at the import stage. Similarly, the increase in domestic income tax is close to 31 per cent, which the FBR described as a dramatic move toward direct taxation.

    The Advance Tax collected in July has increased significantly. Due to the implementation of a withholding provision that is applicable regardless of the holding term, there is also a 118 per cent rise in the advance tax on the sale of properties under Section 236-C.

    Similarly, a change in the tax rate has led to a 40 per cent increase in Advance Tax under Section 147, particularly from financial companies.

    Raising the FED rate on tobacco and cigarettes has also paid off. Sales tax from the tobacco sector increased by a record-breaking 67 per cent, while the FED from tobacco saw a record-high growth of over 47 per cent, or Rs2.6 billion.

    Additionally, the FED for international flight travel has climbed by more than 200 per cent. Additionally, Pakistan Customs saw a modest 2.58 per cent increase in revenue under the heading of customs duty during July 2022 compared to Rs65 billion collected during the same time last year.

    However, it fell short of the Rs77 billion target set for July as a result of the government’s import compression policy, which aims to limit the outflow of US dollars.

    In addition, the FBR lost around Rs11 billion in sales tax due to the zero-rating of petroleum goods.

    It is important to note that the number of income tax returns for the tax year 2021 has increased by 13 per cent to 3.4 million from 3.0 million for the tax year 2020.