by: syed hassaan naeem at karachi tax bar association 19 august 2015 advance tax, deduction of tax...
TRANSCRIPT
By: Syed Hassaan Naeem
at KARACHI TAX BAR ASSOCIATION19 August 2015
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Schemes of Taxation
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 3
Schemes of Taxation - NTR and FTR ► The Income Tax Ordinance, 2001 (“Ordinance”) provides for
two distinct and parallel schemes of taxation vis-à-vis a
Normal Tax Regime (NTR) and a Final Tax Regime (FTR)
► Except for certain payments to a non-resident person, the
scheme to apply to a particular class of income is not optional
and is dependent on the category and source of income being
derived by the taxpayer
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 4
Schemes of Taxation Normal Tax Regime (NTR)
► The computation of income and tax thereon under the NTR is
governed by the provisions of sections 9, 10 and 11 of the
Ordinance. Under NTR, tax is imposed on heads of income of
a taxpayer by applying the rates as prescribed in the First
Schedule
► For each head of income, certain deductions are allowable
while computing income under the respective head. Moreover,
the tax liability under NTR is available for adjustments against
certain tax credits as specified, including the amount of tax
deducted at the time of making payment to the recipient
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 5
Schemes of Taxation Final Tax Regime (FTR)
► Under the Ordinance (section 4), amounts governed under
FTR are not to be included in the computation of “taxable
income”. Sections 8 and 169 of the Ordinance, being the
governing sections prescribe the following distinct features of
income governed under FTR:
Income falling under FTR shall not be chargeable to tax
under any head of income in computing the taxable income
of the person who derives it for any tax year;
No deduction is allowable for any expenditure incurred in
deriving the income falling under FTR
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 6
► The FTR income is not to be reduced by –
(i) any deductible allowance; or
(ii) the set off of any loss;
► The tax payable by a person is not reduced by any tax credits
allowed under the Ordinance; and
► The liability of the person deriving such income stands
discharged to the extent that tax payable has been deducted
or collected at source at the applicable rate from the payment
made to the person
Schemes of Taxation Final Tax Regime (FTR) (Cont.d.)
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 7
► Examples of income that is subject to FTR include but not limited to the following:
Dividend income earned by a shareholder
Export of goods and receipt of indenting commission
Royalty and Fee for Technical Services earned by a non-resident person, otherwise than through a Permanent Establishment (PE) in Pakistan
Commercial imports made by an importer, other than a “large import house”
Prize and winnings
Sale of goods by a trader not being a public company listed on a registered stock exchange in Pakistan
Brokerage and commission earned by a person
Schemes of Taxation Final Tax Regime (FTR) (Cont.d.)
Advance Tax
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 9
► Advance tax, as the name implies is a prepaid form of tax which
is designed in such a way that a taxpayer pays on ‘Pay as You
Earn’ basis
► In other words, it is the part payment of one’s total tax liability to
be paid before the end of the fiscal year
► Advance tax is a tool used by the Governments to collect funds
from the taxpayers
► This tool reduces the last moment tax burden of taxpayers and at
the same time, results in speedy tax collection
► Section 147 governs the mechanism of payment of advance tax
Concept of Advance Tax - Section 147
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 10
Concept of Advance Tax - Section 147
► The following types/ classes of income are subject to advance
payment of tax:
Income from business; and
Capital gains from sale of securities (stocks)
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 11
Advance Tax on business income
► Every taxpayer whose income was charged to tax for the
latest tax year is required to pay advance tax
► The following types of income are not considered for advance
tax purposes:
Dividend income
Royalty and fee for technical services of non-residents who
do not have a permanent establishment in Pakistan
Shipping and transport income of non-residents
Income from salary
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 12
Advance Tax on business income Income falling under FTR where tax collected or deducted
constitutes full and final discharge of tax liability on such
income, e.g. under sections 148 (imports), 151 (profit on
debt), 152 (certain payments to non-residents), 153
(payment for goods, services and contracts), 154
(exports), 156 (prize and winning), 156(A) (petroleum
products), 233 (brokerage and commission), and 234A
(CNG stations)
► Tax liability under section 113 (minimum tax on turnover) is
also accounted for while determining advance tax liability
under section 147
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 13
Advance Tax on business income - Exceptions
► An individual whose latest assessed taxable income is less
than Rs.500,000 is not required to pay advance tax under
section 147
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 14
Computation of Advance Tax for Individuals
► Individuals having latest assessed income of Rs.500,000 or
more are required to pay advance tax on quarterly basis
► The amount of tax due for a quarter is computed according to
the following formula:
(A/4) – B
Where –
A - is the tax assessed for the latest tax year; and
B - is the tax paid in the quarter for which a tax credit is
allowed under section 168(2), other than tax deducted
under section 149 (salary)
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 15
Due dates for payment of advance tax
► For Individuals
► The advance tax paid by a taxpayer is allowed as adjustment
against ultimate tax liability while computing tax due on the
taxable income
► Excess tax paid (if any), by the taxpayer becomes refundable
September quarter on or before 25th September
December quarter on or before 25th December
March quarter on or before 25th March
June quarter on or before 15th June
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 16
Computation of Advance Tax for Companies & AOPs
► AOPs and Companies (other than Banking Companies) are
required to pay advance tax on quarterly basis
► Banking Companies are required to pay advance tax on
monthly basis
► The amount of tax due for a quarter is computed according to
the following formula:
(A x B/C) –D
Where –
A – is the taxpayer’s turnover for the quarter
B – is the tax assessed to the taxpayer for the latest tax year
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 17
Computation of Advance Tax for Companies & AOPs
C – is the taxpayer’s turnover for the latest tax year, and
D – is the tax paid in the quarter for which a tax credit is
allowed under section 168(2)
In the absence of last assessed income or declared turnover,
the taxpayer is required to estimate advance tax payable on
the basis of quarterly turnover and pay such tax after taking
into account minimum tax under section 113 and making
adjustment for taxes already paid (withholding tax), if any
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 18
Estimate of income and advance tax► AOPs and companies are required to estimate the tax payable by
them for the relevant tax year, at any time before the second
installment is due
► 50% of the estimated advance tax liability is to be discharged by the
due date of the second quarter
► Remaining 50% liability is to be paid in the remaining quarters
► If a taxpayer (other than a banking company) believes that the tax
payable for the relevant tax year is likely to be less than the advance
tax required to be paid, he may opt to estimate its advance tax
liability any time before the last installment, and pay such estimated
amount, minus the amount already paid, in equal installments
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 19
Estimate of income and advance tax
► A banking company is required to pay advance tax on a
monthly basis in accordance with Rule 5 of the Seventh
Schedule to the Ordinance
► If the tax payable by a banking company is likely to be more
than the advance tax required to be paid, the banking
company must estimate its advance tax liability and pay 50%
thereof before 15th June of the relevant tax year, and balance
in the remaining months
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 20
Due dates for payment of advance tax
► For Companies (other than banking companies) and AOPs
► For Banking Companies – 15th of every month
► The advance tax paid by a taxpayer is allowed as adjustment
against ultimate tax liability while computing the tax due on the
taxable income
► Excess tax paid (if any), by the taxpayer becomes refundable
September quarter on or before 25th September
December quarter on or before 25th December
March quarter on or before 25th March
June quarter on or before 15th June
Withholding Tax
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 22
Why Withholding Tax
► Pay as you earn
► To cater the working capital/ day to day funding needs of the
Government
► Easy recovery of tax
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 23
Imports Section 148
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 24
Imports (Cont.d.) Section 148
► Collection at import stage is not applicable including imports
by the following:
The Federal, Provincial or Local Governments
A foreign company owned by a foreign government
A person who imports plant and machinery for setting up
an industrial undertaking
A person who imports plant and machinery for execution
of a contract with the Federal, provincial or a local
government
Petroleum (E&P) companies
Industrial undertaking if the tax liability of the current year
on the basis of tax of preceding two years, whichever is
higher, is paid [Clause (72B), Part IV, Second Schedule]
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 25
Imports (Cont.d.) Section 148
Petroleum (E&P) companies
Industrial undertaking if the tax liability of the current year
on the basis of tax of preceding two years, whichever is
higher, is paid [Clause (72B), Part IV, Second Schedule]
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 26
Salary Section 149
Person liable to deduct tax
Every person responsible for payment
From whom Employees deriving taxable salary for the year
RateAt the average rate of tax computed at the rates prescribed in Part I of the First Schedule
On Taxable salary
When At the time of payment of monthly salary
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 27
► Employer is allowed to make adjustments on account of the
following while calculating withholding tax on salary, after
obtaining necessary documentation –
Tax credit on –
(a) donation;
(b) investments in new shares, or life insurance
premium; and
(c) investment in retirement annuity schemes
► I
► N
Section 149Salary (Cont.d.)
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 28
Tax collected from the employee under various
sections such as telephone, cash withdrawals etc.
Excess or short deduction of tax by the employer from
salary within the tax year
Profit on debt paid on housing loans and zakat paid is
allowed as deductible allowance against taxable income
Section 149Salary (Cont.d.)
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 29
Section 150Dividend
Person liable to deduct tax
Every resident company and branches of foreign
companies operating in Pakistan
From whom Every shareholder whether resident or not
Rate
• 7.5% in case of dividend distributed by power
generation companies / companies providing coal for
power generation projects
• 12.5% for other cases in case of filer
• 15% for other cases in case of non-filer
OnDividend distribution and remittance of after tax profits by a
branch of a foreign company in Pakistan
WhenAt the time of payment of dividend and remittance of after
tax profits by a branch of a foreign company in Pakistan
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 30
Section 150Dividend – Exemption from WHT
Clause (11B)Inter-corporate dividend within group companies availing group taxation under sections 59AA and 59B
Clause (38A) Venture Capital Company
Clause (47B)
NIT, Collective Investment Scheme, Modaraba, Approved Pension Fund, Private Equity & Venture Capital Fund Recognized PF, GF and Pension Fund
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 31
Section 151Profit on Debt
Person liable to deduct tax
All payers, other than individuals and AOPs
From whom All resident persons
Rate• 10% of gross yield for filers • 17.5% for non-filers if the yield is more than
Rs.500,000
On Gross amount after deduction of zakat (if any)
WhenAt the time of payment of interest/profit on deposit/ saving accounts, bond, certificate, debenture, instruments of any kind
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 32
► No withholding tax applies on payment of interest on loans
borrowed from banks and financial institutions
► Non-resident persons who are covered under section 152(2)
are not liable to deduction of tax under section 151
Section 151Profit on Debt (Cont.d)
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 33
Section 151Profit on Debt – Exemption from WHT
Clause (11C)Inter-corporate profit / interest within group companies entitled to group taxation under sections 59AA and 59B
Clause (36A)Investment in Behbood Saving Certificate/ Pensioner’s Benefit Account
Clause (38)Special Purpose Vehicle for the purpose of Securitization
Clause (38A) Venture Capital Company
Clause (47B)NIT, Collective Investment Scheme, Modaraba, Approved Pension Fund, Private Equity & Venture Capital Fund Recognized PF, GF and Pension Fund
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 34
Section 152Payments to non-residents
Nature of paymentRate of
withholding
Royalty or Fees for Technical Services (FTS) when governed under Final Tax Regime
15%
Execution of contracts under a construction, assembly or installation project including for supervisory services in relation to such project
6%
Contracts for advertisement services rendered by T.V. Satellite Channels
6%
Insurance premium or re-insurance premium 5%
Advertising services to a Media House 10%
Profit on debt -- Non-resident having a P.E. in Pakistan- Non-resident having no P.E. in Pakistan
20%10%
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 35
Section 152Payments to non-residents
Nature of payment Rate of withholding
Filer Non-filer
Purchase of goods from a PE being a company 4% 6%
Purchase of goods from a PE other than a company 4.5% 6.5%
Acquisition of transportation services from a PE 2% 2%
Other services rendered by PE being a company 8% 12%
Other services rendered by PE not being a company 10% 15%
Execution of contract by PE being a company 7% 10%
Execution of contract by PE not being a company 7.5% 10%
Any other payments to non-residents 20% 20%
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 36
► The general withholding rate of 20% does not apply on the following
payments
Salary
Dividend
Prizes and winnings
Brokerage and commission
Payments that are taxable to a PE in Pakistan of the non-resident
person
Payments by a person who is held to be a representative of a non-
resident person
Where a person claims to be a representative of the non-resident
person
Amounts which are not chargeable to tax
Section 152Payments to non-residents
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 37
► If a person intends to make payment to a non-resident person
without deduction of tax, he must obtain prior approval from
the Commissioner Inland Revenue
► Above reporting requirement is not applicable in the following
cases:
Import of goods where title of goods is transferred outside
Pakistan and is supported by import documents
Educational and medical expenses remitted in accordance
with the regulations of the SBP
Section 152Payments to non-residents
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 38
► Prescribed person means:
Federal Government
A company
An association of persons
Non profit organization
A foreign contractor or consultant
A consortium or joint venture
Exporter or export house (for the purpose of sub-section 2)
An individual and AOP, having turnover of Rs.50 million or above
A sales tax registered person
Section 153Payments for Goods, Services &Contracts
Person liable to deduct tax Every prescribed person
From whom All resident persons
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 39
Section 153Payments for Goods, Services &Contracts
Nature of payment Rate of withholding
Filer Non-filer
For goods 1.5% in case sale of rice, cotton seeds, edible oils
In other cases 4% for companies 4.5% for other
taxpayers
1.5% in case sale of rice, cotton seeds, edible oils
In other cases 6% for companies 6.5% for other
taxpayers
For services 2% in case of transport services
In case of other services 8% for companies 10% for other
taxpayers
2% in case of transport services
In case of other services 12% for companies 15% for other
taxpayers
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 40
Section 153Payments for Goods, Services &Contracts
Nature of payment Rate of withholding
Filer Non-filer
For execution of contracts excluding contracts for sale of goods or rendering of services
7% for companies
7.5% for other taxpayers
10% for sports persons
10% for companies
10% for other taxpayers
10% for sports persons
For services of stitching, dyeing, printing, washing, embroidery, sizing and weaving to an exporter or an export house
1% 1%
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 41
Section 153Payments for Goods, Services &Contracts
► Withholding is required on the gross amount payable
(inclusive of sale-tax)
e.g. -
Sale 100,000
Sales-tax @ 17% 17,000
Rs. 117,000
Withholding tax @ 4% of Rs.117,000 Rs. 4,680
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 42
Section 153Payments for Goods, Services &Contracts
► Deduction of tax is not required in the following cases –
Sale of goods by an importer in the same condition as they
were imported and on which tax has been paid at import
stage
Payments representing refund of security deposit
Payments for purchase of an asset under a lease and
buyback agreement
Where the payment is for securitization of receivable by a
special purpose vehicle
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 43
Section 154ExportsCollecting
AgentTransaction Rate of withholding
Authorized dealer in foreign exchange
Export of goods by an exporter 1% on export proceeds realized
Every Banking Company
Sale of goods by an exporter under inland back to back letter of credit or other arrangements
1% on export proceeds realized
Authorized dealer in foreign exchange
Commission due to an indenting commission agent
5% on export proceeds realized
Collector of Customs Clearing of goods exported 1% of gross value of goods
EPZA Export of goods by an industrial undertaking located in the Zone
1% on export proceeds
Direct exporter / export house
A firm contract to an indirect exporter
1% of export proceeds
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 44
Section 155Income from PropertyPerson liable to deduct tax Every prescribed person
From whom Individual, AOP and company
OnGross amount of rent (including rent of furniture & fixture and amount of services relating to property
When At the time of payment of rent
► Prescribed person means –
Federal, Provincial or Local Government
Company
Non profit organization
Diplomatic mission of a foreign state
Private education institution, boutique, beauty parlour, hospital, clinics
Individuals and AOPs paying rent of Rs.1.5 million in a year
Any other person notified by the FBR
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 45
► The rate of deduction of tax in case of individuals and AOPs -
Section 155Income from Property (Cont.d)
Gross Amount of Rent Rate of tax
Where the gross amount of rent does not exceed PKR 150,000
Nil
Where the gross amount of rent exceeds PKR 150,000 but does not exceed PKR 1000,000.
10% of the gross amount of rent exceeding PKR 150,000
Where the gross amount of rent exceeds PKR 1,000,000
PKR 85,000 plus 15% of the gross amount exceeding PKR 1,000,000
► The rate of deduction of tax in case of companies is 15%
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 46
Section 156Cash withdrawals from Bank
Person liable to deduct tax
Every person paying prize on a bond, winnings
from a raffle, lottery, prize on winnings quiz,
prize offered by companies for promotion of
sales or cross-word puzzle
Rate 15% on prize on bond or cross word puzzle 20% on other cases
On Gross amount paid
When At the time of payment
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 47
Section 231APrizes and Winnings
Person liable to collect tax Every banking company
From whomEvery person withdrawing cash in a day exceeding Rs.50,000
Rate 0.3% for filers and 0.6% for non-filers
When At the time withdrawal exceeds Rs.50,000 in a day
► Exemption from withholding –
Federal or Provincial Government
A foreign diplomat or a diplomatic mission in Pakistan
Person who produces an exemption certificate
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 48
► The scope of collection of tax has been extended to include
every distributer or dealer to another wholesaler
► In addition to manufacturers and commercial importers, now
dealers, wholesalers, and distributors who sell to a wholesaler
are required to collect tax on such sale
► The rate of tax withholding is 0.5% of the gross amount of
sales
Section 236HAdvance tax on sale to retailers & wholesalers
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 49
► Non-filers are subject to collection of tax on all non-cash
banking transactions at the following rates:
Section 236P
Advance tax on banking transactions other than cash
Period 1-07-2015 to 10-07-2015
11-07-2015 to30-09-2015
1-10-2015 Onwards
Rate of tax 0.6% 0.3% 0.6%
► This withholding tax is applicable where total payments for all
transactions in a day exceed Rs.50,000. However, this threshold
shall be considered separately for sales of instruments and transfer
of sums
► The only exception is for payments made for taxes of Federal,
Provincial or Local government and payments to Pakistan Real-time
Interbank Settlement Mechanism (PRISM)
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 50
Section 236Q
Payment for use of machinery and equipment► Withholding of tax @ 10% from payments to a resident person for
use of or right to use industrial, commercial and scientific
equipment as well as on account of rent of machinery
► The tax is required to be deducted by persons prescribed under
section 153(7)
► The tax deducted under this section constitutes final tax
► The tax under this section shall not apply in the case of:
Agricultural machinery
Machinery leased by a leasing company, investment bank,
Modaraba, scheduled bank or development finance institution
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 51
Section 236R
Collection of tax on remittance of education expenses
► Remittance of education and related expenses abroad is now
subject to collection of tax @5% by every remitter of the
foreign exchange
► Education expenses have been defined to include tuition fee,
boarding and lodging expenses, any payment for distant
learning to any institution or university in a foreign country and
any other expense related or attributable to foreign education
► The tax collected under this section is advance tax which
would be available for adjustment against the tax liability of the
payer of education related expenses
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 52
Section 160 & Rule 43Deposit of tax withheld
► The tax withheld from a payment is deposited using the online
system of the FBR
► Where tax has been withheld by the Federal or a Provincial
government, it is to be deposited on the same day
► In other cases, the tax so withheld is to be deposited within 7
days from the end of each week ending on every Sunday.
This means that the tax withheld in the current week is to be
deposited by the end of the next week
Return of Income&
Wealth Statement
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 54
Section 114Persons who are required to file
► Every company as defined in section 80
► Every person (other than a company) earning taxable income
in excess of taxable threshold (Rs.400,000)
► Any non-profit organization (as defined in section 2)
► Any approved welfare institution (as mentioned in Clause (58),
Part I of the Second Schedule)
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 55
Section 114Persons who are required to file ► Any other person who –
(a) has been charged to tax in respect of any of the two
preceding tax years
(b) claims a loss carried forward
(c) owns immovable property with a land area of 250 Sq.Yds or
more
(d) owns a flat located in areas falling thin the municipal limits
existing immediately before the commencement of Local
Government laws in the provinces; or areas in a
Cantonment; or the Islamabad Capital Territory
(e) owns immoveable property with a land area of 500 Sq.Yds.
or more located in a rating area
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 56
Section 114Persons who are required to file
(f) owns a flat having covered area of 2,000 Sq.Ft. or more
located in a rating area
(g) owns a motor vehicle having engine capacity above
1000CC;
(h) has obtained National Tax Number
(i) is a resident person registered with any chamber of
commerce and industry or any trade or business association
or any market committee or any professional body including
Pakistan Engineering Council, Pakistan Medical and Dental
Council, Pakistan Bar Council or any Provincial Bar Council,
Institute of Chartered Accountants of Pakistan or Institute of
Cost and Management Accountants of Pakistan
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 57
Section 114Persons who are required to file
(j) is the holder of commercial or industrial connection of electricity
where the amount of annual bill exceeds Rs.500,000
(k) whose business income exceeds Rs.300,000 but does not
exceed Rs.400,000 in a tax year
► The Commissioner may require any person who in his opinion is
required to file a return of income for a tax year but who has failed to
do so, to furnish such return for that year by the time specified in the
notice
► A notice may be issued in respect of any tax year up till last five
completed tax years
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 58
Section 115Persons who are NOT required to file
► The following persons are not required to furnish a return of
income for a tax year –
(a) a widow;
(b) an orphan below the age of twenty-five years;
(c) a disabled person; or
(d) in the case of ownership of immovable property, a non-
resident person
► Any person who is not obliged to furnish a return for a tax year
because all the person‘s income is subject to FTR is required to
furnish a statement showing such particulars relating to the
person‘s income for the tax year – section 115(4)
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 59
Section 114Revision of Return
► Any person who furnished a return/ statement discovers any
omission or wrong statement therein, may furnish a revised
return/ statement for that tax year, at any time within five years
from the end of the financial year in which the original return/
statement was furnished
(a) it is accompanied by the revised accounts or revised
audited accounts, as the case may be;
(b) the reasons for revision of return, in writing, duly signed,
by the taxpayers are filed with the return;
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 60
Section 114Revision of Return
► It is accompanied by approval of the Commissioner in writing
for revision of return where such revision is done after 60 days
of filing of return
► Taxable income declared is not less than and loss declared is
not more than income or loss, as the case may be, determined
by an order
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
Page 61
Section 116
Filing of Wealth StatementPersons required to file Wealth Statement
► Every resident individual filing a return of income for any tax
year shall furnish a wealth statement and wealth reconciliation
statement for that year along with such return
► Where a person, who has furnished a wealth statement,
discovers any omission or wrong statement therein, he may
furnish a revised wealth statement along with the revised
wealth reconciliation and the reasons for filing revised wealth
statement, at any time before an assessment, for the tax year
to which it relates, is made
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
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Section 165Filing of Withholding tax statement
► Every withholding agent is to report the tax withheld and
deposited by him in the government treasury, to the FBR on a
monthly basis
► The monthly withholding statement is required to be filed by
15th of the next month online on the FBR’s web portal
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
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Rule 73Mode of filing of returns
► E-filing is mandatory for the following taxpayers:
every company & AOP
every salaried individual
sales-tax registered persons
refund claimants either salaried or business individual
Advance Tax, Deduction of Tax at Source and Filing of Returns/ Statements
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Section 118Due date of filing of Returns/ statements
► A person may apply, by the due date, to the Commissioner for an
extension of time to furnish the return and the Commissioner (if
satisfied) may grant an extension not exceeding 15 days from the
due date for furnishing the return of income
► The change in due date will not change the date of payment of
tax due
Particulars Due date
In case of company where tax year runs from 01 July to 30 June 31 December
In case of company where the tax year closes between 01 July to 31 December and business individuals
30 September
In case of salaried individuals and for persons falling under FTR 31 August
Thank You