Taxation

Mid Assignment

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

Superior University Lahore.

Executive summary:-
In 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 website
TAX Ordinance 2001
Different TAXES within one ordinance
 Customs
 Sales TAX
 Income TAX
 FED(Federal Excise Duty

To get the main purpose out of this website, it was very essential for us to understand the depth
of the ordinance as well as how to get the exemption from tax of how to get benefits after giving
TAX.
Introduction:-
The Central Board of Revenue (CBR) was created on April 01, 1924 through enactment of the
Central Board of Revenue Act, 1924. In 1944, a full-fledged Revenue Division was created
under the Ministry of Finance.

After independence, this arrangement continued up to 31st August 1960 when on the
recommendations of the Administrative Re-organization Committee, FBR was made an attached
department of the Ministry of Finance.

In 1974, further changes were made to streamline the organization and its functions.
Consequently, the post of Chairman FBR was created with the status of ex-officio Additional
Secretary and Secretary Finance was relieved of his duties as ex-officio Chairman of the FBR.

In 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 FBR as a Revenue Division was restored under the Ministry of Finance on October 22, 1991.
However, the Revenue Division was abolished in January 1995, and FBR reverted back to the
pre-1991 position. The Revenue Division continues to exist since from December 01, 1998.

By the enactment of FBR ACT 2007 in July 2007 the Central Board of Revenue has now
become Federal Board of Revenue.

 Federal Board Of Revenue Act, 2007

 Article on FBR Act, 2007
Customs:-
Pakistan Customs is the guardian of Pakistan borders against movement of contra band goods
and is facilitator of bona fide trade. It provides a major source of revenue to the Government of
Pakistan in the form of taxes levied on the goods traded across the borders. It also helps to
protect the domestic industry, discourage consumptions of luxury goods and stimulate
development in the under -developed areas.

Collectors:
 Custom House karachi
 Lahore
 Sambrial
 Exports Karachi
 Port Qasim
 Custom House Quetta
 Preventive
 Hyderabad
 Peshawar

Custom act / rules 1969:

 Custom act, 1969 (amended up to 30th June 2010)
It includes following chapters.

Chapter1 Preliminary
Chapter2 Appointment of officers of customs and their powers
Chapter3 Declaration of ports, airports, land custom-station
Chapter4 Prohibition and restriction of importation and exportation
Chapter5 Levy of exemption form and prepayment of customs duties
Chapter6 Drawback
Chapter7 Arrival and departure of conveyance
Chapter8 General provisions affecting conveyances at custom station
Chapter9 Discharge of cargo and entry inward of goods
Chapter10 Clearance of goods for home consumption
Chapter11 Warehousing
 Chapter12 Transshipment
Chapter13 Transit trade
Chapter14 Exportation or shipment and relending
Chapter15 Special provisions regarding baggage and goods imported or exported by post
Chapter16 Provisions related to costal goods and vessels
Chapter17 Offences and penalties
Chapter18 Prevention of smuggling-powers of search, seizure and arrest
Chapter19 Appeals and revisions
Chapter20 Miscellaneous

 Custom act, 1969 (amended up to 30th June 2009)

 Custom act, 1969 (amended up to 30th June 2008)
 Custom act, 1969 (amended up to 30th June 2007)
Custom rules 2001:
Custom rules include;

 Definitions
 Baggage
 Import by privileged personnel
 Prior release of consignment
 Auction and auctioneers
 Temporary importation of motor vehicles
 Licensing
 Valuation procedures
 Maintenance of accounts
 Recovery of arrears

Customs Notifications:
Notifications import
Parent Active SRO
Last
SRO# Issue Date Amended Title
Date

Notifications export
 Customs Active/Operative Notifications/SROs Export
 
Parent Active SRO
Last Amended
SRO# Issue Date Title
Date
Levy of regulatory duty at the rate of fifteen percent ad
323 (I)/2010 May 13 2010 Jun 4 2010 valorem on export of all types of yarn for sixty days with
immediate effect
Imposing of regulatory duty at the rate of twenty-five per
cent (25%) ad valorem on export of waste and scrap of
----(I)/2010 Mar 13 2010
copper and aluminium and on bars, rods, ingots, slabs, and
billets
Federal Board of Revenue is pleased to make the following
888(I)/2009 Oct 15 2009 Oct 20 2009 further amendment in the Export Oriented Units and Small
& Medium Enterprises Rules, 2008
Federal Government is pleased to rescind its Notification
805(I)/2009 Sep 16 2009 Sep 19 2009 No. S.R.O.1185 (I)/2007, dated the 5th December, 2007
with immediate effect.
Regulatory duty at the rate of twenty-five per cent ad
594(I)/2009 Jun 25 2009 Apr 2 2010 valorem levied on Export of goods classifiable under the
H.S. codes in the table on the above mentioned SRO.
The Federal Government is pleased to direct that a
321(I)/2009 Apr 10 2009 Apr 10 2009 regulatory duty at the rate of fifteen per cent ad valorem
shall be levied on export of molasses with immediate effect.
This notification allows duty drawback rates on export of
209(I)/2009 Mar 5 2009 Mar 5 2009
textile and allied products
This notification allows duty drawback rates on export of
210(I)/2009 Mar 5 2009 Mar 5 2009
leather and allied products and sports goods
This notification allows duty drawback rates on export of
211(I)/2009 Mar 5 2009 Mar 5 2009
engineering/metal and allied products
This notification allows duty drawback rates on export of
212(I)/2009 Mar 5 2009 Mar 5 2009 miscellaneous products like packing metarials, edible
products, plastic products, etc.
Regulatory duty equivalent to the Price Differential Claims
(PDC), in Rupees per litre, of High Speed Diesel (HSD) and
946(I)/2008 Sep 4 2008 Oct 18 2008
Superior Kerosene Oil (SKO) as notified by the Ministry of
Petroleum & Natural Re
The Federal Government is pleased to exempt from the
whole of customs duties, sales tax and federal excise duty
326(I)/2008 Mar 29 2008 Mar 29 2008
leviable on all the goods imported into and exported from
an Export Oriented Unit subjec
327(I)/2008 Mar 29 2008 Mar 29 2008 The Federal Board of Revenue is pleased to make the rules.
Regulatory duty at the rate of thirty-five percent ad-
1185(I)/2007 Dec 5 2007 Dec 13 2008
valorem on export of wheat products
Rescind the notification No .S.R.O 474(I)/2006, dated the
1186(I)/2007 Dec 5 2007 Dec 5 2007
22nd May,2006
______(I)/200
Jul 28 2007 Jul 28 2007 ATA Carnet Rules
7
Regulatory duty on ferrous and non ferrous waste and
482(I)/2007 Jun 9 2007 Jun 13 2009
scrap.
492(I)/2006 May 26 2006 Jun 20 2006 35% Regulatory duty on export of Pulses
Amendment in SRO.450(I)/2001 dated 18.6.2001 Customs
1211(I)/2005 Dec 9 2005 Dec 9 2005
Rules,2001
CBR is pleased to direct that blankets, tens and tarpaulins
shall be deemed to have been exported if supplied for the
1080(I)/2005 Oct 22 2005 Mar 28 2009
earthquake victims subject to the following conditions,
namely:
1065(I)/2005 Oct 20 2005 Aug 11 2007 This Notification issued in suppersesion of SRO 410/2001
dated 18th June [Link] to the new Notification,
 the facility of temporary importation is available to
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
Duty Draw Back - Central Excise on export of Lubricating
1028(I)/2003 Nov 6 2003 Jan 1 2005
Oil
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. It 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 Central 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.
Imports were chargeable to Sales Tax but the licensed manufacturers & wholesalers were
allowed to import goods without the payment of Sales Tax. Later on Sales Tax became
chargeable on locally produced & imported goods at the time of their sales & import,
respectively. The sales tax was collected under the Finance Ordinance, 1956, on goods which
were chargeable to Central Excise Duty, as if it were a duty of Central Excise. In 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 Central Excise Department. 

In the late eighties the government decided to replace Sales Tax with the Value 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.
Liability to Sales Tax:-
Following sectors are required to get registration for sales tax and charge sales tax on their
supplies/ services:
 Manufacturing
  Import
  Services
  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.
 
 |MS Word version   

SROs For The Year [2010]

 

SRO Issue Date Title

S.R.O 11/15/201
Amendment in Sales Tax Rules 2006 (Refund)
1042(I)/2010 0

S.R.O 11/12/201
Authorization officers of D.G, [Link] (Inland Revenue)ST&FE
1038(I)/2010 0

S.R.O 11/12/201
Amendment in Sales Tax S.R.O 282(i)/2010 Internal Audit (Customs)
1040(I)/2010 0

S.R.O1037(I)2010 11/8/2010 Amendment in Salex Tax S.R.O 549(i)/2008 Remeltable scrap

862(1)/2010 9/7/2010 Amendment in the Sales Tax Special Procedure Rule

S.R.O 810
8/19/2010 File Refund Claim Through FBR Web Portal
(1)/2010

S.R.O821(i)/2010 8/19/2010 Amendment in SRO, 610(I)/2010.

Amendment in S.R.O 536(i)/08, Dated 11-06-2008, regarding

S.R.O 824(i)/2010 8/19/2010
exemption of Sales Tax on pesticides.

S.R.O 748(i)/2010 8/5/2010 Amendment In Sales Tax Rules 2006

S.R.O 707(I)/2010 8/2/2010 Rescinding Notification

S.R.O 708(i)/2010 8/2/2010 Amendment in S.R.O 550(i)/2008 Dated 11-06-2008

Exemtion of Input Tax paid by Recognized manufacturers of Agricultural

S.R.O 706(I)/2010 8/2/2010
Tractors.
S.R.O.685(1)/201
7/26/2010 Amendment in Sale Tax Rules 2006
0

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

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

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

Fixed value of locally produced Goods/Amendment in special procedure

346(I)/2010 5/24/2010
rules 2007

Fixed value of locally produced Goods/Amendment in special procedure

345(I)/2010 5/24/2010
rules 2007

Federal Board of Revenue is pleased to direct that the following

S.R.O 317(i)/2010 5/6/2010 amendment made in Notification No. S.R.O.308(I)/2008, dated the 24th
March, 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 [Link] 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

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

264(I)/2010 4/22/2010
March, 2010,
Registration procedures:-
The registration procedure is provided in Chapter I of the Sales Tax Rules, 2006, issued
vide SRO 555(I)/2006. For this purpose, the prospective taxpayers have been given the option to
apply for registration directly to the Central Registration Office (CRO) at Federal Board of
Revenue. This will ensure expeditious registration process by eliminating the step of filing
application in the Local Registration Office (LRO) or the Collectorate. 
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. In 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. In 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 LRO (Collectorate), if they find it
convenient.
The previous requirements of furnishing supporting documents have been done away with. The
Central 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
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.
For further details, Chapter 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 Forms Specimen:-

Withholding tax:-
Major sources of Tax Revenue in the country are federal taxes comprising of Income Tax, Sales
Tax, Custom duties and Federal Excise Duty. Out of total collection of Rs.581 (b) for current
financial year up-to February, 2008 the share of Income Tax comes to Rs. 212(b) i.e. 37 % of the
taxes collected by FBR. 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. In 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. Countries 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. Countries, therefore, have to take positive
steps to protect the integrity of their individual and corporate tax systems from the competition
so engendered.

Short history:-

Withholding is an act of deduction or collection of tax at source, which has generally been in the
nature of an advance tax payment. It is an effective mechanism and important/timely source of
revenue. Their contribution is about 41 percent of total direct tax revenues. Increase 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 Income 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 Laws. The repealed Income Tax
Ordinance, 1979, brought in all the provisions of the Income 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 Income
Tax Ordinance, 2001, are more or less the same, except for a few changes and additions.
Important 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.
Changes in withholding tax:

 Government of Pakistan
 Revenue Division
 Federal Board of Revenue

Member Direct Taxes:-

In 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 extra
revenues for the Government. Withholding taxes were unanimously considered the most
potential source. In order to have a unified approach in streamlining this source of revenues, the
Director General (WHT) has been established.
I am confident that the guidelines contained herein and those in the linked pages will be
extremely helpful to all the stakeholders, to explore the potential avenues and identify the
loopholes for improving the management of Withholding Taxes thereby increasing the overall
collection of the FBR.
 Rules
 Forms
 Income tax deposit form
 tax deposit form
 computerized payment receipt
 bulk data computerized payment receipt
 capital value tax deposits
 statements
 monthly and annually
 Circulars
 Collection of withholding taxes

Change in holding tax:-

Rules:-
Forms:-
 Income tax deposit form
  Tax deposit form
 Computerized payment receipt
 Bulk data computerized payment receipt
 Capital value tax deposits
 Statements
 Monthly and annually

Withholding agents:-
Major Withholding Tax Agent
Prescribed Persons / Withholding
Relevant Sections
Agent
Collector of Customs 148
Authorized dealer in foreign exchange 149, 154(1), 154(2)
Authorized dealer (motor cars) 231B
Association of persons 149, 152(1), 152(2), 156, 233
Association of persons constituted by, or 149, 152(1), 152(2), 153(1), 153(3), 156, 233
under, law
Banking Company 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 Corporate formed by or under law 149, 151(1)(d), 152(1), 152(2), 153(1), 153(3),
in force in Pakistan 155, 156, 233
Body incorporated by or under the law of 149, 152(1), 152(2), 153(1), 153(3), 155, 156,
a country outside Pakistan relating to 233
incorporation of companies
CNG Stations (Gas consumption bill 234A
preparer)
Company as defined under the 149, 151(1)(d), 152(1), 152(2), 153(1), 153(3),
Companies Ordinance, 1984 except a 155, 156, 233
Small Company
Consortium 149, 152(1), 152(2), 153(1), 153(3), 156
Co-operative Society 149, 152(1), 152(2), 153(1), 153(3), 155, 156,
233
Diplomatic Mission of a foreign state 155
Direct Exporter 154(3B)
Electricity Consumption Bill Preparing 235
Authority
Export House registered under DTRE 154(3B)
Rule, 2001
Export Processing Zone Authority 154(3A)
Federal Government 149, 151(1)(a), 151(1)(c), 152(1), 152(2),
153(1), 153(3), 155, 156, 233A
Finance Society 149, 151(1)(D), 152(1), 152(2), 153(1), 153(3),
155, 156, 233
Foreign association, whether 149, 152(1), 152(2), 153(1), 153(3), 155, 156,
incorporated or not, declared to be a 233
company by the Federal Board of
Revenue
Foreign consultant 149, 152(1), 152(2), 153(1), 153(3), 156, 233
Foreign contractor 149, 152(1), 152(2), 153(1), 153(3), 156, 233
Individual 149, 152(1), 152(2), 153(1), 153(3), 156
Local Authority 149, 151(1)©, 152(1), 152(2), 153(1), 153(3),
155, 156, 233
Manufacturer of motor cars 231B
Modaraba 149, 152(1), 152(2), 153(1), 153(3), 155, 156,
233
Motor Vehicle Tax Collection Authority 234
Non-profit organizations 149, 152(1), 152(2), 153(1), 153(3), 155, 156,
233
Persons selling petroleum products to 156A
petrol pump operators
Company 149, 152(1), 152(2), 155, 156, 233
Trusts/Non-profit Sector 149, 152(1), 152(2), 153(1), 153(3), 155, 156,
233
Telephone (bill preparer) & Cards (issuer 236
& Seller)
Provincial Government 149, 151(1)(c ), 152(1), 152(2), 153(1), 153(3),
155, 156, 233
Resident Company 150
Society established or constituted by or 149, 152(1), 152(2), 153(1), 153(3), 155, 156,
under any law for the time being in force 233
Stock Exchange Registered in Pakistan 233A
Manufacturer of motor cars 231B
Modaraba 149, 152(1), 152(2), 153(1), 153(3), 155, 156,
233
Motor Vehicle Tax Collection Authority 234
Non-profit organizations 149, 152(1), 152(2), 153(1), 153(3), 155, 156,
233
Persons selling petroleum products to 156A
petrol pump operators
Company 149, 152(1), 152(2), 155, 156, 233
Trusts/Non-profit Sector 149, 152(1), 152(2), 153(1), 153(3), 155, 156,
233
Telephone (bill preparer) & Cards (issuer 236
& Seller)
Provincial Government 149, 151(1)(c ), 152(1), 152(2), 153(1), 153(3),
155, 156, 233
Resident Company 150
Society established or constituted by or 149, 152(1), 152(2), 153(1), 153(3), 155, 156,
under any law for the time being in force 233
Stock Exchange Registered in Pakistan 233A

Income Tax Return Forms For Tax Year 2010:-

For Company Without Computational Help (Formulas/Calculations)

For Individual/AOP With Computational Help (Formulas/Calculations)

For Individual/AOP Without Computational Help (Formulas/Calculations)

Wealth Statement
  

Income Tax Return Forms For Tax Year 2009:-

For Company Without Computational Help (Formulas/Calculations)

For Individual/AOP With Computational Help (Formulas/Calculations)

For Individual/AOP Without Computational Help (Formulas/Calculations)

Wealth Statement Form

Tax Payment Receipt - IT-31 (REV - II)

Declaration by Salaried Persons

 
 
 

Income Tax Return Forms For Tax Year 2008:-

For Company 

For Individual/AOP

Wealth Statement Form

 Monthly/Annual statements of collection or deduction of Income Tax

Monthly statement of collection or deduction of Income Tax

Tax Rate Card-Tax year 2008

Annual statement of deduction of Income Tax from salary

Declaration by Salaried Persons

Composition of the Advance Ruling Committee:-

The application for advance ruling is considered and decided upon by a committee headed by the
Chairman, Central Board of Revenue, after giving due opportunity to the applicant of explaining
his case. Other members of the committee are Member (Direct Taxes), Central Board of
Revenue, and Additional Secretary, Law, Justice, and Human Rights Division, Government of
Pakistan.

Procedure:-

The applicant may seek advance ruling by making an application to the Central Board of
Revenue in the prescribed form and manner.
 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,
International Taxes Operations, Room No. 424, 5th Floor, FBR House, Constitution
Avenue, Islamabad.
 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. Legible photocopies of the relevant documents may be attached.
  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.
 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 Committee either
personally or through an authorized representative. If the applicant desires to be represented by
an authorized representative, a duly authenticated document authorizing him to appear for the
applicant should be enclosed.

Payment of Fee:-

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

Withdrawal of application:-

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

Advantages of Advance Ruling:-

  Helps non-residents in planning their income tax affairs well in advance.

  Gives clarity to the local partners of non-residents vis-à-vis their liabilities under the tax
laws.

  Brings certainty in determination of the tax liability.

  Helps in avoiding long drawn and expensive litigation.

  It is inexpensive, expeditious and binding.

Who can seek advance ruling?

Presently, only a non-resident person as defined in the Income Tax Ordinance, 2001, can seek
advance ruling.
Who is a non-resident person?
  Under the existing scheme of tax laws, the taxable entities are broadly divided into three
groups i.e. Individual, Association of Persons, and Company.
  These taxable entities are divided into two categories depending upon their residential
status. These categories are :-
  Resident, and
  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 Central Board of Revenue within 3 months of
the receipt of a valid application.

Is advance ruling binding?

Advance ruling issued by the Central Board of Revenue is binding in respect of the transaction(s)
in relation to which ruling has been sought on the Commissioner 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.
Full Scope Treaties:-
Sr# Country Name (Alphabetical Order) Sr# Country Name (Alphabetical Order)

1 Austria 2 Azerbaijan

3 Bahrain    

4 Bangladesh 5 Belgium

6 Belarus 7 Bosnia  & Herzegovina

8 Canada 9 China

10 Denmark 11 Egypt

12 Finland 13 France

14 Germany 15 Hungary

16 Indonesia 17 Iran

18 Ireland 19 Italy

20 Japan 21 Jordan

22 Kazakhstan 23 Korea

24 Kuwait 25 Libya

26 Lebanon 27 Malaysia

28 Malta 29 Mauritius

30 Moroco 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 Lanka 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 Vietnam 57 Yeman

       

Limited Purpose Agreement:-

Country Name (Alphabetical
Sr# Country Name (Alphabetical Order) Sr#
Order)

Greece (Income from Airlines)

1 2 India (Income from Airlines)
Greece (Income from Shipping)
Iran (Income from airlines)
3 4 Jordan (Income from Airlines)
Iran (Income from Shipping)
Saudi Arabia (Income from
5 Kenya (Income from Airlines & Shipping) 6
Airlines).

Universal self assessment:-

Income Tax Ordinance, 2001 was promulgated on 13th September 2001. It shall come into force
on July 01, 2002 and will be applicable from the said date. The new income tax law is in simple
language and is easy to understand. You can now prepare your income tax return and compute
your 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:

 No assessing officer will determine your income and compute your tax liability. Now you
will yourself declare your income and determine your tax liability.
 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.

  Filing of your income tax return itself will be an assessment order and your eligibility for
refund will flow from your tax return.

  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.

 Tax audit will not necessarily mean an amendment of the assessment originally made
based by you in your return of income.

  Your original assessment can only be amended on the basis of information acquired
during tax audit or any other source.

 If 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. In
other words you have no designated Income 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 Income 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 Central Board of Revenue is fully aware of your (small taxpayers) problems and
difficulties in maintaining adequate records. Therefore only bare minimum books of
account; documents and records (that you generally maintain to run your business) have
been prescribed.

INDIVIDUAL, AOP

Quarter Date of Payment

September 15th September
December 15th December
 March 15th March
June 15th June
 
COMPANIES
Quarter Date of Payment
September 15th October
December 15th January
March 15th April
June 15th June
 
Calculation of quarterly income:-
In 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 the
repealed 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.
 
  In the case of a company, 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 the
repealed Ordinance; and 

B. is the tax paid in the quarter for which a tax credit is allowed under section 168, other than tax
 
Federal excise:-
The Federal Excise Act, 2005, was promulgated with effect from 1st July, 2005, repealing the
Central Excises Act, 1944. Following are some of the significant changes brought about by the
new Act:
  The word “Federal” was used in place of “Central”. Therefore, now the term “Federal
Excise Duty” is more appropriate as compared to old “Central Excise Duty” for the duties
of excise levied under the 2005 Act.
  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.
 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.
 No gate passes are required for clearances as in the old system.
 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.
 On some services and goods FED is payable in VAT more i.e. in the same manner as
provided in the Sales Tax Act, 1990. For details see the link ‘Goods/Services Liable to
Excise Duty’ on this page.

Notifications:-

SROs for the Year [2010]

SRO Issue Date Title

11/29/201 Coal Mined, Produced or Extracted by any Method from Thar

1085(I)/2010
0 Coalfield

11/27/201
1084(I)/2010 Ammendment in SRO 57(I)/2010 Dated, 2/2/2010
0

S.R.O 11/12/201 Authorization officers of D.G, [Link] (Inland

1039(I)/2010 0 Revenue)ST&FE

S.R.O 11/12/201 Amendment in Federal Excise SRO 284(I)/2010 , Dated April

1041(I)/2010 0 29, 2010
 S.R.O Amendments shall be made in its Notification No. S.R.O.
8/19/2010
811(I)/2010 217(I)/2010

S.R.O
6/5/2010 Resciding in S.R.O 650(I)/2005, dated 01/07/2005
399(I)/2010

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

6/2/2010
370(I)/2010 March 2010

Federal Board of Revenue is pleased to direct that the following

S.R.O342(i)/201
5/20/2010 amendment in Notification No. S.R.O.993(I)/2006, dated the
0
21st September, 2006,

The Federal Boarf of Revenue invest the officers of the D.G

284(I)/2010 4/29/2010
Internal Audit, with powers of an officer of Inland Revenue

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

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

265(I)/2010 4/22/2010
10th March, 2010

The fiscal relief package to rehabilitate the economic life in

NWFP, FATA/PATA announced by the Federal Government
161(I)/2010 3/10/2010
on 07.01.2010, incentives relating to sales tax and federal
excise.

The fiscal relief package to rehabilitate the economic life in

NWFP, FATA/PATA announced by the Federal Government
162(I)/2010 3/10/2010
on 07.01.2010, incentives relating to sales tax and federal
excise.

The fiscal relief package to rehabilitate the economic life in

NWFP, FATA/PATA announced by the Federal Government
163(I)/2010 3/10/2010
on 07.01.2010, incentives relating to sales tax and federal
excise.
 Exemption of Federal Excise Duty on Advertisement in
8(I)/2010 2/13/2010
periodicals

Federal excise general orders:-

General Order
Issue Date Subject
#

No. 01/2010 2nd June, 2010 SANCTION OF REFUND CLAIMS OF IMPORT-RELATED FEDEAL EXCISE DUTY BY
THE COLLECTORATES OF CUSTOMS

No. 02/2008 6th October, 2008 FEDERAL EXCISE DUTY ON GOODS PRODUCED BY VENDORS (TOLL
MANUFACTURERS) FROM THE RAW MATERIALS SUPPLIED BY THE
PRINCIPALS.

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

No.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.

 No. 08/2006 27th December, 2006 PROCEDURE REGARDING EXEMPT SUPPLY OF SOLVENT OIL TO
MANUFACTURERS OF SHOE ADHESIVES

No. 07/2006 10th October, 2006 BANKS FALLING IN THE JURISDICTION OF LARGE TAXPAYERS UNIT,
LAHORE.

No. 06/2006 10th October, 2006 BANKS FALLING IN THE JURISDICTION OF LARGE TAXPAYERS UNIT,
KARACHI

No. 05/2006 5th August, 2006 LEVY AND COLLECTION OF EXCISE DUTY ON FRANCHISE FEE/ TECHNICAL
FEE/ROYALTY AND PAYMENT THEREOF.

No.03/2006 5 June, 2006 PRINTING OF RETAIL PRICES ON CIGARETTE PACKETS

NO.01/2006 19th January, 2006 LEVY OF FEDERAL EXCISE DUTY AT IMPORT STAGE ON EDIBLE OIL AND
VEGETABLE GHEE INCLUDING COOKING OIL VIDE SRO. 24(I)/2006 Dated
07.01.2006 - CLARIFICATIONS REGARDING

NO.1/2005  1st July, 2005  ISSUES RELATING TO SWITCH-OVER TO NEW EXCISE LEGISLATION.

 

NO.2/2005 15th August, 2005 ISSUES RELATING TO FEDERAL EXCISE DUTY.

 
SP&RS:-
In June, 2000, Government of Pakistan appointed a Task Force on Reform of Tax
Administration. This Task Force 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 FBR reform effort, an IMF
Mission visited in August, 2001. This Mission carried out in-depth discussion with various
stakeholders including Ministry of Finance, Establishment Division, Federal Public Service
Commission 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 and
efficient procedures that promote self-assessment, reduce physical controls and creates reliance
on audit and risk assessment.

Profile Member’s:-
[Link]

Chief strategic policy:-

Objectives of reform:-

a. Overall increase in the revenue collection and contribute to the achievement of fiscal
targets;

b. Increase in tax to GDP ratio;

c. Collection of optimum tax revenues;

d. Broadening of the tax base;

e. Strengthening audit and enforcement procedures;

 f. Guarantee fairer and more equitable application of tax laws;

g. Increase in transparency and integrity;

h. Improve effectiveness, responsiveness and efficiency;

i. Facilitate & promote voluntary compliance with tax laws;

j. Provide transparent and high quality tax services

Component of Reforms
Management and Institutional Development  

 Organizational Design
 Human Resource Management
 Training
 Improving Professional Ethics
 Internal Audit Function
 Internal Affairs and Vigilance Function
 Managing Organizational Change

Improving Revenue Operations  

 Direct Taxes
 Sales Tax
 Customs

Strengthening Revenue Services  

 Establishing Audit Function

 Establishing Collection & Enforcement Function
 Establishing National Intelligence and Risk management Function
 Establishing Custom and Tax Fraud Function

Tax Compliance Culture  

 Establishing Taxpayers Identification, Registration, Return Processing and Accounts Function

 Establishing Facilitation and Tax Education Function
  Impact Evaluation, Quality Assurance and Monitoring

Adopting Responsive IT Systems  

 HQ Information Systems
 Direct Tax Information System
 Sales Tax Information System
 Customs Information system

Outcomes of Reforms:-
a. Gaining Stakeholders' Respect
b. Substantial reduction of corruption - Transparency International Report
c. On Tax Facilitation 's Ranking improved to 32 in 133 countries (recent report)
d. Improved performance - Revenue targets not only achieved but surpassed
e. Increase in Tax to GDP ration by 0.3 % each year from 2004-05 as against agreed KPI's of 0.2 %
f. Creating business friendly environment
g. Introducing professionalism, integrity, teamwork, courtesy, responsiveness, transparency and
fairness
h. Facilitating and providing service to the taxpayers
i. Reducing the cost of doing business
j. Adversarial relations turned to mutual trust and confidence.

Completed and ongoing projects:-

Regional Taxpayers Offices

RTO Abbottabad

RTO Peshawar

RTO Rawalpindi
 RTO Islamabad

RTO Gujranwala

RTO Sialkot

RTO Lahore

RTO Faisalabad

RTO Multan

RTO Sukkur

RTO Hyderabad

RTO Karachi

RTO Quetta

Completed Projects (Tax Facilitation Centers) Under TARP

 

PTFC 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)

Bahawal Nagar (Punjab)

Jehlum (Punjab)

Ongoing Projects of Tax Facilitation Centers under

(TARP):-
Hub (Bolochistan)

Gur Mandar (Karachi Sindh)

Gulshan-e-Iqbal (Karachi Sindh)

Gulistan-e-Johar (Karachi Sindh)

Thatta (Sindh)

Baddin (Sindh)
 Shikarpur (Sindh)

Jacob Abad (Sindh)

Larkana (Sindh)

Dadu (Sindh)

Nawab Shah(Sindh)

Article on reforms:-
[Link]

Reform wing FBR:-

[Link]

[Link]

Report of task force on reform of tax administration:-

[Link]