ST Registrations: FBR launches physical verification of manufacturers

 ST registrations: FBR launches physical verification of manufacturers

ISLAMABAD: In a major move to check fake sales tax registrations of manufacturers, the Federal Board of Revenue (FBR) has ordered physical verifications of all manufacturers registered from July 1, 2021, onwards.

In this connection, the FBR has issued instructions to all field formations on the sales tax registration in the category of manufacturers and physical verification of the business premises.

The field formations have started physical verification exercise of business premises of all “manufacturers”, registered from July 1, 2021, across the country.

The FBR has simplified the registration process through the introduction of the online process. The registration process after electronic means has significantly reduced the time registration time to a maximum of one week. Earlier the registration process particularly the manufacturing category was taking a lot of time, which was a major hurdle in a business startup.

The FBR has linked up Nadra biometric system and digitize the whole process to remove the bottleneck in the registration process. This is considered one of the major achievements of the FBR. The physical survey was kept in the second phase subsequent to registration to facilitate the business.

Unverified invoices: IR Commissioner can seal Tier-1 retailers’ outlets: FBR

According to the FBR’s instructions, under Rule 5 and 7 of the Sales Tax Rules, 2006, for applicants seeking online registration for sales tax as “Manufacturer”, post verification of business premises is mandatory to be conducted by respective field offices. Reportedly, the applicants are being registered as “manufacturers” online through an automated module that needs post-physical verification of business premises by the field formations.

“In case of a manufacturer, the Board may require post-verification through field offices or a third party authorized by the Board”, rule 5 of the Sales Tax Rules said.

It is, therefore, requested that the taxpayers who got registered as “manufacturer” from July 1, 2021, may be physically verified, if already not, and reported to the Board by March 31, 2022, the FBR added.

BECOME INCOME TAX FILER | WHY & HOW TO BECOME TAX FILER |YHA

 

BECOME INCOME TAX FILER | WHY & HOW TO BECOME TAX FILER |YHA

In every country, tax collection is one of the major source of revenue collection to run and manage resources smoothly. Without tax collection a country cannot survive or / and grow for a longtime. In order to get tax from the citizens of any country or Companies operating in the jurisdiction of the country, they (citizens and companies) must have to file their tax returns and pay taxes accordingly.

Pakistan is the country where tax collection is only the main source for revenue collection to run the country. For this FBR is the authorized department to collect the revenue. Under the Income Tax Ordinance 2001, as per Section 114 (1) of the Income Tax Ordinance 2001, the law bound some persons to File Income Tax Return Annually.

HOW TO BECOME A TAX FILER | ACTIVE FILER

Tax Filer Status or Active Status (of Individual or AOP or Company or NGO) is the status on FBR portal (FBR site) starts to show.

In order to become tax filer you just need to make NTN and submit Income Tax Return on time, normally 30^th Sep Annually for Individual and AOPs, and 31^st December for Companies and NGOs if the FBR do not extend the due date.   

Here is the simple guideline to make NTN and file Income TaxReturn.

Now the cases come if the person file its Tax Return after due date then what will happen, how he will become Filer, when his filer status will become active. There are many questions like this. So you not need to worry. Here are their solutions in this video. You can get all the solutions of them.

 

 

       

If person are not able to file his Income Tax Return in due date or file his Tax Return after due date then he must have to pay ATL Surcharge (a penalty imposed to include a person in Active Tax Payer List of FBR).

ATL SURCHARGE AMOUNT

Here is the breakdown of the ATL Surcharge to be paid as per category of the persons.

 

Individual                                         Rs. 1,000

AOPs/ Partnership Firms                 Rs. 10,000

Companies / NGOs                          Rs. 20,000

After paying the ATL Surcharge and submitting the relevant year’s income tax return, FBR system will update the Filer Status within 24 hours.   

HOW TO CHECK TAX FILER STATUS

This status can be verified or checked by online verification on FBR Portal or by sending ATL CNIC # to 9966 through SMS of your phone. E.g. ATL 35201-49999999999-9

 

WHY TO BECOME TAX FILER | BENEFITS OF TAX FILER

Government gives privileges by reducing tax up to 100% to those persons who file their Income Tax Returns timely as compare to those who either do not file their tax returns or file but late. Further, those who do not file their tax returns timely , government also impose them penalty with different range under section 182 of the Income Tax Ordinance 2001.

• Lower rates of tax deduction at source by banks on both profits and cash withdrawals
• Reduction on withholding tax (tax already deducted from your income and gains) when registering and transferring motor vehicles
• Lower rate of tax on buying and selling of property
• Lower withholding tax rate on capital gains on sale of securities
• Charges for tax on dividend will be lower
• Lower rate of withholding tax on prize bond winnings
• Allows you to claim back overpaid tax that has been withheld

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PARTNERSHIP FIRM REGISTRATION IN PAKISTAN & ITS TAX COMPLIANCES

PARTNERSHIP FIRM REGISTRATION IN PAKISTAN & TAX COMPLIANCES

When two or more individuals make an agreement to form and establish a business a Partnership Firm created. In legal terms it is called Association of Persons (AOP). Partnership Firm govern under the frame work of Partnership Act 1932. AOP performs and work jointly and enjoys all benefits with sharing of works and management. Other than being govern under the framework of Partnership Act 1932, all other major regulatory bodies are same as connected with the Sole Proprietor business. Like Sole Proprietor business, AOP / Partnership Firm is also operated under non-corporate structure.

REGISTRATON OF AOP IN PAKISTAN

With less compliances and working under no regulatory framework as like Sole Proprietorship, Partnership Firm has to be registered in the following Government Departments/ Regulatory Bodies

            I.            Firm of Registrar Office in the District (Form C )  

         II.            FBR (NTN Registration)

      III.            FBR (For Sales Tax (GST)  if the person is selling goods)

   IV.    PRA / SRB / KPRA/BRA (For Sales Tax if the person is selling Services)

     V.            CUSTOMS DEPARTMET (works under FBR) through PSW (Pakistan Single Window) if the person is / to be involved in IMPORT / EXPORT

 VI.  EXCISE & TAXATION DEPARTMENT for payment of professional taxes.

  VII.   CHAMBER OF COMMERCE like LCCI, KCCI. its optional.

VIII. IPO for Trade Mark registration. It’s not mandatory but optional. If the Sole Proprietor is keen to save and protect his business Goodwill and BRAND NAME then he (SOLE PROPRIETOR) must register his brand name / TRADE MARK (LOGO) / PATENT / DESIGNS / COPYRIGHT on time before its gets too late.

 IX. EOBI if the Sole Proprietor business exceed 5 or more employees in his entity then he is liable to be registered with this Department.

 X. PESSI / SESSI / KPK SOCIAL SECURITY / BALUCHISTAN SOCIAL SECURITY if the Sole Proprietor business has any of the employee who is getting Salary in his entity as defined in relevant province Employees Social Security Law (Rs.22,500 for PESSI) then he is liable to be registered with SOCIAL SECURITY Department.

  XI.     OTHER LABOR LAWS as per defined limit and applicability.

 TAX COMPLIANCES FOR AOP / PARTNERSHIP FIRM

Once a Partnership Firm gets registered in any of the above department then the Firm shall bound to make compliances of that regulatory body as per the relevant law.

Here is the details of Tax Compliances which any of the Firm (Partnership) shall have to make mandatory regardless of his business volume and business sector.

For further details and guidance you may watch our YouTube channel YOUSAF HASSAN ASSOCIATES regarding Tax Compliances of a Partnership Firm 

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SOLE PROPRIETOR BUSINESS REGISTRATION AND TAX COMPLIANCES

One of the business model is to start and register your business in Individual Capacity which terms as  Sole Proprietorship (while a Single Member Private Company is a separate business model). Sole Proprietor performs and work independently and enjoys all benefits without sharing with any other partner / shareholder, and it is its one of the core benefit of the Sole Proprietor business model. Income Tax Return Filing method is also very similar to that of Partnership Firm or Company with the addition of Wealth Statement filing for the Sole Proprietor.

REGISTRATION OF A SOLE PROPRIETOR WITH REGULATORY BODDIES

With less compliances and working under no regulatory framework as like Partnership Firms (works under Partnership Act 1932), Private Companies (works under Companies Act 2017), and Sole Proprietor Business has to be registered in the following Government Departments/ Regulatory Bodies

            I.            FBR (for NTN REGISTRATION) 

         II.            FBR (For Sales Tax (GST)  if the person is selling goods)

    III.    PRA / SRB / KPRA/BRA (For Sales Tax if the person is selling Services)

  IV.            CUSTOMS DEPARTMET (works under FBR) through PSW (Pakistan Single Window) if the person is / to be involved in IMPORT / EXPORT

 V.   EXCISE & TAXATION DEPARTMENT for payment of professional taxation.

 VI.       CHAMBER OF COMMERCE like LCCI, KCCI. Its optional.

VII. IPO for Trade Mark registration. It’s not mandatory but optional. If the Sole Proprietor is keen to save and protect his business Goodwill and BRAND NAME then he (SOLE PROPRIETOR) must register his brand name / TRADE MARK (LOGO) / PATENT / DESIGNS / COPYRIGHT on time before its gets too late.

VIII. EOBI if the Sole Proprietor business exceed 5 or more employees in his entity then he is liable to be registered with this Department.

IX. PESSI / SESSI / KPK SOCIAL SECURITY / BALUCHISTAN SOCIAL SECURITY if the Sole Proprietor business has any of the employee who is getting Salary in his entity as defined in relevant province Social Security Law (Rs.22,500 for PESSI) then he is liable to be registered with SOCIAL SECURITY Department.

  X.         OTHER LABOR LAWS as per defined limit and applicability.

TAX COMPLIANCES FOR A SOLE PROPRIETOR

Once a Sole Proprietor gets registered in any of the above department then he (SOLE PROPRIETOR) shall bound to make compliances of that regulatory body as per the relevant law.

Here is the details of Tax Compliances which any of the Sole Proprietor Business shall have to make mandatory regardless of his business volume and business sector.

TAX COMPLIANCES CHART- SOLE PROPRIETOR BUSINESS

Further you may get more and detailed understanding on our YouTube channel YOUSAF HASSAN ASSOCIATES YOUSAF HASSAN ASSOCIATES 

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BENEFITS OF A SOLE PROPRIETORSHIP (INDIVIDUAL BUSINESS)

 

BENEFITS OF SOLE PROPRIETORSHIP

Sole Proprietorship (Individual Business) has many benefits as compared to  Private Limited Companies; some of which are:

1. Sole Proprietorship (Individual Business) is the easiest and simplest way to do business in Pakistan.
2. The registration process is very simple and quick 
   
   
3. Sole Proprietorship and owner is the same person so there is no need of any meeting of Board of Directors (in case of Company) or Partner’s Meeting (in case of AOP).
4. The owner is not accountable to anyone.
5. Very few lawful regulations and compliances are to be followed as compared to a private limited company.
6. Since the owner and business income is the same; therefore, the income tax is only required to be paid once a year.
7. Quick decision making process
8. No separate Income tax Return need to file as Sole Proprietor Business Return also included in Personal Return format on IRIS Portal.
9. 
   
   
10. Only one time taxation is imposed (on the basis of Business Profit).
11. Obligation to Withhold Tax as a Withholding Agent against Payments (U/S 153, U/s 233 , U/s 155) starts beyond a threshold Limit. (100 Million Turnover in any of the previous Tax year from 2017 or onwards.)
12. Obligation to pay Tax on Sales (Turnover Tax u/s 113) regardless of Profit / Loss starts beyond a threshold Limit. (100 Million Turnover in any of the previous Tax year from 2017 or onwards.)
13. All the profits belong to the owner only
14. Financial records accessible to the owner only.
15. No Cost of Statutory Annual Audit.
16. Highly Recommended for STARTUPS (if they are nor concerned about, Name Security, Corporate Structure, raise Capital / Investment)

CONTACT US:

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