FBR Tax Pakistan

What is Tax Amnesty Scheme 2019

Tax Amnesty Scheme 2019?
(Last Updated On: June 3, 2019)

What is Tax Amnesty Scheme 2019?

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What is Tax Amnesty Scheme 2019?

The payment of liable taxes is crucial as it is your obligation as a responsible citizen. Without the tax, the government will not be able to meet your expectations. It will raise the standards of living as the government needs taxes for many social and financial projects. The FBR has introduced a tax amnesty scheme where people have a limited time to pay a tax of undeclared or foreign properties. In previous years, this scheme with different terms, conditions and ideas have been introduced. Call for free consultation 03362334402, 03328005028, 03212005087

Rates of Taxes under Tax Amnesty Scheme

There are two types of rates. 

Foreign
       Undeclared asset      4%
       Income                       6%

Domestic
        Undeclared asset   5%
        Income                    2%

PERSONS COVERED 

“Declarant” has been defined as a ‘person’ making declaration. This means all the Persons are eligible to avail the benefit of declaration irrespective of residential and citizenship status except

a) A public company;

b) Holders of public office (definition in Annexure A);

c) Benamidar (definition in Annexure A) of persons in (b) above; and

d) Spouses and dependents of (b) and (c) above.

ASSETS COVERED

Undisclosed, unreported and under reported assets acquired up to 30th June 2018 Ø Undisclosed and undeclared sales made up to 30th June 2018 Ø Undisclosed expenditures incurred up to 30th June 2018 Ø Benami Assets acquired or held on or before date of declaration.

Scheme is not avail below person, asset,  or Proceedings:

  1. Those assets, sales or expenditures with respect to which proceedings are pending in any Court of law; Court of Law under the Ordinance is defined as a “High Court” or “Supreme Court of Pakistan”;
  2. Those assets, sales or expenditures with respect to which the proceedings under Income Tax Ordinance, 2001 (“ITO”), Sales Tax Act, 1990 (“STA”) and Federal excise Act, 2005 (“FEA”) have attained finality. It means that those assets with respect to which proceedings are still pending or which are appealable before court of law are covered in the ordinance and those assets with respect to which proceedings have been concluded and time for filing of appeal against such proceedings has been lapsed are not covered in the ordinance.
  • Any proceeds or assets that are involved in or derived from the commission of a criminal offence;
  1. Gold and precious stones;
  2. Bearer prize bonds; and
  3. Bearer assets.

 

What is tax amnesty scheme

PAYMENT OF TAX

The deadline for payment of tax without default surcharge shall be 30th June 2019. Timeline for payment of default surcharge and rates of default surcharge details are as under:

Type of Asset/ Income

Value

Tax Rate in %

Domestic Immovable Properties – Land

 

Not less than 150% of value prescribed by the FBR under section 68 of ITO or 150% of DC value, whichever is higher

 

1.5

Domestic Immovable Properties – Constructed

 

Not less than 150% DC value where FBR value has not been notified for constructed property

 

1.5

Foreign Liquid Assets not repatriated

 

Not less than Fair Market Value or cost, whichever is higher, translated at exchange rates prevalent at date of declaration.

 

6

Foreign Liquid Assets Repatriated

 

Not less than Fair Market Value or cost, whichever is higher, translated at exchange rates prevalent at date of declaration.

 

4

Unexplained Expenditure

 

Not less than Fair Market Value or cost, whichever is higher

 

4

Undisclosed Sales

 

Not less than Fair Market Value or cost, whichever is higher

 

2

All assets except domestic immovable properties

What is tax amnesty scheme 

Not less than Fair Market Value or cost, whichever is higher

 

4

The rates for domestic immovable properties have been approved at 2.25% effectively. For example, if the FBR approved value of a property is Rs. 1,000,000 then the same will be required to be declared at Rs. 1,500,000 minimum. The tax at 1.5% will be required to be paid on value of Rs. 22,500 instead of Rs. 1,000,000 which will be Rs. 15,000. Therefore, effective rate of tax will become (Rs. 22,500 /Rs. 15,000) 2.25%.

How to file tax amnesty scheme 2019

RATES OF DEFULT SURCHARGE

Time of payment of Tax                                                Default surcharge rate in addition to tax

01st July 2019 to 30th September2019                                         10%

01st October 2019 to 31st December, 2019                                 20%

01st January 2020 to 31st March, 20120                                      30%

 01st April 2020 to 30th June, 2020                                             40%

Asset Valuation and declaration:

For example, Mr. ABC declares a constructed property having empty land cost Rs. 1,500,000 and construction cost Rs. 4,500,000. FBR specified rate for the land is Rs. 2,500,000 and DC rate of land is Rs. 1,500,000. With respect to construction, there is no FBR specified rate, however, DC rate of constructed area in the locality comes to Rs. 5,000,000. Mr. A will declare value of land at Rs. 3,750,000 (i.e. 150% of Rs. 2,500,000) and value of constructed area at Rs. 7,500,000 (i.e. 150% of Rs. 5,000,000). Total immovable property will be declared at Rs. 11,250,000. Tax on such declaration of Rs. 11,250,000 at 1.5% will be Rs. 168,750. If Mr. A pays such amount of Rs. 168,750 on 15th January 2020 a default surcharge of Rs. 50,625 (i.e. 30% of Rs. 168,750) will also be required to be paid in addition to tax amount of Rs. 168,750. Therefore, a total of Rs. 219,375 will be required to be paid by Mr. A

How to file tax amnesty scheme 2019

Income Valuation and declaration:

  1. Before filing of declaration any cash in hand means you are ready to declare so first of all you deposit cash in your bank account at the time of declaration and should not be withdraw up to 30th June 2019. How to file tax amnesty scheme 2019

2.Foreign currency amount declared which is held in Pakistan Before filing of declaration any cash in hand means you are ready to declare so first of all you deposit cash in your foreign currency bank account at the time of declaration and should not be withdraw up to 30th June 2019.

  1. The repatriated foreign liquid assets should be deposited into: a. Declarant’s own Pak Rupee account; b. His foreign currency bank account in Pakistan; c. Invested into Pakistan Banao Certificates; or d. Invested into any foreign currency denominated bonds issued by the federal government.
  2. Foreign liquid assets not repatriated to Pakistan shall be deposited in declarant’s foreign bank account on or before 30th June 2019. How to file tax amnesty scheme 2019
  3. The declared assets, sales and expenditure shall be allowed to be incorporated in declarant’s books of accounts irrespective of the fact that the periods to which such amounts relate are time barred for the purpose of revision of return of income or wealth statement.
  4. No credit of such incorporation, i.e. input tax adjustment, allowance of business expense, depreciation etc. shall be allowed.

Conclusion

The aim of this policy is to generalize the trend of taxation among industrialists, businessmen or property owners. I think this is wonderful scheme for property owners, real-estate business. The burden will be reduced on common people after the equality of laws about tax payments. More proper laws and policies are needed which we expect to have in 2019 to make people aware and active in tax payments and to realise the importance of tax and its role in the success of the country and some awareness program done via digital media, electro media etc…

Objective of Tax Amnesty Scheme

As we see that the objective of amnesty scheme is just to convert people a part of tax network who feel themselves free from any such thing. It is a very positive and beneficial step which will definitely show its results in the near future. The people who do not take this step need to do it now. It will be a source of much relaxation to you also as you do not need to worried about your hidden property which can cause you serious harm if you doesn’t follow the tax amnesty laws. It is the right time to take advantages of this policy and also give benefits to our country.

Pakistan’s debts have been extended to almost $103.4 billion. The scheme is not to grab money from the people under the title of tax. Not at all! The government has some more intentions to save the country from other loans or financial problems. There are no extra payments and difficulties to encourage all those who have already declared money by paying the certain tax amount. In spite of all this, people are still hiding the properties because of fear or uncertainty. It is a major reason which prevents them to take part in this scheme which is necessary both for you and for your country. But we need to break these fears and doubts. It is the only way left to us through which we can make the economic status of our country bright and secure.

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