The Federal Board of Revenue (FBR) has issued a draft for further amendments to the Income Tax Rules, 2002, under which a new procedure has been proposed for taxpayers who file their returns after the due date to be included in the Active Taxpayers List.
According to the FBR, the draft amendments to the Income Tax Rules, 2002 have been issued for public comments and suggestions. Objections and proposals regarding the proposed amendments can be submitted to the FBR within seven days of publication of the notification in the official Gazette.
Under the proposed rules, the procedure for filing income tax returns under Section 143 of the Income Tax Ordinance, 2001 by non-resident ship owners, charterers and authorized shipping agents is proposed to be made electronic.
According to the proposed amendments, the return required under Section 143 will be filed through a specific electronic return available on the FBR’s computerized system, IRIS. The return will include such details, declarations, statements, certifications and other system features as may be prescribed by the FBR from time to time. The required documents, certificates, statements and electronic records will also have to be submitted along with the return.
According to the draft, following receipt of the Vessel Intimation Report (VIR) by the Pakistan Single Window (PSW), information relating to the relevant vessel will be electronically transmitted to IRIS. This information will include the vessel’s name, expected time of arrival and departure, VIR number, the NTN of the vessel’s master or authorized shipping agent who submitted the VIR, as well as the NTNs of all shipping agents and co-loaders associated with that VIR, along with other prescribed information.
The registration details of shipping agents will also be electronically integrated between PSW and IRIS. Under the proposed procedure, upon receipt of the relevant VIR, IRIS will automatically generate an electronic return, and only one return will be generated for each unique VIR.
The return will show the relevant NTNs, the gross income earned from the voyage, including freight, container detention charges, container service charges, terminal handling charges and other receipts taxable under Section 7, as well as details of the relevant tax payments.
According to the FBR’s draft, the vessel’s master, authorized shipping agent and relevant co-loader will generate a specific PSID against the prescribed VIR and provide the required details relating to freight and tax liabilities.
Upon payment through the PSID, a CPR will automatically be issued and electronically linked with the relevant VIR and NTN. The payment details will also be automatically incorporated into the relevant return.
The return cannot be submitted until all required payments against the relevant VIR have been made and the CPRs have been attached to the return.
Under the draft, at the time of filing the return, or when applying for an extension under Section 143, the vessel’s master or authorized shipping agent will also submit an electronic declaration stating that returns have been filed by all shipping agents and co-loaders associated with the relevant VIR, and that the information provided is true, complete and correct.
In case of an application for an extension to file the return under Section 143, the application will have to be submitted before the vessel’s departure, and the reason for seeking the extension will have to be specified.
According to the draft, the application must also state the expected gross amount taxable under Section 7 and the expected amount of tax payable. In addition, an undertaking to file the return within the prescribed period, the relevant travel documents, and security equal to the expected amount of tax payable will have to be provided.
The security may be in the form of a bank guarantee, pay order, or a post-dated cheque whose date is not more than 30 days beyond the vessel’s departure date.
According to the proposed amendments, after the return has been filed and the tax has been paid, or after an application for an extension under Section 143 has been approved, IRIS will electronically transmit confirmation to PSW. PSW will make this confirmation available to the Customs Collector or an authorized officer of the FBR.
PSW will maintain a record of this transmission, including the relevant reference number, date and time.
The FBR draft further states that information provided through PSIDs and CPRs will form part of the records under the Income Tax Ordinance and may be used for assessment, amendment, audit, verification, enforcement, recovery or other proceedings.
The relevant shipping agents, co-loaders, authorized shipping agents, non-resident ship owners, charterers, operators, vessel masters and other relevant persons will be required, whenever necessary, to provide accounts, freight records, manifests, contracts, electronic records and other information.
According to the draft, recovery proceedings for tax payable under Section 143 will be initiated against the authorized shipping agent under the Income Tax Ordinance. However, the authorized shipping agent’s right to recover this amount from the vessel’s master, charterer, shipping agents, co-loaders or other persons associated with the relevant return, in accordance with the Ordinance, will not be affected.
Also Read: FBR extends deadline for filing income tax returns
