F.B.

R (Federal Board of Revenue)

The Federal Board of Revenue is a statutory body is appointed by the Federal
Government and is attached to the Ministry of Finance. It is the highest executive in
the administrative of Income Tax La and has poer to ma!e rule and issue orders"
instructions and directions to all officers and persons employed in the executive of the
act" but not to income tax appellate tribunal or courts of la. Its special poers duties
and functions.
Federal Board of Revenue is the highest authority in the frameor! of Income#Tax
$rdinance %&&'. It assigns several poers and performs certain functions under the
ordinance. The various poers and function of Federal Board of Revenue are as
under(
Powers and Functions:
). *eclare any foreign unincorporated association or company.
%. *etermine a commercial year as previous year.
+. ,ear appeal against refusal to grant recognition to provide fund.
-. Recogni.e provident fund" super annotation fund and frame rules therefore.
/. Recogni.e 0ualified persons to practice as income tax practitioners.
'. *etermine place of assessment and 1urisdiction.
2. Grant exemption from tax to nely established understandings.
3. 4ertify an institution as conducting research in 5a!istan.
6. 7pprove scheme regarding employee training.
)&. Grant approval to leasing companies and moderates.
)). 8pecify method of accounting.
)%. 7pprove charitable institutions.
)+. Ma!e rules for appointment of deduction.
)-. Ma!e rules for taxation of unexplained income.
)/. Issue circulars for taxpayers and tax officers.
)'. 9xercise general administration.
)2. 7ppoint income tax authorities.
)3. *etermine 1urisdiction.
)6. 5rescribe forms.
%&. 7ppoint auditors.
%). 7ppoint private agency.
%%. Issue advance rulings on application of non resident.
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INCOM!"#$ OFFICR
Income tax officer is appointed by the Federal Board of Revenue. Taxation $fficer
means 7dditional 4ommissioner" *eputy 4ommissioner" 7ssistant 4ommissioner"
Income Tax $fficer" 8pecial $fficer or any other officer or a person appointed as such
under %ection &('5). ,e is appointed by Federal Board of Revenue. The Income Tax
$fficer is appointed by Federal Board of Revenue and is responsible to 4ommissioner
of Income tax and Inspecting 7ssistant 4ommissioner.
PO(R% #N) F*NC"ION% OF INCOM "#$ OFFICR:
,e en1oys both administrative and 1udicial poers hich are given belo(
). ,e issues statutory notices for submission of returns and for collection of
income#tax.
%. ,e ma!es best 1udgment and assessment.
+. ,e ma!es additional assessment here income has escaped or under#
assessed.
-. ,e registers the firm.
/. ,e issues certificates the amount of tax due from an assessee to be collected
by the Tax Recovery $fficer.
'. 8ubmit return.
2. 4ompliance ith notice.
3. Give notice of discontinuance of business.
6. ,e refunds excess tax paid by the assessee.
)&. ,e imposes penalty for concealment or furnishing inaccurate particulars of
income.
)). ,e frames assessment order.
)%. ,e ma!es regular assessment after scrutiny.
)+. ,e rectifies mista!es in his on assessment.
)-. ,e can ta!e evidence on both.
)/. Impose penalty in case of failure to submit return" compliance ith none.
)'. Impose penalty for concealment or furnishing incorrect particulars of income.
)2. Refund excess tax paid by the assessee.
)3. Frames assessment orders.
)6. Ma!es a register of assessment and file scrutiny of evidence.
%&. Recogni.e the mista!e.
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"O"#+ INCOM:
:nder the Inco,e "a- Ordinance &..' Total Income means" the income of
assessee during the income year from all sources or head of income credited under
the Income Tax La. In other ords total income or a person for a tax year means the
total on his incomes from the folloing heads of income.
). 8alaries
%. Interest on 8ecurities
+. ,ouse 5roperty
-. Business" 5rofession or ;ocation
/. 4apital Gains
'. $ther 8ources
Total income is sum total of all incomes specified under %ection 15 of Inco,e "a-
Ordinance &..' as reduced by the amounts and rebated under various provisions of
the ordinance.
INCOM /#R:
The Inco,e "a- Ordinance &..' does not assign any specific meaning to the
income year< ordinarily the year in hich the income is earned is !non as income
year. There can be different income years under different situations. 7n assessee can
exercise his option of income year strictly in conformity ith the legal provisions of the
income#tax ordinance.
The present ordinance refers" in respects of income years" to the meaning assigned to
the term by the repeated ordinance. 8uch provisions are summari.ed belo.
a. The financial year next proceeding the assessment year. Financial year is the
period from )
st
=uly to +&
th
=une next folloing.
b. 7ny period that may be specific by Federal Board of Revenue.
c. 7ny period this is deemed to be as income year.
d. 7ny period in respect of hich a return of total income is re0uired to be
furnished under the provision of income tax ordinance.
%#+%!"#$:
8ales Tax is a levy or tax on the sales value of the good hich have been made
taxable under the sales tax act. It is a tax recovered by the seller of goods or services
from the purchaser in addition to the value of the good. It is chargeable only in respect
of those goods and services hich have been declared chargeable for this purpose.
The collects the sales tax and pays over the amount so collected to the tax authorities.
8ometimes the price 0uoted by the seller is inclusive of sales tax but normally sales
tax is shon as a separate item on the sales invoice or cash memo.
The %ales "a- #ct 100. empoers the Federal government to levy the sales tax on
the folloing items.
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). sales
%. importation
+. exportation
-. production
/. manufacture
'. consumption of goods
INCOM!"#$ #*"2ORI"I%:
The income#tax authorities have been specified in the Inco,e "a- Ordinance3 1040.
Their appointment" 1urisdiction and functions are also specified in the ordinance.
7mong the income#tax administration Federal Board of Revenue is the supreme
authority ithin the frameor! of the income tax ordinance.
The Inco,e "a- Ordinance &..' specifies the provisions relating to the various
classes of tax authorities. It deals ith the provisions regarding(
a. =urisdiction
b. 7ppointment
c. Functions of these provision.
The folloing different classes of income tax authorities may be appointed.
). 7dministration 7uthorities.
%. Investigating and Intelligence 7uthorities.
+. Training and Research 7uthorities.
-. Inspection 7uthorities.
/. Independent 5rivate 7gencies" Firm or
'. 4ompanies such as 7uditors" 8urveyors and ;aluers.
#%%%%:
7ssessee means a person by hom income tax or any sum of money is payable
under the act and includes(
). 9very person in respect of hom any proceeding has ta!es place under the act
for the assessment of his income or loss sustained by him or for the amount of
refund due to him.
%. 9very person ho is re0uired to file a return of income at the end of accounting
year or as and hen re0uired by the income tax officer under the act.
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NON R%I)N":
The Inco,e "a- Ordinance &..' has defined the term non#resident as" a person
ho is not a resident of 5a!istan i.e." a non#resident means a person ho does not
satisfy the re0uirements of %ection &(5.). In other ords an assessee ho fails to
0ualify as a resident under the respective tests mentioned above ould be regarded
as a non#resident for all purposes of the Inco,e "a- Ordinance &..'. 7 non#
resident" in relation to any income year" means(
7n Individual" ho(
). is in 5a!istan in that year for less than )3% days <or
%. is in 5a!istan for less than +'/ days during the four years preceding that year
even if he as in 5a!istan for 6& days in that year< or
+. Is in 5a!istan for at least +'/ days during the - years preceding that year but is
in 5a!istan for less than 6& days in that year.
-. 7 ,indu undivided family" firm" or other association of person the control and
management of hose affairs is situated outside 5a!istan.
/. 7 company the control and management of hose affairs id situated outside
5a!istan in that year.
PR%ON:
The Inco,e "a- Ordinance &..' in %ection &(5&) has not defined the term person
in clear term. It simply includes certain entities in the term person. The court in a
number of cases has also not defined the term person. In vie of all the above the
ord >person? includes the folloing(
)@ Individual.
%@ 7 Firm.
+@ 7n association of persons incorporated" formed" organi.ed or established in
5a!istan".
-@ 7 company or a corporate body formed by or under Co,6anies Ordinance
1075 or any other la in force in 5a!istan.
/@ 7 local authority.
'@ 9very other artificial 1udicial person.
It has also been held to include a minor Aor a person of unsound mind@.
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