The Federal Board of Revenue (FBR) has introduced a new approach for retailers to fulfill their income tax obligations – by integrating them with their monthly electricity expenditures.
This notable transformation is a key aspect of the updated Income Tax Ordinance, 2001, which came into effect on July 1, 2023.
The updated regulation, detailed in Section 99A, defines the process of gathering income tax from retailers by connecting their electricity subscriptions. This provision is exclusively tailored for retailers not falling under the Tier-I category as defined in the Sales Tax Act, 1990 (VII of 1990). It is also applicable to specific service providers who utilize commercial electricity connections.
Key points from Section 99A of the Income Tax Ordinance are as follows:
Tax Collection: Eligible retailers will have their income tax charged and collected through their commercial electricity connections. The specific tax rates are outlined in the income tax general order issued by the FBR.
FBR’s Authority: The Federal Government or the FBR, with approval from the Minister in charge after approval from the Economic Coordination Committee of the Cabinet, can issue an income tax general order. This order encompasses various aspects such as scope, timing, payment, recovery, penalties, default surcharges, adjustments, refunds, and more related to the tax payable under this section.
Collection Methods: The order has the authority to determine whether the tax should be collected based on electricity bill amounts or consumption levels. It can also specify rates, conditions, effective dates for tax collection, and elaborate on record-keeping, return filing, statement submission, and assessment procedures.
Mechanism and Application: The order outlines mechanisms for tax collection, deduction, and payment for individuals or groups. It also specifies which persons or classes of persons, as well as types of income or classes of income, are included or exempted from this section.
Adjustability: The order can stipulate whether the tax collected under this section is adjustable, final, or a minimum regarding any income, along with the extent and conditions of such adjustments.
Application of Other Provisions: Sub-section (1) of section 235 applies to the individuals specified unless specifically exempted under the income tax general order issued under sub-section (2). The tax collectible under this section is not subject to Section 100BA and rule 1 of the Tenth Schedule unless outlined in the income tax general order.
This modification in tax collection methods aims to streamline the process for retailers and enhance revenue collection efficiency. It offers a mechanism for the government to directly collect taxes from retailers through their electricity bills, simplifying the process for convenience and accessibility.
“The difference between tax avoidance and tax evasion is the thickness of a prison wall.”
– Denis Healey
Disclaimer: The information presented in this document is intended for informational and educational purposes only. It is not a substitute for professional advice or legal guidance. While we strive to provide accurate and up-to-date information, laws and regulations may change over time, and interpretations may vary. Therefore, individuals seeking specific legal advice or guidance should consult with qualified legal professionals or relevant authorities. This document should not be considered a legal document or a replacement for authoritative legal sources. It is essential to rely on official legal documents and expert consultation for precise and current legal information and interpretation.
