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FBR Verifying Exemption Certificates

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  • Tanzil Faisal And Co
  • 3 Comments
  • March 29, 2014

FBR Verifying Exemption Certificates

Date: March 29, 2014

The Federal Board of Revenue is verifying authenticity of thousands of exemption certificates
used for clearance of imported consignments without payment of withholding tax during July 1,
2013 – January 2014. The FBR issued instructions to field formations here on Friday. The FBR
has launched verification of exemption certificates on national level based on discrepancies
detected in the certificates issued by RTO Faisalabad.

According to the FBR instructions, the FBR has detected misuse of the exemption certificates
issued to the importers under section 148 of the Income Tax Ordinance, 2001. Sources further
said that the data analysis of the exemption certificates revealed misuse of the facility available
to the importers. It would be verified whether exemption claimed/allowed through certificate is
genuine? Secondly, whether the tax deducted under section 148 is accurate as per prescribed
rate? Thirdly, whether these imports are made for manufacturing purposes and for their own
consumption)? Whether the imports have been used by commercial importers on the basis of
exemption certificates without paying any taxes. The FBR is also verifying whether the exempt
imports are related to the industrial undertaking for the purpose of manufacturing? The FBR said
that the Regional Tax Office (RTO)-I, Karachi while monitoring section 148 has obtained
information from WeBOC regarding the imports cleared by the Customs Authorities on
production of exemption certificates issued by RTO Faisalabad for the period July 01-07-2013 to
31-01-2014. The concerned RTO is therefore requested to please take up this exercise of
verification of genuineness of the exemption certificates and other aspects of imports as
mentioned in on priority for recovery of any short deduction identified.

Sources said that a study was conducted by RTO, Karachi responsible for monitoring of
withholding taxes (WHT) under section 148 by obtaining information from Collectorate of
Customs Karachi/Central Directorate WeBOC with regards to imports cleared by the Customs
Authorities on production of exemption certificates issued by different Commissioners IR all
over Pakistan for the period 1st July, 2013 to 31st January 2014. Over four hundred thousand
lines of data were analysed during this study.

Prima facie serious discrepancies have been observed which if cross verified can result into huge
revenues. RTOs are requested to please look into the data from the following perspective:

1. As to whether exemption claimed/allowed through is genuine? (Exemption certificate veracity)

2. Whether the tax deducted under section 148 is accurate as per prescribed rate?

3. Whether these imports are made for manufacturing purposes (own consumption) or for
commercial purposes? If discrepancy detected take appropriate action to recover the short
payment.

4. Whether the exempt imports are related to the industrial undertaking or otherwise?

5. Any other area you like to verify?

 

Business Recorder, 2014

3 Comments

ZAFAR & ASSOCIATES
April 20, 2015 @ 06:03

“No specific exemption certificate is required in case of statutory exemption (e.g. exemption provided under The Second Schedule to Income Tax Ordinance, 2001), and there is no need of applying for seeking exemption in this case either online or manually to The Commissioner Income Inland Revenue.”

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Sanam khan
May 27, 2016 @ 03:50

Hi... Would u please let me know the companies claiming that they are exempted from income tax but are not willing to provide tax exemption certificate ... Whether it is possible to get their certificate from fbr?

Reply
M. Rashid
June 12, 2019 @ 09:06

A company has provided exemption certificate but FBR system is deducting tax while I post their payment.How I can check that certificate is still valid or has revoked?

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