Islamabad: FBR has introduced a new system ‘Swap Payment Receipt System’ to prevent withholding tax evasion.
The Federal Board of Revenue (FBR) has introduced a new system called ‘Swap Payment’ to prevent withholding tax evasion and promote documentation by withholding agents to deposit withholding tax deducted from suppliers of goods and services directly to the government exchequer. ‘Receipt System’ has been introduced, in this regard the Federal Board of Revenue has officially issued a notification through which the Federal Board of Revenue has amended the Income Tax Rules, 2002.
Under this amendment notification, FBR has mandated direct deposit of withholding tax deducted from suppliers of goods and services by withholding agents to prevent evasion of withholding tax and promote documentation.
The Federal Board of Revenue has introduced a swap payment receipt system to immediately deposit the withholding tax deducted by the withholding agents directly into the exchequer instead of retaining it.
Under this system, the amount of tax withheld on transactions carried out by notified swaps with holding agents will automatically go directly to the exchequer immediately instead of going to the holding agents.
FBR officials say that the main objective of this initiative is to increase tax revenue and tax net. By implementing this system, tax collections in terms of withholding tax will increase and secondly documentation will also increase because first withholding agents will withhold from suppliers. The withholding tax was retained and submitted to the FBR along with the withholding tax statements and returns, but under the new proposed system, the withholding tax amount is directly deposited into the exchequer with the issuance of invoices by the swap agents. I will leave.
Apart from this, under this new system, the withholding agents will also have to provide the details of the suppliers and buyers from whom the tax will be withheld, the details of the supply made by the suppliers and the purchase and sale of the winders. FBR will be able to know which will prevent evasion of withholding tax as well as trace the supply, purchase and sale of goods for which tax is not paid.
As per the rules issued by FBR, a new chapter namely Part 4 has been added after Part 3 in Chapter 9 of Income Tax Rules 2002.
The rules state that these amended rules will apply to all swap agents notified by the Federal Board of Revenue and all swap agents notified by the FBR under the new chapter number four introduced in the Income Tax Rules. Requirements have to be met and these notified swap agents have to integrate with FBR by installing point of sale system from licensed person or company of FBR and swap agents have to register on FBR’s web based portal portal or FBR. will be able to issue digital invoices through an integrated computerized system.
By issuing these digital invoices, the amount of tax withheld on all transactions by the swap agents will go directly to the government treasury and the remaining principal amount will go to the swap agent.
According to the proposed rules, each swap agent will be issued a swap ID while updating their IRIS profile and each notified swap agent will be issued a fiscal electronic device system and software issued by an FBR approved and licensed company. The electronic swap payment receipts issued under this system must be installed and linked with the FB cover and the swap ID and SPR numbers will be mentioned on these receipts in addition to the names, addresses and addresses of the swap agents and suppliers on these receipts. NTN numbers and sales tax registration numbers will also be recorded.
In the case of the contract for the quantity of goods to be supplied and in the case of services, the details of the contract for the supply of services must also be given. Enter and where applicable the number of the winders and the number of the digital invoice issued to the holder of the supplies from which the tax is being withheld must also be given, besides the total transaction amount with and without tax. Also, withholding income tax section and amount also have to be mentioned.
Similarly, in the sales tax section and the amount of sales tax withheld in this regard, the amount of federal excise duty withheld in the federal excise duty section must also be stated, while in the provincial sales tax section, the sales tax applied to the provincial tax must be stated. The amount of tax withheld must also be stated in the statement.
The proposed rules further state that Swap Payment Receipt (SPR) will be the only proof of tax collection and tax deduction along with claiming tax refunds and tax adjustments. For extension of the date of registration and integration, an application has to be made to the concerned Commissioner of Inland Revenue through IRIS system with reasonable justification and the concerned Commissioner of Inland Revenue will be able to extend the period from thirty days to a maximum of ninety days.
The rules further state that swap agents who are found guilty of violation will be prosecuted for fines and penalties under the Income Tax Ordinance 2001.
