INTERNSHIP REPORT

REGINAL TAX OFFICE FEDERAL BOARD OF REVENUE MULTAN

Submitted to: Mr Allah Bakash Khan

Submitted by: Muhammad Ali Raza

Class: M.COM

Roll No: MCM-16-26

Session: 2016-2018

Department of Commerce

BahauddinZakariya University, Multan

1|Page
Copy of Internship Certificate Issued by Organization

2|Page
 Acknowledgment

First of all, I would like to thanks my supporting and caring parents, my great
father Abdul Rashid Khan and sweet affectionate mother Qamar Sultana which
make me able to survive in storms of life and today I am here by their love and
prayers. I would also like to thank my elder brother Muhammad ArqamRaza Khan.
They are my keen support through every thick and thin. I would also like to thank
all my teachers, fellows and friends for their continual assistance, advice, and
prayers throughout my study.

I take this prospect to my internship report Coordinator Professor AB KHAN that

expressed his deep appreciation and me would like to thank him for his wisdom
and inspiration.

I also escalate the organization and all its members because of their guidance and
care about me. I found great care and polite environment out there. They all give
me affectionate care and a very profound environment.

Muham
mad Ali Raza

3|Page
 Dedication

I devote this to my dearly loved parents and teachers for all their love and
consideration which has made it potential for me to build it up to this
internship/training and as well as the Internship advisor Mr AB Khan who is my
teacher and coordinator of M.Com bestowed me with the bravery the obligation
and the consciousness to pursue the best likely way By his unmatchable manner
and by best possible training.

4|Page
 Table of Contents

Sr.# Contents Page.

#
1 Introduction /Background 06

2 Organizational Structure/Hierarchy 09

3 Services and purpose of FBR 11

4 Income Tax 13

5 Departments 16

6 Practical Work 18

7 SWOT analysis 29

8 Conclusion 31

9 Recommendations 32

5|Page
 “
1) Introduction
FEDERAL BOARD OF REVENUE” which is
the largest tax collecting organization in
Pakistan & is having a thoroughly established
chain throughout the country. An extensive network of 4large
taxpayer unit and 18 regional tax offices makes it one of the largest
organizations in Pakistan only.
1.1. Vision Statement:

1. To be an organization, which is
2. Modern
3. Progressive
4. Effective
5. Credible for optimizing revenue by providing quality service and promoting compliance with
tax and related laws

1.2. Mission Statement:

Increase the capability of the tax system to collect taxes through the application of modern
techniques, providing taxpayer assistance and by creating a motivated, dedicated and satisfied,
professional workforce.
1.3. Values:
I. Integrity
II. Professionalism
III. Teamwork
IV. Courtesy
V. Fairness
VI. Transparency
VII. Responsiveness

6|Page
1.4: Brief History:

When Pakistan came into being, the Government of Pakistan promulgated the Income Tax Act,
1922, as amended up to the date for regulating the taxation system in Pakistan. The provisions of
the Act were extended to the whole of Pakistan except the specified area. A Taxation Inquiry
Committee was introduced in 1958 which was consisting of officials and the representatives of
trade and commerce. Taxation Inquiry Committee submitted a report after a keen analysis
of prevailing tax system and suggested some recommendations. Some of the recommendations
were accommodated which resulted in the amendment of Income Tax Act, 1922. Before 1959,
the super tax was imposed on the incomes of all the persons but in a registered firm and
companies. In 1959, the rates of each slab were expressed as a percentage of income considering
the recommendations of Taxation Inquiry committee.

Before 1960, the financial year was considered from 1 st April to 31st March but in 1960, it was
changed from 1st July to 30th June. In 1961, FBR introduced an "Income Tax Committee". The
main purpose of introduction of such committee was to make recommendations for
simplification of the Income Tax Act, 1922 and procedure of taxation. Before 1965, an
assessment officer has assessed the income and determined the tax liability of the person but in
1965, "Self-Assessment Scheme" was introduced. Till 1979, a lot of amendments was made in
the context of the Income Tax Act, 1922. As a result of these amendments, the Act became a
complicated law and difficulties arose in its working. Keeping these difficulties in view, the
Government promulgated a new income tax law namely "The Income Tax Ordinance, 1979"
through the Finance Ordinance on June 28, 1979 and included all the basic concept of the
repealed Act, so that the benefit of the whole case law built up over the last 57 years is not
rendered useless.

In 1985, the Federal Government formed a National Tax Reform Commission. It was consist of
members of Senate and National Assembly, high government officials and renowned
industrialist. The major purpose of such commission was to suggest way and means improve the
existing structure of tax laws in Pakistan. In 1999-2000, under the Income Tax Ordinance, 1979,
an income tax survey was conducted to analyze the prevailing taxation structure and to procure
the suggestions and recommendations from surveyors. Many tax amnesty schemes were

7|Page
introduced under the Income Tax Ordinance, 1979. These schemes were introduced to provide a
chance for black money holders so that they can change their black money into white money.
Latest scheme was introduced in the year 2002. 

Under section 1, the Ordinance specifies that The Income Tax Ordinance, 2001 shall be the short
title of the law. Under section 1, the Ordinance specifies that the Income Tax Ordinance, 2001
shall extend to the whole of Pakistan. According to section 3 The Income Tax Ordinance, 2001
overrides other laws enforceable in Pakistan. It means, in case of any contradiction between the
provisions of the Income Tax Ordinance, 2001 and
any other law of the country, the provisions of
the Income Tax Ordinance, 2001 shall prevail. The preamble of the Ordinance specifies the
object of law. It specifies that the Income Tax Ordinance, 2001, is promulgated to consolidate
and to amend the law relating income tax and provide for matters ancillary to and connected with
the income tax. The FBR under the authority of section 237 of the Income Tax Ordinance, 2001
made the Income Tax rules, 2002.

These rules were published on July 1, 2002, in Extraordinary Gazette of Pakistan on pages 1819
to 1966. To update the income tax law in Pakistan according to the requirements of time,
different methods of changes have been adopted by competent income tax authorities like
S.R.O's and Circulars etc. Finance Act is the regular source of change; it is presented in the
month of June in each year. Finance Act, 2009 is one step to the continuous process of change.

The Central Board of Revenue (CBR) was created on April 01, 1924 through the enactment of
the Central Board of Revenue Act, 1924. In 1944, a full-fledged Revenue Division was created
under the Ministry of Finance. After independence, this arrangement continued up to 31st
August 1960 when on the recommendations of the Administrative Re-organization Committee,
FBR was made an attached department of the Ministry of Finance. In 1974, further changes were
made to streamline the organization and its functions. Consequently, the post of Chairman FBR
was created with the status of ex-officio Additional Secretary and Secretary Finance was relieved
of his duties as ex-officio as chairman of FBR.

In order to remove impediments in the exercise of administrative powers of a Secretary to the

Government and effective formulation and implementation of fiscal policy measures, the status of
FBR as a Revenue Division was restored under the Ministry of Finance on October 22, 1991.

8|Page
However, the Revenue Division was abolished in January 1995, and FBR reverted back to the pre-
1991. By enactment of FBR 2007, the Central Board of Revenue has now become Federal Board of
Revenue

2) Organization Structure

9|Page
 Level of hierarchy:
1. Board (FBR Established Under Section 3 ) (BS 22)
2. Chief Commissioner ( Established under section 30)(BS 21)
3. Commissioner (Established under section 30) (BS 20)
4. Additional Commissioner ( Established under section 30)(BS 19)
5. Deputy Commissioner ( Established under section 30)(BS 18)
6. Audit Officer ( Established under section 30)(BS 18)
7. Assistant Commissioner ( Established under section 30 )(BS 17)
8. Supervisor (Supervisor Inland Revenue Established Under section 30)(BS 16)
9. Inspector (Inspector Inland Revenue Established Under section 30)(BS 16)
10. Office Inland Revenue (Officer Inland Revenue Established Under section 30)(BS 16)

10 | P a g e
3) Services and Purpose of FBR:

3.1 Function of FBR/Revenue Division:

In the existing setup, the Chairman, FBR, being the executive head of the Board as well as
Secretary of the Revenue Division has the responsibility for:

 Formulation and administration of fiscal policies,

 Levy and collection of federal taxes and
 The quasi-judicial function of hearing of appeals.

His responsibilities also involve interaction with the offices of the President, the Prime Minister,
all economic Ministries as well as trade and industry.

3.2: Nature of Organization:

Federal Board of Revenue is the supreme authority for tax collection in Pakistan. Taxes collected
by FBR form a major part of the state revenues. FBR has a monopoly in tax collection in the
country. It is playing a very vital role in the smooth running of state affairs regarding
expenditures of the country.

3.2. Scope and volume of Federal Board of Revenue:

Federal Board of Revenue is an accelerated network of Tax collection offices throughout the
country. It has the authority to collect taxes from each and every person in the country who is
liable to pay tax according to the Income Tax Ordinance 2001. Collection of taxes is being
increased day by day because new taxpayers are being added to the tax net, and working of FBR
has got better.

3.3: Purpose and Use of Tax:

The purpose of taxation is to finance government expenditure. One of the most important uses of
taxes is to finance public goods and services, such as street lighting and street cleaning. Since
public goods and services do not allow a non-payer to be excluded, or allow exclusion by a
consumer, there cannot be a market in the good or service, and so they need to be provided by
the government or a quasi-government agency, which tend to finance themselves largely through
taxes.

FBR collects major of its revenues from customs and federal excise as well as income tax. FBR

11 | P a g e
is playing a vital role in Pakistan Customs is the guardian of Pakistan borders against the
movement of contraband goods and is a facilitator of bona fide trade. It provides a major source
of revenue to the Government of Pakistan in the form of taxes levied on the goods traded across
the borders. It also helps to protect the domestic industry, discourage consumptions of luxury
goods and stimulate development in the underdeveloped areas.

Pakistan economy has confronted difficult challenges in the past few years, external and
domestic economic shocks, political uncertainty and security problems. Faced with these
challenges, Pakistan has implemented several reforms, including under the recently expired
stand-by-arrangement with IMF, which helped the economy avoid a full-blown crisis. More
recently, however, continued security issues, two major floods, and large fiscal deficit have
contributed to make inflation persistently high and limit growth

And employment creation. This has left Pakistan economy highly vulnerable.

3.4: Types of Taxes:

FBR collects three major types of tax:

 Income tax
 Federal Excise
 Sales tax

4) Income Tax:
An Income Tax is a tax levied on the income of individuals or businesses for corporations or
other legal entities. Various income tax systems exist, with varying degrees of tax incidence.
Income taxation can be progressive, proportional, or regressive. When the tax is levied on the

12 | P a g e
income of companies, it is often called a corporate tax, corporate income tax, or profit tax.
Individual income taxes often tax the total income of the individual with some deductions
permitted, while corporate income taxes often tax net income, for example, the difference
between gross receipts, expenses, and additional write-offs.

A personal or individual income tax is levied on the total income of the individual (with some
deductions permitted). It is often collected on a pay-as-you-earn basis, with small corrections
made soon after the end of the tax year. These corrections take one of two forms: payments to
the government, for taxpayers who have not paid enough during the tax year; and tax refunds
from the government for those who have overpaid. Income tax systems will often have
deductions available that lessen the total tax liability by reducing total taxable income. They may
allow losses from one type of income to be counted against another. For example, a loss on the
stock market may be deducted against taxes paid on wages.

Taxation according to a person’s ability to pay is a universally accepted principle, and income is
considered a satisfactory though not a sufficient index of such ability to pay. Income Tax is,
therefore, generally recognized as a highly equitable form of taxation. A tax levied on income
can normally be shifted to others and thus its incidence is on those for whom it is intended. Since
income tax is progressive in nature, it tends to reduce economic disparity. Tax rates and method
of calculating taxable income varies with the fiscal status of the taxpayer.

4.1 Capital Value Tax:

It is payable by individuals, firms, and companies which acquire an asset by purchase or a right
to use for more than 20 years.

4.2 Corporate Asset Tax:

It is levied through section 12 of the Finance Act, 1991. This is one-time levy payable by a
company as defined in Companies Ordinance, 1984, on the value of fixed assets held by the
company on the specified date.

13 | P a g e
4.3 Federal Excise Duty:

Federal Excise Act, 2005, was promulgated with effect from 1st July 2005, repealing the Central
Excises Act, 1944. Following are some of the significant changes brought about by the new Act:

 The word “Federal” was used in place of “Central”. Therefore, now the term “Federal
Excise Duty” is more appropriate as compared to old “Central Excise Duty” for the duties
of excise levied under the 2005 Act.
 The system of physical supervision has been entirely done away with and now all
clearances will be self-assessed and no prior permission for clearance will be required.
 The payment of duty will be on monthly basis and the duty on all clearances during the
month will be payable by the 15th of next month. This is in contrast to the previous
requirement of payment of duty prior to clearance.
 No gate passes are required for clearances as in the old system.
 Double taxation has been eliminated by allowing adjustment of the excise duty paid on
the input goods used directly in the manufacture of excisable goods.

Federal Excise Duty is payable on:

 Goods produced or manufactured in Pakistan;

 Goods imported into Pakistan;
 Such goods as the Federal Government may, by notification in the official Gazette,
specify, as are produced or manufactured in the non-tariff areas and are brought to the
tariff areas for sale or consumption therein
 Services, provided or rendered in Pakistan

4.4 Special Exercise Duty:

As part of budgetary measures for the year 2007-08, Special FED at 1% has been levied on
goods which are manufactured or are imported in Pakistan. This duty is in addition to FED as
prescribed in First Schedule of the Federal Excise Act, 2005.

4.5. Sales Tax:

Sales Tax is the responsibility of any salesman person who is liable in the eye of FBR.
14 | P a g e
In a certain condition with activity will occurthere will create situation Input or output will take
place and may remain refund and claimable amount.

15 | P a g e
5) Departments:

FBR consists of following major departments:

1. Audit Department
2. Legal Department
3. HRM Department
4. Admin Department
5. Collection and Enforcement Department
6. Customs Department
5.1: Audit Department
The function of the audit department is to work on the defaulted files through internal and external
auditing. They have to find the difference between the taxpayer income shown and which really
exists if any are found the penalties and extra tax is charged.

52: Legal Department

The legal wing/department does his function by reposing confidence in the taxpayer community
and simultaneously implementing the tax laws fairly and squarely, the FBR is in the process of
achieving growth in revenues. Legal Wing of the FBR helps in implementation of the tax laws
fairly and squarely which in turn contributes to achieving growth in revenue.

The Legal Wing of FBR is to introduce reforms of reduction in litigation coupled with creating a
better environment for taxpayers to discharge their obligation to the State.

5.3 HRM Department

HRM department works on how to increase the employee’s motivation. All issues of employees are
resolved by the HRM department i.e. vacations, code of conduct functioning of employees.
Complete information of certain employees is recorded here.

5.4: Admin Department

Admin Department works on the communication system and network system, as well as electronic
information, spread around all department.

16 | P a g e
5.5: Collection and Enforcement Department
Collection and enforcement department function is how to collect the revenues and
implementations taxes.

5.6: Customs department

Customs department is responsible for implementing the customs duties on the entry and exit on the
boundaries of the country. Customs duties are paid at the port stage and Levi on import and export.

17 | P a g e
6) Practical Work:
MrSaeed Ahmad Inspector Inland Revenue Reginal Tax Office Multan Leave Field Under The
Rule 9 And Revised Rule 1980. MrSaeed Ahmad Inspector Inland Revenue Was Appointed On
07-08-1995 was Joined His Duty 05-09-1995.

. When he will retire, he will get all the benefits and allowance according to rules and
ordinanceand his business will be running smoothly. He was retired in 2016.

LeaveField Under The Rule 9 And Revised Rule 1980

The Chief Commissioner,

Regional Tax Office,
Multan,
Subject 123 Request Grant Of Leave Without Pay Period 5 Years (01-11r-2010) to (31-10-2015).

Subject 124 Request Grant Of Leave Without Pay Period 5 Years.

Subject 125 Request Grant Of Leave Without Pay.

Subject 126 Request Grant Of Leave Without Pay Period 5 Years.

(Directed Refer Letter No 534 Date 27-11-2010 On The Subject And To Say That Rules
Disallowing)

Subject 127 Request Grant Of Leave Without Pay On Humanitarian Grounds.

(29-12-2011 Copy Of Rule 9 Of Revised Leave Rules 1980 Is Enclosed Here With
Necessary Action)

Subject 128 Request Grant Of Leave Without Pay Period 5 Years.

(Direct Refer RTO FBR Multan)

Subject 129 Request Grant Of Leave Without Pay Period 5 Years

(Direct Refer To The Subject And Find Enclosed Board Letter)

Subject 130 Request Grant Of Leave Without Pay Period 5 Years

18 | P a g e
 (Kindly Refer To Letter 28-6-2012 It Is Submitted That MrSaeed Ahmad Inspector Inland
Revenue Was Appointed On 07-08-1995 was Joined His Duty 05-09-1995. He Was Spell Of
Continous Service 10 Years Stand And Completed On 05-09-2005

Subject 131 Establishment Non Gazetted Transfer/Posting Of Staff Joining And Relieving
Report

(MrSaeed Ahmad Inspector Inland Revenue Has Joined His Duty On 13-03-2012)

Subject 132 Restoration Of Pay W.E.F. 13-03-2012 Onward Request Regarding.

(I Have Applied For Leave With Out Pay For 5 Years Effect From 01-11-2010 To 31-10-
2015 And Relived From Duty 01-11-2010)

subject 133 Restoration Of Pay 13-03-2012

(Directed Enclose Here With Application OfMrSaeed Ahmad Inspector Inland Revenue
Enforcement Enclose)

Subject 134 Restoration Of Pay W.E.F 13-03-2012

Subject 135 Establishment Non Gazetted Transfer/Posting Of Staff Relieving Report Submission
Subject 136 Provision Of Service Book
Subject 137 Provision Of Service Book
Subject 138 Request For IJP Selection
(Submitted Long Leave Period 1 Year 4 Month.I Joined My Job 13-03-2012 After Availing The
Leave Now I Am Drawing Single Pay And Not Availing The Benefits Of IJP)

Subject 139 Request For IJP Selection

(I Am Directed To Refer To The Subject And To Enclose Application MrSaeed Ahmad

Inspector Inland Revenue

Commissioner Inland Revenue

Human Resource Management Division
Regional Tax Office.Multan

19 | P a g e
 FBR Pakistan SALES TAX ACT 1990

Active Taxpayer
Active Taxpayer is the registered Entity Who Does Not Fall In The Following List.
 1 A person is blackkisted (Whose Registration Is Suspended or Blocked).
 2 Fails to File the Return
 3 Fails to File The Income Tax Return

Appellate Tribunal
Established Under section 130 of the Income Tax Ordinance, 2001

Appropriate Officer
Officer Inland Revenue Authorised By The Board For Perform Certain Functions Under The
Act.

Arrears
The Sales Tax due and Payables by the person is known as Arrears.

Associated Persons
The relationshipbetween two person

1. Firm
2. Individuals
3. Group
4. Hindus Undivided Family
5. Foreign Law

Common Taxpayer
1. Company
2. Computerized System
3. Cottage Industry
4. Customs Act
5. Distributor

20 | P a g e
6. Documents
7. Establishment
8. Firm
9. Goods
10. Importers
11. KIBOR (Karachi Inter Bank Offered Rate )
12. Manufacturer
13. Open Market Price
14. Output Tax
15. Person
16. Provincial Sale Tax
17. Retailer
18. Return
19. Sales Tax
20. Sales Tax Account
21. Supply
22. Taxable Goods
23. Unit Trust

Zero Rating
Goods Shall be Charge to Tax at the Rate of Zero percent but Govt Remove in future and goods
shall not be Charge to tax at zeropercent

Determination of Tax Liability

A Registered Entity/Person Did Not Deduct Input Tax Within the Relevant Period.

Tax Credit Not Allowed

Goods sale and purchase is not verifiable in the supply chain of input tax

21 | P a g e
Adjustable Input Tax
A registered person not allowed to adjust input tax is greater than the 90% of the output tax for
the period.

Assessment Of Tax And Recovery Of Tax Not Levied Or Short Lived Or Erroneously Refunded

I. An Officer Inland Revenue Send Show Cause Notice And Including Imposition Of
Penalty And Charges in Such Conditions are Following
II. A Person has not paid the Tax on Supplies
III. Short Payment
IV. Input Tax Credit Claim
V. The reason of some deliberate Act any Tax Or Charge has not been levied.
VI. Errors,Misconstruction, Omissions, Fraud,

SHOW CAUSE NOTICE

A shopperBagscompany is running from 2011. His owner name is Mr Iftakar Ahmad. The
company address is 931, ShaheenAbadBudla road Multan Corporation amount of sale tax short
assessed and short deposited is Rs 3332743.

Tax Year Turnover Sales Tax Amount of Remarks

declared recoverable Electricity
inTaxreturn @16% bill calculated
2011 5198100 831696 3535600 Turnover of
more than 5
million, as
well as the
electricity
bills, were also
more than
700,000 in
each tax year
2012 7487220 1197955 4550100 Turnover of
more than 5

22 | P a g e
 million, as
well as the
electricity
bills, were also
more than
700000 in
each tax year
2013 8144324 1303092 4973716 Turnover of
more than 5
million, as
well as the
electricity
bills, were also
more than
700,000 in
each tax year
Sub Total(a): 20,829,644 3,332,743 13,059,416

This shopper Bag Company is paying income tax but this company, is not paying a sales tax of
2011,2012, and 2013 year. Inspector inland revenue visited the company and he checked the
documents and records of the company financial statement. He assured that this shopper Bag
company is not paying sale tax of 2011, 2012, and 2013 year. Inspector inland revenue reported
the commissioner inland revenue about the company sale tax. Commissioner inland revenue
checked all the documents and records of the company and assessed that this shopper bag
company is involved in fraud. Commissioner inland revenue gave show cause notice to the
shopper bag company and imposed high penaltieswithin the show cause notice according to
section sale tax. Show cause notice is also known as FIR first information report. In this
condition, Inspector inland revenue reported the commissioner inland revenue about the

23 | P a g e
company sale tax and Commissioner inland revenue gave show cause notice to the company and
imposed high penaltieswithin the show cause notice according to section sale tax. Commissioner
inland revenue said to the company owner, to present their financial details infront of him. If the
company owner is not able to present their financialcredentialsinfront of Commissioner Inland
Revenue Then Commissioner inland revenue sends the cause in court and sealed the company.
The case runs in the court according to the law.

Access Record Documents

A Person required to maintain any record or documents under section 25 or other law when
required by commissioner produce record or documents.The officer Inland Revenue authorized
by commissioner he shall allow to access and use of any Technology on such date.

The officerauthorized by the commissionunder the Act once in a year commissioner carry out
audit andCommissioner of Inland Revenue authorized by Assistant commissioner is not below
the rank to conduct Information.sufficient evidence, investigation and inquiry under section 28

A registered person does not wish to impose the penalty becauseoftheregistered person well-
reputed person..

Return Chapter 5 Section 26

Every registered person shall furnish a correct return in the prescribed form to the bank or any
other officer. The Board selects or specified the bank and Officer to indicating the purchases
during a tax period, Such other information of tax due or paid as may be prescribed in chapter 7
Offences or penalties under the section 33.

The Board may provideofficial gazette or notification, required any person or class of
persons submitted the return quarterly basis.

Board may provide official gazette or notification, required any person or class of persons submit
such return as may be prescribed annually in addition to the monthly return or quarterly basis.
The prescribed form of return compulsory

Board Provide also that return filed electronically on the web and another medium or any other
computer-readable media.

Return field electronically to use digital signatures.

Sales Tax Act 1990 Offences And Penalties

There are many offences and penalties impose to file the return under the sales tax act 1990 such
asfollowing

24 | P a g e
Offences 1

The personfails to file the return within the due date.

The offence has reference under the sale Tax Act 1990 and Section 26

Penalty 1

The personfails to file the return within the due date. Such person Impose a penalty of RS 5000

Files a return within 10 days of the due date than registered person shall pay a penalty RS 100
for each day of default

Offences 2

Any Registered person/Entity fails to issue an invoice

The offence has reference under the sale Tax Act 1990 and Section 23

Penalty 2

Any Registered person/Entity fails to issue an invoice. Such registered person shall impose a
penalty of RS 5000.

3% of the amount of the tax involved, whichever is higher.\

Offences 3

The unauthorized person who issues an invoice.when An amount of tax is specified.

The offence has reference under the sale Tax Act 1990 and Section 3, 7 and 23

Penalty 3

Any Registered person/Entity fails to issue an invoice. Such registered person shall impose a
penalty of RS 10000.

5% of the amount of the tax involved, whichever is higher

Offences 4

Any entity fails to notify the changes of material nature in the registration of particular taxable
activity.

The offence has reference under the sale Tax Act 1990 and Section 4

25 | P a g e
Penalty 4

Any Registered person/Entity fails to issue an invoice. Such registered person shall impose a
penalty of RS 5000.

The percentageamount of the tax involved, whichever is higher not deducted

Offences 5

Any Registered person/Entity fails to deposit the amount of tax due or any part of the time or
manner laid down under the rules or Act or orders made thereunder

The offence has reference under the sale Tax Act 1990 and Section 3, 6, 7 and 48,

Penalty 5

Any Registered person/Entity fails to issue an invoice. Such registered person shall impose a
penalty of RS 10000.

5% of the amount of the tax involved, whichever is higher.

The personfails to file the return within due date or Files a return within 10 days of the due date
than registered person shall pay a penalty RS 500 for each day of default

The first time miscalculation During a year there is no penalty imposed

Offences 6

Any Registered person/Entity whereby the amount of return during the year tax less than the
actual tax paid

The offence has reference under the sale Tax Act 1990 and Section 7 and 26,

Penalty 6

Any Registered person/Entity whereby the amount of return during the year tax less than the
actual tax paid than Such registered person shall impose a penalty of RS 5000.

3% of the amount of the tax involved, whichever is higher

Offences 7

Any Registered person/Entity required to apply for registration

Under THE act fails to make an application for registration before making TAXABLE
SUPPLIES

The offence has reference under the sale Tax Act 1990 and Section 14

26 | P a g e
Penalty 7

Any Registered person/Entity fails to issue an invoice. Such registered person shall impose a
penalty of Rs 10000.

5% of the amount of the tax involved, whichever is higher

An entity required to apply for registration

Under THE Act fails to make an application for registration before making TAXABLE
SUPPLIES

Offences 8

Any Registered person/Entity fails TO MAINTAIN THE RECORDS REQUIRED UNDER

THIS ACTOR Rules

The offence has reference under the sale Tax Act 1990 and Section 22 AND 24

Penalty 8

Any Registered person/Entity fails to issue an invoice. Such registered person shall impose a
penalty of Rs 10000.

5% of the amount of the tax involved, whichever is higher

Entity fails TO MAINTAIN THE RECORDS REQUIRED UNDER THIS ACTOR Rules

Offences 9

Any Registered person WITHOUT any reasonable cause in non-compliance with the provisions
of sections

A person who fails to produce the record on the sale of the first notice

A person who fails to produce the record on the sale of the second notice

A person who fails to produce the record on the sale of the third notice

The offence has reference under the sale Tax Act 1990 and Section 25

Penalty 9

Such registered person shall impose a penalty of RS 5000.

Such registered person shall impose a penalty of RS 10000.

Such registered person shall impose a penalty of Rs 5000.

27 | P a g e
Offences 10

Board issued notification through under the section required the information of any registered
person who fails to furnish the required information

The offence has reference under the sale Tax Act 1990 and Section 26

Penalty 10

Such registered person shall impose a penalty of RS 10000.

Offences 11

A person submitsthewrong documents to Any officer inland revenue

Destroy the sales tax Invoices

False Statement

False Declaration

False information

The offence has reference under the sale Tax Act 1990 and Section 2(37)

Penalty 11

Any Registered person/Entity fails to issue an invoice. Such registered person shall impose a
penalty of RS 25000.

100% of the amount of the tax involved, whichever is higher.

28 | P a g e
7) SWOT Analysis

7.1. Strengths:

1. One of the largest organization in the public sector

2. FBR is a major part of federal revenue collection source for the Govt. of Pakistan
3. It’s machinery, It’s employees playing a vital role in tax collection
4. A computerized system for certain registrations
5. Federal Board of Revenue is a federal organization so prioritize then all other provincial
tax organizations. (provincial govt. collect tax on vehicles & property)
6. Laws and legislation for strengthening FBR
7. Special allowances are given to employees according to their performances
8. Special pay scale
9. Autonomous power enhance effective decision power
10. Special pay scale given by autonomous organization is lead employees to efficient output
11. FBR is having 3 large tax pair offices (LTO) and 18 regional tax offices (RTO).

12. FBR pays a handsome salary to his employees

13. PRAL [Pakistan Revenue Automation (PVT) LMT] consulting services for Govt. tax and
revenue agencies
14. Qualified and experienced management

7.2. Weaknesses:

1. Laws and legislation

2. Complications in the recovery process
3. Monitoring of whole organization is difficult
4. Tax collection system is not compatible with small social setup and business
norms in the country
5. Old employees having lack of information technology and cannot use the latest
taxation software’s
6. Reward on recoveries had banned 6 years before
7. Time-consuming process in rotation of files even for the very minor thing

29 | P a g e
 8. Labor unions spoil the working environment where they prefer their personal
motives over overall organizations goals
9. Lack of promotion

7.3. Opportunities:

1. Organizational change for the better working environment

2. Multimedia to facilitate human resources
3. Machinery usage
4. Improve and Speed up the system through software and advanced technology
5. New taxpayers can be made through different strategies
6. The tax system can develop through reviewing the tax system of other
countries and by adapting in a way to use in our circumstances
7. Job rotation for dynamic learning
8. Reward on certain recoveries for the motivation of employees
9. Collect record of other organizations to get rid of corruption

7.4. Threats:

1. Consultants persuaded and motivate taxpayers in their oneself that how a

taxpayer can get rid of taxes
2. Peculations of taxpayers due to the absence of file automation
3. Unaware laypersons are caught in double taxing
4. black sheep’s in the organization which advises tax pairs how to reduce their
taxes
5. Taxpayers can deceive due to insufficient data
6. Dependencies on PRAL

30 | P a g e
8. Conclusion:

It is well established that the cost of tax collection is low in Pakistan as compared to a number of
the countries. It implies that the taxation system is reasonable on this score and reflects
administrative efficiency to some extent. It does not mean that everything is going well on part
of tax administration. On the other hand, the outcome of the resource mobilization efforts is low
as tax-GDP is quite low. In this context, the cost of collection is a weak indicator of the
efficiency of tax administration due to various limitations and irrelevancies.

There are various issues with taxation system of Pakistan like huge exemptions, wider tax gap,
low tax-GDP ratio, less effective audit and penalty system etc. If these issues are settled, tax
revenues will improve significantly which will further bring down the cost of collection.
Improvement in revenue collection through reduced cost of collection should then be viewed as a
by-product of effective management of human and physical resources. More resources are
required for modernization and enforcement. Similarly, skilledperson will have to be increased.
There is a need to modernize the taxation system and more funds are required to be allocated for
human resource development.

31 | P a g e
9. Recommendations:

1. Organizational change for a better working environment

2. Multimedia to facilitate human resources
3. Improve and Speed up the system through software and advanced
technology
4. The tax system can develop through reviewing the tax system of other
countries and by adapting in a way to use in our circumstances
5. Job rotation for dynamic learning
6. Punctuality of workforce
7. Reward on certain recoveries for the motivation of employees
8. Collect record of other organizations to get rid of corruption
9. Avoid double taxation and create awareness among taxpayers about the
benefits of registration
10. Training should be given to the FBR workforce about modern auditing
techniques

11. Fraud awareness and indicators of fraud should be well known for inspection
12. Avoid gender biases
13. An accountability system should be developed
14. Hire educated people instead of undergraduate people.

32 | P a g e