The document discusses taxation in Pakistan, including direct and indirect taxes. Direct taxes include income tax on salaries, interest, property income, business income, capital gains, and other sources. Direct taxes also include customs and central excise duties. Indirect taxes include a 15% sales tax levied on imports, supplies within Pakistan, and other economic activities. The document then outlines the process for taxpayers to claim refunds of excess taxes paid, including calculating the refund amount, applying to the tax authorities with supporting documents, and receiving the refund payment or credit.

1. Project
on
Taxation Management
BY
UZAIR HAIDER 14

2. Taxation system in Pakistan
• Two types of taxes in Pakistan
 Direct taxes
 Indirect Taxes
•Direct taxes primarily comprise income tax levied on the
income from:
Salaries
Interest on securities;
 Income from property;
Income from business or professions
Capital gains; and
Income from other sources.

3. Continue….
• Direct tax also includes Customs & Central excise.
• Custom duty is tax imposed on the imported goods at the time of import.
• Direct taxes on Imports is dealt under section 148 on income tax ordinance
2001.
• Central excise is the tax imposed on some specific goods manufactured within
Pakistan
• All goods to be exported or manufactured for the purpose of export are
exempt from central excise duty.
• Direct taxes are to be paid by every individual AOP & Corporation with their
specified rates and with compliance of prescribed manner.

4. Indirect Tax
Sales Tax is levied at various stages of economic activity at the rate of 15 per
cent on:
• All goods imported into Pakistan, payable by the importers.
• All supplies made in Pakistan by a registered person in the course of
furtherance of any business carried on by him.
• There is an in-built system of input tax adjustment and a registered person can
make adjustment of tax paid at earlier stages against.
• The tax payable by him on his supplies. Thus the tax paid at any stage does not
exceed 15% of the total sales price of the supplies.

5. Important terms regarding sales tax
• Input tax
Input tax is the tax paid by registered person on the taxable goods and services
purchased or
acquired by him. This includes the sales tax paid on imports.
• Output tax
It is the sales tax charged and levied on the sale or supply of goods or services
on which sales tax is livable.
• Input Tax Adjustment
Input tax adjustment is the deduction of input tax from out put tax to arrive at
the net amount of sales tax payable by the taxpayer.

6. Tax Refunds – income tax ordinance 2001
• The return of excess amounts of income tax that a taxpayer has paid to the
state or federal government throughout the past year.
• Scope of Tax refund in Pakistan is not complex and is dealt with the prospective
to give relief to tax payer.

7. Continue….
• If any individual, AOP or company in a Tax year paid tax amount higher than the
actual amount of tax due these persons can apply for a refund from the tax
authorities.
• Tax paid during the year includes all Federal, provincial, sales tax , Excise ,
Customs or any amount levied on the income or actions of these persons.
• Advance taxation is necessary for Refunding of tax.

8. Sec 170 states about refunding of tax…
• A taxpayer who has paid tax in excess of the amount which the taxpayer is properly chargeable
under this Ordinance may apply to the Commissioner for a refund of the excess.
• An application for a refund under sub-section (1) shall be –
-made in the prescribed form;
-verified in the prescribed manner; and
-made within two years of the later of -
-the date on which the Commissioner has issued the assessment order to the taxpayer for the
tax year to which the refund application relates; or
-the date on which the tax was paid.

9. Continue…
Where the Commissioner is satisfied that tax has been overpaid,
the Commissioner shall
◦ apply the excess in reduction of any other tax due from the taxpayer under
this Ordinance;
◦ apply the balance of the excess, if any, in reduction of any outstanding liability
of the taxpayer to pay other taxes; and
◦ refund the remainder, if any, to the taxpayer.

10. Requirements of Refunding
• Refunds are available to the persons who have paid advance tax of any nature
such as General sales Tax on electricity bills , mobile phone cards , Gas bills.
• Tax refund can only be claimed if Tax deducted previously is according to
provision of Normal Tax regime NTR.

11. • NTR does not eliminates the whole tax liability of an activity or transaction NTR
settles the tax liability in the final tax return filled by tax payer therefore refund
amount can be worked on NTR.
• FTR does not Provide with the opportunity of refund except in few cases
mentioned in section 148 of income tax ordinance 2001.

12. Procedure for tax Refunding

13. Step-I
Calculate the amount/opportunity assessment
The person calculates the amount of advance tax & Deductions made at source in case of
income from different heads such as:
• sales tax paid on purchases.
• import duty paid on imports.
• tax deducted at source in case of salary or any other head of income.
• Tax on electricity bills.
• Any other Advance tax against which Section 170 Provides provisions of refund.
and tally these amounts with the amount calculated in the tax return.
The excess amount paid by that person will be subject to refund.

14. Step – II
apply for Refund/Compile data for refund claim
After assessing the amount of excess tax paid the next step of a tax payer is to apply for
refund.
• Get an Prescribed form from the official website of FBR or Local tax Office.(Sample Application
is given below)
• Fill the application form with all necessary information asked with in.
• Attach supporting documents.
• Provide Final tax return for the year and statement proving the amount of advance tax
paid.(Documents are given below)
• Any other documents as may required by the department.

15. Step – III
Document your Application
Tax payer must attach following document along with the application:
• Prescribed application form ( Filled ).
• Statement of Advance taxation.
• Statement of Final taxation.
• Any other document required by FBR.

16. Step-IV
Receiving the refund/Claim you Refund
After all the above steps now its time for a tax payer to collect his refund in
form of:
• Direct payment through bank.
• Reduction in tax adjustment of subsequent years.
• Reduction in tax liability of previous years.

17. Some key points…
• Deadline of applying for a year’s refund is two years after the date on which tax
was paid.
• Advance tax must be deducted in order to receive refund by withholding agents
or any authorized person.
• Assistance regarding refund is provided by department.

18. Continue….
• Government department also pays taxes and receives refund but their
procedure is different.
• Refund can received of whole amount which a tax payer applied for if the
amount can be verified to be paid as tax by any authorized medium.

19. Thank You!