FBR income Verification!

[koolgouki]

Hi,
I bought a new Honda City.... I had the NTN number etc etc and we managed to do the Registration.

My questions are

Are the people from F.B.R going to inquire the source of income?
As in my case the money came in installments by someone's hand and i deposited in the bank after getting it changed...... not through TT.

So how will i verify this income? ( Currently i am working and paying Tax)

One thing more this was an investors car it was originally booked on the Investors name, on company sale invoice his name is written, not registered. And then on the documents its first registered to the investor and then to us.....

Please suggest what to do with FBR inquiry

I shall be very thankful if you guys could help...

[spectra]

FBR will ask questions when u file your tax return, if u dont file your return and FBR takes notice, they can ask whatever they like

[raza1]

Yes, FBR will ask the source of income. Presently only a foreign remittance source is not inquired by FBR people, and that can be proved if and only if the income was landed directly in your account, wherein it is mentioned that so and so dollars remittance.

If you have just deposited cash and it will be added to your income and will be taxed accordingly.

Have you ever filed your wealth statement and reconciliation?

Further, do the regn authority requires NTN certificate as well?

[koolgouki]

Yes, FBR will ask the source of income. Presently only a foreign remittance source is not inquired by FBR people, and that can be proved if and only if the income was landed directly in your account, wherein it is mentioned that so and so dollars remittance.

If you have just deposited cash and it will be added to your income and will be taxed accordingly.

Have you ever filed your wealth statement and reconciliation?

Further, do the regn authority requires NTN certificate as well?

no i have never filed my wealth statement and reconcilliation
no they do not require NTN certificate
and the us dollars i received were deposited in the bank after changing from the exchange... can the change of dollar to pak rupees receipt also be accepted? Please guide

[raza1]

no i have never filed my wealth statement and reconcilliation
no they do not require NTN certificate
and the us dollars i received were deposited in the bank after changing from the exchange... can the change of dollar to pak rupees receipt also be accepted? Please guide

It means that FBR doesn't know that you are the owner of car, as they do not have any system through which they get details of car regn, and send the notices to owners.

No. Those receipts would not serve the purpose. How will negate their question that "you have purchased these dollars from open market and then encashed them and deposited in your account"?

Now, it is not likely that you will receive any notice from FBR.

Even if they somehow manage to get info regarding your ownership, and send you notice, then consult any tax consultant for your wealth preparation, and show as many cash as he can in your wealth. That is dependent on your age, whats you age right now?

[Sdogar]

Currently FBR in Punjab(Lahore zone) is inquiring on the basis of car registration, i think they are getting the info from Punjab registration authority. They will ask if you have filed your return and if you haven't they will ask for paying the tax. I am going through this and they are asking for source of income and proof of income tax paid. If you can't provide the proofs they will ask to pay tax and then if u don't they can take legal action.

[koolgouki]

It means that FBR doesn't know that you are the owner of car, as they do not have any system through which they get details of car regn, and send the notices to owners.

No. Those receipts would not serve the purpose. How will negate their question that "you have purchased these dollars from open market and then encashed them and deposited in your account"?

Actually the car is registered in my fathers name........ and even he has not filled the wealth statement and reconcilliation( its pending for past 6 or more months)

please advice....
Also what is the worst case will i have to bribe them and if yes how much........

[koolgouki]

Currently FBR in Punjab(Lahore zone) is inquiring on the basis of car registration, i think they are getting the info from Punjab registration authority. They will ask if you have filed your return and if you haven't they will ask for paying the tax. I am going through this and they are asking for source of income and proof of income tax paid. If you can't provide the proofs they will ask to pay tax and then if u don't they can take legal action.

how do they calculate tax? and do they check each and every person who is buying cars more the 1 million or just random

[raza1]

Actually the car is registered in my fathers name........ and even he has not filled the wealth statement and reconcilliation( its pending for past 6 or more months)

please advice....
Also what is the worst case will i have to bribe them and if yes how much........

I edited my previous post and added following:

Even if they somehow manage to get info regarding your ownership, and send you notice, then consult any tax consultant for your wealth preparation, and show as many cash as he can in your wealth. That is dependent on your age, whats you age right now?

Okay now car is in father's name. His WS is pending means? the last date of filing of return is Sep 30 every year. A person having 500K taxable income in current tax year or having 500K total income in preceding tax year is required to file WS as well.

Now, has your father ever filed WS?

[raza1]

Currently FBR in Punjab(Lahore zone) is inquiring on the basis of car registration, i think they are getting the info from Punjab registration authority. They will ask if you have filed your return and if you haven't they will ask for paying the tax. I am going through this and they are asking for source of income and proof of income tax paid. If you can't provide the proofs they will ask to pay tax and then if u don't they can take legal action.

Good to hear that, we are going towards documentation of economy.

If you have white money with you then its not a problem in proving. Problem arises when people use black money for buying things over and above their white money.

[koolgouki]

I edited my previous post and added following:

Okay now car is in father's name. His WS is pending means? the last date of filing of return is Sep 30 every year. A person having 500K taxable income in current tax year or having 500K total income in preceding tax year is required to file WS as well.

Now, has your father ever filed WS?

he is a salaried person and he has a NTN number and the car is registered on his name and the payment was made by me and the income we are generating is less then 500k and i am 32 also a salaried person

[raza1]

he is a salaried person and he has a NTN number and the car is registered on his name and the payment was made by me and the income we are generating is less then 500k and i am 32 also a salaried person

It means that you need to get prepare for your wealth accumulation. The cash which you deposited in your bank account (from where the PO was issued to car seller) will be shown as a cash deposit into bank from the liquid cash lying in your wealth. Consult a tax consultant for the purpose, and ask him to show as much cash as he can in your wealth.

Considering your age, you must have done your matric in 1994-95. Show that you were doing job since then and was getting salary in cash (keep the annual salary below the taxable limits) once you have generated enough cash by keeping the personal expenditures at minimal level, you can justify the source of income from which you bought this car.

Now you can gift this car to your dad by preparing a simple Gift Deed.

[raza1]

Now your dad has become the owner of car, now he will also be required to file a return (not WS as his taxable income is below 500K p.a.), as following are the persons who are required to file IT return:
A person who:
(i) has been charged to tax in respect of any of the two preceding tax years;
(ii) claims a loss carried forward under this Ordinance for a tax year;
(iii) owns immovable property with a land area of two hundred and fifty square yards or more or owns any flat located in areas falling within the municipal limits existing immediately before the commencement of Local Government laws in the provinces; or areas in a Cantonment; or the Islamabad Capital Territory;
(iv) owns immoveable property with a land area of five hundred square yards or more located in a rating area;
(v) owns a flat having covered area of two thousand square feet or more located in a rating area;
(vi) owns a motor vehicle having engine capacity above 1000 CC; and
(vii) has obtained National Tax Number.

Keep the both cases simultaneously.

[koolgouki]

Now your dad has become the owner of car, now he will also be required to file a return (not WS as his taxable income is below 500K p.a.), as following are the persons who are required to file IT return:
A person who:
(i) has been charged to tax in respect of any of the two preceding tax years;
(ii) claims a loss carried forward under this Ordinance for a tax year;
(iii) owns immovable property with a land area of two hundred and fifty square yards or more or owns any flat located in areas falling within the municipal limits existing immediately before the commencement of Local Government laws in the provinces; or areas in a Cantonment; or the Islamabad Capital Territory;
(iv) owns immoveable property with a land area of five hundred square yards or more located in a rating area;
(v) owns a flat having covered area of two thousand square feet or more located in a rating area;
(vi) owns a motor vehicle having engine capacity above 1000 CC; and
(vii) has obtained National Tax Number.

Keep the both cases simultaneously.

Many thanks Raza brother for the detailed information, if i ever get a notice from FBR...... well i will see what happens

[Sdogar]

how do they calculate tax? and do they check each and every person who is buying cars more the 1 million or just random

I don't know what is the method they use to calculate tax, also no idea if they check everyone, but i was the one they chose to investigate:). I received the notice from ITO-2 office in lahore, may be it is specific to this tax region and they are taking this initiative.I think they are checking new registrations as this number is not very big(around 11-12000 passenger cars registered each month in all of pakistan so if you devide them in income tax regions numbers for each region become small).

[raza1]

Many thanks Raza brother for the detailed information, if i ever get a notice from FBR...... well i will see what happens

My pleasure sir. If you need any further clarification, just post your question.

[capsat]

There is a Federal Database called NADRA. There is a state bank department called CIB (credit information bureau).

FBR can pull any information based on CNIC / NTN / NICOP / Car Registration. any Individual bank account doing CASH inward ~ outward transactions over PKRs.500,000 (half million) is yellow flagged, means under observation if activity continues 3 months later it is RED Flagged and data is pulled by the FBR and notice is sent.

In respect of vehicles registration provincial excise offices are connected to FBR provincial & regional HQs (by default) and a soft copy summary is shared with FBR HQ every quarter.

If the Foreign currency conversion receipt is in your name keep it in record it may be of help if & when a notice is received. A smart income tax lawyer will be able to help without any problems.

[koolgouki]

There is a Federal Database called NADRA. There is a state bank department called CIB (credit information bureau).

FBR can pull any information based on CNIC / NTN / NICOP / Car Registration. any Individual bank account doing CASH inward ~ outward transactions over PKRs.500,000 (half million) is yellow flagged, means under observation if activity continues 3 months later it is RED Flagged and data is pulled by the FBR and notice is sent.

In respect of vehicles registration provincial excise offices are connected to FBR provincial & regional HQs (by default) and a soft copy summary is shared with FBR HQ every quarter.

If the Foreign currency conversion receipt is in your name keep it in record it may be of help if & when a notice is received. A smart income tax lawyer will be able to help without any problems.

Thanks so its up to the Lawyer now......

One more question does everyone get a notice??????

[PKTUN]

Thanks so its up to the Lawyer now......

One more question does everyone get a notice??????

bhaie jan itna fiker shikar karnay ki no need jab taak notice na milay khud sai koi panga na layna sleep on it honsla rakho yar hazaron cars register hoti hain rooz ana saray ki saray tax payer nahi hotay aur jo tax pay kartay hain woh itna parayshan nahi hotay tou ap ko keya fiker hai

[a_k]

Good step been taken to document the economy, bring more people in tax net.