FBR imposes new conditions on units seeking tax credit

The Federal Board of Revenue (FBR) has recently set forth new conditions for entities seeking tax credit for integration with their computerised systems, according to a recent notification. The tax credit allowed for a tax year where an electronic resource is installed, integrated, and configured with the Board’s system will be ten percent of the amount actually invested in the resource.

Any party claiming tax credit under Section 64D of the Income Tax Ordinance must meet certain criteria. They must integrate with the Board’s computerised system for real-time production monitoring or sales reporting during the relevant tax year.

The electronic resource in question must be purchased, installed, and integrated with the Board’s system during the tax year in which the claim is made. This equipment must be used exclusively for the required integration, and this integration must be verified by an integration record created by the Board’s system, identifying the taxpayer, the resource, and the date of activation.

The claim must be backed by a tax invoice, agreement, licence, or other document confirming the investment in the electronic resource. The actual investment in the resource is the purchase price plus direct costs related to installation, configuration, integration, testing, and implementation. This amount is reduced by any discounts, rebates, refunds, grants, or subsidies, excluding tax, duty, maintenance, utility, or employee costs.

The tax credit should be claimed in the income return for the tax year when the resource is integrated. This expenditure cannot be claimed more than once under Section 64D. Lastly, the taxpayer must provide details about the electronic resource, vendor information, invoice or agreement reference, acquisition date, investment amount, integration identification, and activation date in their return or a designated schedule on IRIS.