Day: June 13, 2019

Finance Bill 2019: 12th Schedule introduced to levy 3pc value addition sales tax on all imported goods

ISLAMABAD: The government has proposed Twelfth Schedule to Sales Tax Act, 1990 to streamline imposition of 3 percent value addition tax on imported goods.

The schedule has been proposed to make part of the Act through Finance Bill, 2019.

According to the schedule,

(1) The sales tax on account of minimum value addition as payable under this Schedule (hereinafter referred to as value addition tax), shall be levied and collected at import stage on all taxable goods as are chargeable to tax under section 3 of the Act or any notification issued thereunder at the rate specified in the Table in addition to the tax chargeable under section 3 of the Act or a notification issued thereunder:

(2) The value addition tax under this Schedule shall not be charged on,—

(i) Raw materials and intermediary goods meant for use in an industrial process which are subject to customs duty at 16% or 20% ad valorem under First Schedule to the Customs Act, 1969;

(ii) The petroleum products falling in Chapter 27 of Pakistan Customs Tariff as imported by a licensed Oil Marketing Company for sale in the country;

(iii) Registered service providers importing goods for their in-house business use for furtherance of their taxable activity and not intended for further supply; and

(iv) Cellular mobile phones or satellite phones.

(3) The value addition tax paid at import stage shall form part of input tax, and the importer shall deduct the same from the output tax due for the tax period, subject to limitations and restrictions under the Act, for determining his net liability. The excess of input tax over output tax shall be carried forwarded to the next tax period as provided in section 10 of the Act.

(4) In no case, the refund of excess input tax over output tax, which is attributable to tax paid at import stage, shall be refunded to a registered person.

(5) The registered person, if also dealing in goods other than imported goods, shall be entitled to file refund claim of excess carried forward input tax for a period as provided in section 10 or in a notification issued there under by the Board after deducting the amount attributable to the tax paid at import stage i.e. sum of amounts paid during the claim period and brought forward to claim period. Such deducted amount may be carried forward to subsequent tax period.”

June 13, 2019
FBR empowered to probe foreign remittances above Rs5 million received in a year

ISLAMABAD: Federal Board of Revenue (FBR) has been empowered to probe source of foreign remittances above Rs5 million received by a person in a year.

According to Finance Bill 2019, an amendment has been proposed to Section 111(4) of Income Tax Ordinance, 2001 in this regard.

At present the FBR cannot ask source to any amount of foreign exchange remitted from outside Pakistan through normal banking channels up to Rs10 million in a tax year that is encashed into rupees by a scheduled bank and a certificate from such bank is produced to that effect.

However, this threshold has been reduced to Rs5 million.

FBR sources said that the proposal had been introduced through Finance Bill 2019 to shut the window for whitening of money.

June 13, 2019
Finance Bill 2019: Banks to pay 37.5pc tax on profit from investment in govt securities

ISLAMABAD: Banks shall pay 37.5 percent income tax on profit from investment in government securities, according to proposals made through Finance Bill, 2019.

The Federal Board of Revenue (FBR) in explanation to the Finance Bill, 2019 said that banks are earning substantial profits on account of incremental exposure to government securities.

Therefore profit from such government securities as is in excess of twenty percent of total profit before tax is being taxed separately at the rate of 37.5 percent.

The FBR further said that banks generally do not offer for taxation the provisions which were previously allowed but later on reversed. Therefore reversal of provisions already allowed is being made taxable by inserting an explanation in the Seventh Schedule.

Banks are also allowed to claim deduction in respect of provisions classified as “doubtful” and “loss”. Now only deductions only in respect of provisions classified as “loss” are to be allowed.

June 13, 2019
Finance Bill 2019: Advance tax increased by 900 percent on renewal of license by arhatis

ISLAMABAD: The government has increased the advance tax by 900 percent (nine times) at the time of renewal of license by middleman of a commodity markets in agriculture sector.

The tax rates have been increased through Finance Bill, 2019 and may be applicable from July 01, 2019.

The Federal Board of Revenue (FBR) said that presently every market committee is required to collect advance tax from dealers, commission agents and arhatis at the time of issuance or renewal of licenses.

Now the tax rates are being increase for:

Class A from Rs10,000 to Rs100,000/-,

Class B from Rs7,500 to Rs75,000/-,

Class C from Rs5,000/- to Rs50,000; and

for any other category from Rs5,000/- to Rs50,000/-.

The tax has been collected under Section 236J of Income Tax Ordinance, 2001.

According to the section:

“236J. Advance tax on dealers, commission agents and arhatis etc.— (1) Every market committee shall collect advance tax from dealers, commission agents or arhatis, etc. at the rates specified in Division XVII of Part-IV of the First Schedule at the time of issuance or renewal of licences.

(2) The advance tax collected under sub-section (1) shall be adjustable.

(4) In this section “market committee” includes any committee or body formed under any provincial or local law made for the purposes of establishing, regulating or organizing agricultural, livestock and other commodity markets.”

June 13, 2019