Pkrevenue.com

Month: November 2019

  • Court restriction on telecom tax costs Rs55 billion: FBR

    Court restriction on telecom tax costs Rs55 billion: FBR

    ISLAMABAD: Federal Board of Revenue (FBR) has incurred loss of Rs55 billion due to restriction imposed by Supreme Court of Pakistan on collection of tax on phone services.

    The FBR in its year book 2018-2019, said that during the last fiscal year it had missed the revenue collection target by Rs321.5 billion due to various reasons.

    The FBR said that a loss of Rs55 billion was incurred due to suspension of withholding tax on telecommunication services by the Supreme Court of Pakistan.

    The other reasons for revenue shortfall included: petroleum Rs96 billion; reduced government spending Rs80 billion; import compression Rs16 billion, reduced rates of salary income Rs50 billion and reduction in customs duty Rs50 billion.

    The FBR collected Rs. 3,828.5 billion during FY 2018-2019 against Rs. 3,843.8 billion during FY 2017-2018 indicating a negative growth of 0.4 percent.

    The revised revenue target of Rs. 4,150 billion has been achieved to the extent of 92.3 percent.

    The direct taxes, sales tax, FED and customs missed their respective targets by 12.9 percent, 2.1 percent, 10.5 percent and 6.7 percent, respectively.

    During FY 2018-2019 the overall growth in net tax collection has been declined by 0.4 percent.

    The collection of FED grew by around 11.6 percent and customs by 12.7 percent during FY 2018-2019, whereas the sales tax and direct taxes recorded a negative growth of 1.8 percent and 5.9 percent respectively.

    As per the collection FY 2018-2019 the sales tax is the top revenue generator with 38.1 percent share followed by direct taxes with 37.8 percent, customs 17.9 percent and FED 6.2 percent.

    During FY 2018-2019 the share of customs duty and FED has increased, whereas the share of direct taxes and sales tax has decreased slightly.

    The FBR said that the overall growth in collection remained dismal during FY 2018-2019. The overall collection witnessed decline of 0.4 percent, which is Rs. 15.3 billion lesser than the collection of FY 2017-2018.

    It is pertinent to mention that last time the negative growth (-2.6 percent) was recorded in 1967-68 in the FBR revenue collection.

    A look on the monthly growth trend indicates a very good increase in July 2018 and May 2019 but during the remaining ten months either growth was below the double digit or negative.

    As a whole during the year negative growth in revenue was recorded during five months as compared to corresponding months of the previous year, which is in fact very unusual behavior.

    The revenue performance during April and June have been very poor with around (-) 30.7 percent and (-) 8.9 percent negative growth.

  • Sales tax refund payment falls by 70 percent in last year

    Sales tax refund payment falls by 70 percent in last year

    ISLAMABAD: Federal Board of Revenue (FBR) has issued only Rs21.16 billion as sales tax refunds during last year which is 70 percent less than the preceding fiscal year.

    According to FBR’s Year Book 2018-2019, the revenue body had issued sales tax refunds amounting to Rs21.16 billion as against Rs70.5 billion in the preceding fiscal year, which recorded 70 percent decline.

    It is worth mentioning that the exporters are criticizing the FBR for holding their amount in the shape of sales tax refunds. The stuck up liquidity has created serious financial challenges to undertake production activity.

    The overall release of refunds and rebate registered 21.4 percent decline during the past fiscal year.

    The FBR issued rebate and refunds worth Rs121.63 billion during fiscal year 2018/2019 as compared with Rs154.72 billion in the preceding fiscal year.

    The issuance of refunds in direct taxes recorded 21 percent growth to Rs83.89 during the last fiscal year as compared with Rs69.46 billion in the preceding fiscal year.

    The FBR issued Rs16.57 billion as customs duty rebate during the last fiscal year, which was 12.3 percent higher than Rs14.75 billion in preceding fiscal year.

  • Tax system not to improve without documentation of economy: Hafeez Shaikh

    Tax system not to improve without documentation of economy: Hafeez Shaikh

    KARACHI: Dr. Abdul Hafeez Shaikh, Adviser to Prime Minister on Finance and Revenue, on Saturday said that taxation system will not be improved without documentation of economy.

    He was addressing at a meeting with office bearers of Overseas Investors’ Chamber of Commerce and Industry (OICCI).

    He said that achieving economic growth was not possible without generating tax revenue. He said trade community should not fear with the condition of Computerized National Identity Card (CNIC) because without documenting the economy tax system would not improve.

    The adviser said that the prime minister was putting all his efforts to facilitate the business community with the realization that trade and business were backbone of the economy.

    Shaikh said that the government had overcome the economic challenges. The government is giving around Rs250 billion subsidy to manufacturers and exporters.

    In order to improve the taxation system of Federal Board of Revenue (FBR) the government is introducing large scale reforms.

    He further said that the government was taken all those steps to strengthen the institutions.

    Hafeez Shaikh said that the IMF had shown confidence on reform programs initiated by the government.

    The government has not borrowed from the State Bank during past four months. Besides the government also reduced the current account deficit, he added.

    He said that in order to facilitate the masses the government had not increased prices of petroleum products.

    The adviser pointed out improvement in stock exchange due to measures of the government regarding confidence building of investors.

  • Weekly Review: market to maintain upsurge

    Weekly Review: market to maintain upsurge

    KARACHI: The stock market to maintain upsurge in next week owing to foreign investors’ participation in local bond and equity markets.

    Analysts at Arif Habib Limited said that although the market may witness a temporary spell of consolidation, we expect the index to continue its upsurge going forward led by improvement in the macro-economic landscape.

    Moreover, augmented participation by foreign and local investors (courtesy improved volumes) in the debt and equity space has also kept the sentiment upbeat. We advise market participants to cherry pick blue chip scrips and keep their view long.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 6.4x (2020) compared to Asia Pac regional average of 13.6x and while offering DY of ~8.5 percent versus ~2.6 percent offered by the region.

    Foreign investment in government backed treasury bills at USD 722 million since the beginning of FY20, attributable to waning concerns on the economic front has effectively supported the slight growth in FX reserves of the SBP (up by 0.5 percent WoW to USD 8,397 million as at 14th November 2019) and consequentially, kept the exchange rate parity stable.

    Meanwhile the opposition party – JUIF – has called-off the sit-in in the capital, shielding the political climate from heating up.

    This translated to positivity at the domestic equity bourse with the benchmark KSE-100 index closing at 37,584 points this week, generating a return of 4.5 percent WoW (1,606 points).

    Sector-wise Positive contributions came from i) Commercial Banks (430 points), ii) Power Generation & Distribution (203 points), iii) Cement (133 points), iv) E&P (127 points), and OMCs (101 points) while negative contributions were led by i) Tobacco (33 points).

    Scrip-wise positive contributions were led by HUBC (156 points), HBL (103 points), BAHL (93 points), ENGRO (56 points) and TRG (55 points).

    Foreign buying was witnessed this week clocking-in at USD 4.2 million compared to a net buy of USD 4.5 million last week.

    Buying was witnessed in fertilizer (USD 5.1 million) and Commercial Banks (USD 3.8 million). On the domestic front, major selling was reported by Banks / DFIs (USD 18.8 million) and Insurance Companies (USD 9.6 million).

    Average Volumes settled at 311 million shares (up by 21 percent WoW) while average value traded clocked-in at USD 64 million (up by 17 percent WoW).

  • Tax collection witnesses negative growth after 51 years

    Tax collection witnesses negative growth after 51 years

    ISLAMABAD: The revenue collection in 2018/2019 has witnessed negative growth after 51 years, according to year book released by Federal Board of Revenue (FBR). The historical revenue collection shows the tax collecting agency witnessed the negative growth in 1967/1968.

    Following is the historical revenue collection figures since 1948/1949:

    Rupees in million

    YearTotal 
    1948-49311+
    1949-50448+
    1950-51785+
    1951-52951+
    1952-53882–
    1953-54701–
    1954-55775+
    1955-56965+
    1956-57884–
    1957-58978+
    1958-591,281+
    1959-601,178–
    1960-611,400+
    1961-621,565+
    1962-631,760+
    1963-642,083+
    1964-652,498+
    1965-662,686+
    1966-673,299+
    1967-683,213–
    1968-693,902+
    1969-704,610+
    1970-714,984+
    1971-725,162+
    1972-736,508+
    1973-749,019+
    1974-7510,937+
    1975-7613,193+
    1976-7715,664+
    1977-7819,188+
    1978-7922,399+
    1979-8030,016+
    1980-8134,764+
    1981-8238,551+
    1982-8343,308+
    1983-8450,331+
    1984-8552,410+
    1985-8659,202+
    1986-8765,301+
    1987-8875,425+
    1988-8990,381+
    1989-90104,233+
    1990-91110,493+
    1991-92139,776+
    1992-93153,238+
    1993-94172,591+
    1994-95226,578+
    1995-96268,037+
    1996-97282,087+
    1997-98293,631+
    1998-99308,509+
    1999-00347,104+
    2000-01392,277+
    2001-02404,070+
    2002-03460,627+
    2003-04520,843+
    2004-05590,387+
    2005-06713,442+
    2006-07847,236+
    2007-081,008,091+
    2008-091,161,150+
    2009-101,327,382+
    2010-111,558,014+
    2011-121,882,693+
    2012-131,946,360+
    2013-142,254,532+
    2014-152,589,978+
    2015-163,115,054+
    2016-173,367,900+
    2017-183,843,755+
    2018-193,828,482–

    The negative growth in revenue collection for fiscal year 2018/2019 has been witnessed when Syed Muhammad Shabbar Zaidi is performing as chairman.

    The previous negative growth in revenue collection was recorded in 1967/1968 when Ghulam Ishaq Khan was Ex-Officio Chairperson of the then Central Board of Revenue (CBR) presently FBR.

    Record shows the tax collection also witnessed negative growth in 1952/1953, 1953/1954 and 1956/1957 when Mumtaz Hassan was ex-official chairperson of the CBR. He served at head of the tax collecting agency from February 25, 1952 to November 01, 1958.

    The tax collecting agency again witnessed negative collection growth in 1959-1960 when H A Majid was ex-officio chairperson of the CBR.

  • Income tax collection from doctors surges by 135pc; services sector contribution falls by 8.2pc

    Income tax collection from doctors surges by 135pc; services sector contribution falls by 8.2pc

    ISLAMABAD: The income tax collection from doctors has witnessed unprecedented growth of 135 percent in fiscal year 2018/2019, according to official statistics of Federal Board of Revenue (FBR).

    The FBR revealed that the tax collection from doctors increased to Rs2.83 billion in fiscal year 2018/2019 as compared with Rs1.21 billion in the preceding fiscal year.

    Sources in the FBR said that the monitoring of professionals resulted in revenue collection growth.

    Similarly, the income tax collection from engineers registered 80 percent growth to Rs5.24 billion in fiscal year 2018/2019 as compared with Rs2.91 billion in the preceding fiscal year.

    The collection of income tax from another segment of services sector i.e. accountants witnessed 10.3 percent growth. The collection of income tax from accountants was Rs3.05 billion in fiscal year 2018/2019 as compared with Rs2.76 billion in the preceding fiscal year.

    The overall collection of income tax from services sector fell by 8.2 percent to Rs350 billion in the last fiscal year as compared with Rs381.7 billion in the fiscal year 2017/2018.

    The major chunk of revenue came from banking and financial institutions under the head of services sector. The banks and financial institutions paid Rs152.21 billion in fiscal year 2018/2019 as compared with Rs177.41 billion, registering 14.2 percent decline.

    Other major revenue spinner under this head was insurance sector but it also witnessed negative growth of 13.3 percent. The insurance sector paid Rs11.24 billion during fiscal year 2018/2019 as compared with Rs12.96 billion in preceding fiscal year.

    However, the income tax collection from hotels and restaurants registered 33 percent growth in revenue collection to Rs8.16 billion in 2018/2019 as compared with Rs6.15 billion in the preceding fiscal year.

    The income tax collection from travel agencies posted 15.5 percent increase. The collection from travel agencies increased to Rs2.12 billion in fiscal year 2018/2019 as compared with Rs1.83 billion in the preceding fiscal year.

  • Stock market gains 341 points on buying activities

    Stock market gains 341 points on buying activities

    The Pakistan stock market witnessed a significant rally on Friday, with the benchmark KSE-100 index climbing 341 points. The index closed at 37,584 points, up from 37,243 points, marking a robust session of across-the-board buying activities.

    (more…)
  • KTBA submits observations on suspicious transaction reporting by jewelers, real estate agents

    KTBA submits observations on suspicious transaction reporting by jewelers, real estate agents

    KARACHI: Karachi Tax Bar Association (KTBA) on Friday submitted its observations on reporting of suspicious transactions by jewelers and real estate agents to Federal Board of Revenue (FBR).

    (more…)
  • SBP issues instructions to banks on FX/SWAP trade confirmation

    SBP issues instructions to banks on FX/SWAP trade confirmation

    KARACHI: State Bank of Pakistan (SBP) on Friday issued instructions to banks regarding foreign exchange (FX)/SWAP trade confirmation.

    The SBP said that it had earlier issued instructions through a circular on October 09, 2012 under which the banks provide FX/SWAP trade confirmations duly signed by their authorized signatories, as per standardized hard copy format (hard copy) on the transaction date.

    They are also required to provide SWIFT MT-300 confirmation message (SWIFT message) in addition to said hard copies.

    It has, however, been observed that some of the banks occasionally fail to send said hard copies/ SWIFT messages on the transaction date.

    Such lapses pose serious difficulties in timely verification of trade terms and other trade related details thereby unnecessarily exposing the banks to critical settlement risk.

    The banks are also required to keep this department updated on any changes in their list of authorized signatories along with contact details, however, intermittent non-compliance to these instructions has also been noted.

    In order to ensure smooth settlement process, the banks are advised to:

    Ensure that all SWIFT messages, of a given transaction date, are invariably transmitted to this department with zero tolerance for any leftover SWIFT message.

    This means that transmission date of a SWIFT message should not be later than the trade commitment date (transaction date) of related FX/SWAP trade.

    Further, in order to bring efficiency in the process, transmission of hard copy may be discontinued from now onwards.

    However, submission of hard copy would be mandatory in situations where a bank is unable to transmit SWIFT message due to any reason of whatsoever in nature.
    Submit an updated list of authorized signatories with specimen signatures and contact details, on quarterly basis (format attached).

    Such updated list for quarter ending Jul-Sep19 may be submitted by November 28, 2019. The future reports may be submitted within 10 working days from end of a calendar quarter.

    In case of any future changes of authorized person(s) during a quarter, this department will be immediately notified of such changes but not later than 3 working days.

  • SLR limits not to apply on floating rate PIBs: SBP

    SLR limits not to apply on floating rate PIBs: SBP

    KARACHI: The State Bank of Pakistan (SBP) has notified regulations to Statutory Liquidity Requirement (SLR) eligibility limit on floating rate Pakistan Investment Bonds (PIBs).

    In a circular issued on Friday, the SBP said it is decided that SLR eligibility limit of 15 percent for banks and 5 percent for Development Finance Institutions (DFIs) on Pakistan Investment Bonds (PIBs) shall not be applicable on floating rate PIBs.

    The SBP said that it had issued circulars on March 08, 2018 and May 22, 2004 for banks and Development Finance Institutions (DFIs) respectively.

    All other instructions on the subject will remain same. The above instructions will be effective immediately, the SBP said.