Pkrevenue.com

Month: December 2019

  • FBR deploys IR officers at 20 sugar mills for monitoring of production, supplies

    FBR deploys IR officers at 20 sugar mills for monitoring of production, supplies

    ISLAMABAD: Federal Board of Revenue (FBR) has deployed officers of Inland Revenue at 20 sugar mills to monitor production and supply for checking tax evasion.

    The IR officers have been deployed at the premises of sugar mills under Section 40B of Sales Tax Act, 1990 for the monitoring of stock, production and supply.

    Sources told PkRevenue.com that Large Taxpayers Unit (LTU) Karachi had requested the FBR to allow monitoring of sugar mills as huge tax evasion was detected in the past.

    Recently, the FBR conducted analysis of sugar production of the last year which revealed huge tax evasion by sugar mills.

    The outcome of analysis showed that FBR and the Cane Commissioner of three provinces had a difference of 641,000 metric tons which showed that the sugar mills were under reporting their stock in order to evade tax payments.

    It is also identified that the local supplies during the tax period of July 2019 fell by 255 percent due to enhancement in tax rate from eight percent in June 2019 to 17 percent in July 2019.

    The analysis further revealed that the stock holding last year ending June 2018 was 3,147,000 metric tons where as closing stock of the year ending on June 2019 was only 2,230,778 metric tons, which showed 29 percent decline.

    It is also pointed out that sugar manufacturers had declared high quantity of supplies during June 2019 to evade sales tax as the tax rate was to increase in July 2019.

    The FBR analysis revealed that the sugarcane was the biggest raw material of sugar industry.

    The undocumented/under-documented nature of this agriculture sector poses a great challenge to accurately gauge the quantity of sugarcane produced and supplied to a particular mill.

    Considering the above facts the FBR allowed deployment of IR officers at the sugar mills.

    It is worth mentioning that the FBR Chairman through an official memorandum barred the tax offices for invoking Section 40B of the Sales Tax Act, 1990 without prior permission of the board or Member IR Operations.

    Following is the list of sugar mills where IR officers have been deployed:

    01. M/s. Darya Khan Sugar Mills Limited.

    02. M/s. Popular Sugar Mills Limited.

    03. M/s. Deharki Sugar Mill Limited.

    04. M/s. Adam Sugar Mill Limited.

    05. M/s. Baba Farid Sugar Mill Limited.

    06. M/s. Digri Sugar Mill Limited.

    07. M/s. Mirpurkhas Sugar Mill Limited.

    08. M/s. Faran Sugar Mills Limited.

    09. M/s. Mehran Sugar Mills Limited.

    10. M/s. Dewan Sugar Mills Limited.

    11. M/s. Al-Abbas Sugar Mills Limited.

    12. M/s. Ansari Sugar Mills Limited.

    13. M/s. Bawany Sugar Mills Limited.

    14. M/s. Larr Sugar Mills Limited.

    15. M/s. New Dadu Sugar Mills Limited.

    16. M/s. Rani Sugar Mills (Pvt) Limited

    17. M/s. Al-Noor Sugar Mills Limited

    18. M/s. Tando Allahyar Sugar Mills Limited

    19. M/s. Habib Sugar Mills Limited

    20. M/s. Sindabadgar Sugar Mills Limited

  • Pakistan, China agree to expedite customs clearance through green corridor

    Pakistan, China agree to expedite customs clearance through green corridor

    ISLAMABAD: Pakistan and Chinese customs authorities have agreed to expedite clearance of agriculture products under proposed green corridor at Sost-Khunjarab Border.

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  • Tax exemption available on ‘profit on debt’ if security issued outside Pakistan

    Tax exemption available on ‘profit on debt’ if security issued outside Pakistan

    KARACHI: Tax exemption is available to profit on debt where security issued outside Pakistan for raising loan.

    Officials in Federal Board of Revenue (FBR) on Wednesday said that tax exemption is available on profit on debt in certain conditions.

    According to Income Tax Ordinance, 2001, any profit received by a non-resident person on a security issued by a resident person shall be exempt from tax under this Ordinance where—

    (a) the persons are not associates;

    (b) the security was widely issued by the resident person outside Pakistan for the purposes of raising a loan outside Pakistan for use in a business carried on by the person in Pakistan;

    (c) the profit was paid outside Pakistan; and

    (d) the security is approved by the FBR for the purposes of this section.

    The income tax exemption is also available to any scholarship granted to a person to meet the cost of the person’s education shall be exempt from tax under this Ordinance, other than where the scholarship is paid directly or indirectly by an associate.

    Any income received by a spouse as support payment under an agreement to live apart] shall be exempt from tax under the Ordinance.

    The officials said income tax exemption is also available to the income derived by the federal government, provincial government, and local government.

    The income of the Federal Government shall be exempt from tax under the Ordinance.

    The income of a Provincial Government or a Local Government in Pakistan shall be exempt from tax under this Ordinance, other than income chargeable under the head “Income from Business” derived by a Provincial Government or Local Government from a business carried on outside its jurisdictional area.

    Any payment received by the Federal Government, a Provincial Government or a Local Government shall not be liable to any collection or deduction of advance tax.

    Exemption under this section shall not be available in the case of corporation, company, a regulatory authority, a development authority, other body or institution established by or under a Federal law or a Provincial law or an existing law or a corporation, company, a regulatory authority, a development authority or other body or institution set up, owned and controlled, either directly or indirectly, by the Federal Government or a Provincial Government, regardless of the ultimate destination of such income as laid down in Article 165A of the Constitution of the Islamic Republic of Pakistan:

    Provided that the income from sale of spectrum licenses and renewal thereof by Pakistan Telecommunication Authority on behalf of the Federal Government after the first day of March 2014 shall be treated as income of the Federal Government and not of the Pakistan Telecommunication Authority.

  • Intelligence discovery of around Rs1bn evasion raises question on customs collectorates performance

    Intelligence discovery of around Rs1bn evasion raises question on customs collectorates performance

    KARACHI: Performance of customs officials in clearance of imported has become questionable following back to back detection of around Rs1 billion by intelligence wing.

    Directorate of Intelligence and Investigation (I&I) Customs pointed out tax avoidance of an amount of Rs221 million by Oil and Gas Development Company Limited (OGDCL) and recovered the same.

    In another case the intelligence directorate detected tax evasion of around Rs755 million by three importers of steel products.

    The sources said that the huge discovery of tax evasion and avoidance raised questions about the performance of customs officials posted at Customs collectorates in Karachi.

    The officials of customs intelligence have jurisdiction over those goods which were cleared by customs collectorates. The sources said that huge discovery of evasion and avoidance showed inefficiency of the customs staff posted at collectorates or something else.

    The sources said that in both the cases the intelligence was ascertaining the role of customs officials in evasion and avoidance.

    They said that in the case of OGDCL, the company wrongly claimed the exemption. However, the company paid the amount as pointed out by the intelligence directorate.

    However, in other case customs intelligence and investigation lodged around 26 FIRs two days ago against three importers for misusing SRO 655(I)/2006 dated June 26, 2006 for clearance of steel products.

    The said consignments were cleared by three model collectorates in Karachi where only one percent customs duty was paid instead actual payment of 20 percent duty.

    The sources said that the three importers jointly evaded around Rs755 million. They, however, said that the evasion was detected post clearance by the collectorates.

    The sources in customs intelligence and investigation said that they had jurisdiction over cases where consignments were allowed clearance after proper scrutiny of prevailing laws and applicable customs valuations.

    The sources further said that besides lodging FIRs against importers, the authorities had launched probe into the cases that why the consignments were not examined properly by the customs collectorates.

    As per the concessions the importers cum-manufactures had been allowed imports at reduced rate of duty for in-house value addition but in the instant cases the importers had sold the goods in the open market in the raw form.

    As per the FIRs the importers misdeclared the quality of steel products at the customs clearance stage.

  • Stock market declines by 133 points on selling pressure

    Stock market declines by 133 points on selling pressure

    KARACHI: The stock market ended down by 133 points on Wednesday owing to selling pressure witnessed during the day.

    The benchmark KSE-100 of Pakistan Stock Exchange (PSX) closed at 40,531 points as against 40,664 points showing a decline of 133 points.

    Analysts at Arif Habib Limited said that the market replicated yesterday’s performance, the index traded range bound from +247 points to -214 points during the session and closed the session at low ebb.

    At the start of session, index opened on a positive note with +77 points and 3.74 million shares traded on opening. Volumes improved over the day and cross 300 million mark again.

    Selling pressure was evident almost across the board, but mostly observed in Oil & Gas chain and Banks. Cement sector led the volumes with 44.6 million shares followed by Vanaspati (44.5 million) and Banks (31.8 million).

    Among scrips, UNITY topped with 44.5 million shares, followed by POWER (16.3 million) and PAEL (15.6 million).

    Sectors contributing to the performance include Banks (-50 points), Power (-44 points), Cement (-28 points), Inv Banks (-23 points), Autos (-20 points), Chemical (+14 points), and Textile (+11 points).

    Volumes increased from 254.7 million shares to 305.1 million shares (+20 percent DoD). Average traded value also increased by 18 percent to reach US$ 70.0 million as against US$ 59.5 million.

    Stocks that contributed significantly to the volumes include UNITY, POWER, PAEL, BOP and KEL, which formed 34 percent of total volumes.

    Stocks that contributed positively include MARI (+37 points), FFC (+14 points), COLG (+13 points), SYS (+9 points) and SHFA (+7 points). Stocks that contributed negatively include PPL (-32 points), HUBC (-28 points), DAWH (-18 points), MCB (-18 points), and LUCK (-13 points).

  • Rupee ends unchanged in range bound trading

    Rupee ends unchanged in range bound trading

    The Pakistani rupee remained stable against the US dollar on Wednesday, as the interbank foreign exchange market witnessed range-bound trading with limited volatility, according to currency dealers.

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  • Customs intelligence recovers Rs221.7 million from OGDCL for claiming wrong exemption

    Customs intelligence recovers Rs221.7 million from OGDCL for claiming wrong exemption

    KARACHI: Directorate of Customs Intelligence and Investigation, Karachi has recovered Rs221.7 million from Oil and Gas Development Company Limited (OGDCL) against avoiding payment of duty and taxes on import of seamless pipes.

    Officials at the directorate on Wednesday said that the oil and development company imported seamless pipes from China and got cleared through MCC Appraisement East, Karachi while availing exemption under SRO 678(I)/2004.

    “The GD was assessed and cleared by the collectorate under claimed exemption on customs duty at five percent and additional customs duty at four percent total amounting to Rs71.77 million against total assessed value of Rs797.53 million,” according to an official note sent to Federal Board of Revenue (FBR) Headquarters.

    It said that the scrutiny of GD revealed that the exemption was wrongly claimed as it was not admissible on the goods being locally manufactured.

    While realizing the factual position the representatives of OGDCL submitted pay orders amounting Rs221.71 million, which was drawn on National Bank of Pakistan (NBP).

    The payment of differential amount proved that the OGDCL had wrongly claimed exemption under the SRO 678(I)/2004 which resulted into loss of government revenue. The paid amount included Rs39.87 million as customs duty, Rs154.56 million as sales tax and Rs27.27 million as additional sales tax.

    The pay orders submitted by the company were sent to the clearance collectorate for deposit in the government treasury after assessment of the GD so that consignment may be de-blocked.

    The directorate said that the amount was deposited in the government treasury. However, role of customs officers/officials is being ascertained in the matter.

    Director I&I Irfan Javed praised the extraordinary efforts of Adnan Rafiq, Deputy Director, in detection of the evasion.

  • SBP imposes Rs1.35 billion as monetary penalty on commercial banks

    SBP imposes Rs1.35 billion as monetary penalty on commercial banks

    KARACHI: State Bank of Pakistan (SBP) has imposed monetary penalty to the tune of Rs1.35 billion on commercial banks in five months for violating regulatory environment.

    The central bank on Wednesday issued significant enforcement measures by imposing monetary penalty on banks for violating rules, regulations and other regulatory environment.

    The SBP imposed Rs192.66 million as penalty on four banks during the month of November 2019 for violating mainly regulations related to Customers Due Diligence (CDD) and Know Your Customer (KYC).

    The SBP from July 2019 started public disclosure of penal action against banks. “Enforcement actions are an integral part of regulatory regime which involves imposition of monetary penalties and other actions against institutions and individuals for violations of laws, rules, regulations, guidelines or directives issued by SBP from time to time,” according to a circular issued by the central bank.

    In order to bring more transparency and strengthen market discipline, SBP has decided to publicly disclose significant enforcement actions

    With the latest penal action the total amount of penalty during first five months (July – November) 2019 increased to Rs1,351.28 million.

    According to the highlights of significant enforcement actions by the SBP during November 2019, the central bank imposed Rs192 million as monetary penalties.

    The central bank on November 05, 2019 imposed penalty amount of Rs60.8 million on Allied Bank Limited for violating CDD/KYC.

    “In addition to penal action, the bank has been advised to conduct an internal inquiry on breaches of regulatory requirements and take a disciplinary action against the delinquent officials,” the SBP said.

    The central bank o n November 06, 2019 imposed an amount of Rs91.85 million on MCB Bank Limited for violating CDD/KYC.

    “In addition to penal action, the bank has been advised to conduct an internal inquiry on certain breaches/violation of regulatory requirements. Further, the bank has been advised to strengthen its process related to KYC/CDD, in order to avoid recurrence of such violations in future.”

    The SBP on November 06, 2019 imposed penalty of Rs14 million on the Bank of Punjab for violating CDD/KYC.

    “In addition to penal action, the bank has been advised to strengthen its process related to KYC/CDD, in order to avoid recurrence of such violations in future.”

    The SBP on November 07, 2019 imposed monetary penalty of Rs26 million on Habib Bank Limited for violating CDD/KYC.

    “In addition to penal action, the bank has been advised timelines to bring improvements in its systems/controls to avoid recurrence of such violations in future.”

  • Ministry’s approval must for liquor import for diplomatic bonded warehouse

    Ministry’s approval must for liquor import for diplomatic bonded warehouse

    KARACHI: The Import permission from Ministry of Commerce is necessary for the import of liquor for a diplomatic bonded warehouse.

    “A Muslim cannot import or deal in liquor in the diplomatic bonded warehouse,” according to explanation issued by Federal Board of Revenue (FBR) regarding Diplomatic Bonded Warehouse.

    “Liquor is allowed to Diplomats against the Exemption Certificates issued by the Ministry of Foreign Affairs.”

    Liquor can be purchased by diplomats according to the quantities mentioned in the exemption certificates issued by the Ministry of Foreign Affairs, it said.

    Privileged persons can purchase liquor according to the quota provided in the Model Rules and CGO.15/96 which is as under :-

    According to CGO.15/96, the Import / purchase of alcoholic beverage is restricted to US$ 200/= per family per month by expatriate employees of foreign or local companies, loan funded projects or media personnel.

    According to the Model Rules dated 15-04-1963 for customs concessions to privileged personnel arriving under various foreign aid programmes or projects, Import / purchase of liquor can be made as per following quota.

    The FBR said that Diplomatic Bonded Warehouse is the warehouse licensed under section 13 of the Customs Act, 1969 for warehousing the dutiable goods Imported exclusively for diplomats / privileged persons.

    A Bonded Warehouse License is issued under the provisions of section 13 of Customs Act,1969.

    However, in case of Diplomatic Bonded Warehouse, the licenses were issued with the prior approval of the Federal Board of Revenue (FBR).

    As provided under sub-section(2) of section 13 of the Customs Act,1969, an application for the grant of license shall be made in the prescribed form Annex-B along with following documents :-

    Map of the proposed area.

    Article and Memorandum of Association in case of company and copy of partnership deed in case of partnership firm.

    Certificate from a scheduled bank showing soundness of financial position.

    Income Tax Registration Certificate.

    Details of Directors and authorized persons.

    Certificate of Membership of Chamber of Commerce and Industry.

    Lease / Tenancy Agreement.

    Copies of National identity Card(s) & Character Certificate(s).

    Comprehensive Insurance Policy from an approved Insurance Company.

    Survey Certificate issued by the approved surveyor.

    Besides the requirements mentioned above, all other conditions required under the Customs Act,1969 or any other law for the time being in force shall also be fulfilled.

    The permission for Import of liquor is, however, granted to non-Muslims only.

    The diplomatic bonded warehouses are dealing in Import of goods Imported exclusively for the use of diplomats, foreign missions and privileged persons. As such, all such goods / items which are used by the diplomats, foreign missions and privileged persons can be imported.

    The goods are not imported against L/C. The Importer (holding diplomatic bonded warehouse license) Import goods on contract basis and store the same in his warehouse. Subsequently goods are sold to diplomats / privileged persons according to their requirement and exemption certificates issued by the Ministry of Foreign Affairs.

    The purchase will be made strictly according to the quota fixed by the Ministry of Foreign Affairs and quantities mentioned in the exemption certificate.

    Quota is allotted and purchases are authorized by the Ministry of Foreign Affairs.
    The strength of the diplomatic community in the country which benefits from the warehouses is maintained by the Ministry of Foreign Affairs.

    The licensee of a bonded warehouse cannot open its sub-office in other cities. Periodical stock taking is conducted.

    The audit is also carried out by the staff of the Director General, Revenue Receipt Audit on quarterly basis.

    Moreover, insurance policy is obtained from the bonders covering all risks including pilferage etc.

    Besides there are specific provisions in Chapter-XI and Chapter-XVIII of the Customs Act,1969.

    In case of detection of any pilferage or misuse of the facility, penal action under the relevant clauses of sub-section (1) of section 156 of the Customs Act,1969 can also be initiated.

    On first arrival in Pakistan a privileged person shall be allowed to import free of duty and taxes foodstuff and other consumable stores including liquors and tobacco up to C&F value of US$ 200/- under chapter III of SRO 450(i)/01.

    During the period of his assignment he shall be allowed to Import free of duty and taxes foodstuff and consumable stores including liquor and tobacco up to C&F value of US$ 150/- per month but the value of liquor will not exceed US $50/- per month.

  • FBR discusses Customs internship program at NUST, LUMS

    FBR discusses Customs internship program at NUST, LUMS

    ISLAMABAD: Federal Board of Revenue (FBR) is in discussion with top universities to launch ‘Customs internship program’ for the youth of the country.

    In this regard, Syed Shabbar Zaidi, Chairman FBR held a meeting with Heads of Departments of National University of Science and Technology (NUST) and Lahore University of Management Sciences (LUMS) to discuss the launch of “Customs Internship Program” for the youth of Pakistan in June 2020.

    Earlier the program had been got approved and Chairman had directed its expeditious implementation.

    As informed by Dr. Jawwad Uwais Agha, Member Customs Operations, through this program two hundred BS/MS level students of top universities of Pakistan like LUMS, NUST, IBA and GIK in areas of Law, Public Financial Management, Economics, Finance, Public Policy and Information Technology would get an opportunity to work in the field units of Pakistan Customs for a 10-12 weeks’ internship program.

    A stipend of Rs 12,000 / month will be offered in this regard.A special internship program for 200 High School students will also be launched simultaneously with a stipend of Rs 4000-8000 for a 2-6 weeks internship program.

    FBR chairman lauded the efforts of Pakistan Customs in launching this innovative initiative which will create awareness about International and Domestic Economy and Public sector functioning and elaborated that the program will increase opportunities of employability and enhance confidence and ability of youth.

    The representatives from NUST and LUMS appreciated the initiative taken by Pakistan Customs and ensured their complete cooperation in this regard.