Year: 2019

Customs to auction huge quantity of vehicles, motor bikes on April 09

KARACHI: Pakistan Customs has announce public auction of used motor vehicles and heavy bikes to be held on April 09, 2019 at Bay West, West Wharf Road, Karachi.

Auction of fresh vehicles under schedule No. 04/ 2019 to be held on April 09, 2019:

01. Nissan Moco Car, Chassis No. MG33S-1434760, year 2014

02. Honda-N car, Chassis No. JGI-1208909, year 2016

03. Toyota Aqua Hybrid Car, Chassis No. NHP10-6492089, year 2016, capacity 1496ml

04. Toyota Passo, Chassis No. M700A-0068740, Year 2017, Capacity 996cc

05. Toyota Aqua Hybrid Car, Chassis No. NHP10-6675744, year 2017, capacity 1496ml

06. Daihatsu Move Car, Chassis No. LA160S-0022740, year 2016, capacity 658cc

07. Honda Vezel Hybrid Car, Chassis No. RU3-1009600, Year 2014

08. Suzuki Alto, Chassis No. HA36S-318639, year 2019-04-07

09. Toyota Prius Hybrid car, chassis no. ZVW50-6057948, capacity 1797ml, year 2016

10. Suzuki Wagon-R, chassis no. NH34-535805, year 2016

11. Suzuki Alto, Chassis No. HA36S-283360, year 2016

12. Toyota Prius Hybrid Car, Chassis No. AVW50-6040670, year 2016, capacity 1797cc

13. Toyota Aqua Hybrid Car, chassis No. NHP10-6489786, year 2016, capacity 1496ml

14. Suzuki Alto Lapin Car, Chassis No. HE33S-114646, year 2015

15. Suzuki Every Wago, Chassis No. DA17W-160902, Year 2018

16. Honda-N WGN Car, Chassis No. JHI-1399120, year 2018, milage 562kms

17. Honda Fit Hybrid Car, Chassis No. GP5-3313188, year 2016

18. Suzuki Every Van, Chassis No. Da64V-827933, year 2013

19. Toyota Aqua Hybrid Car, Chassis No. NHP10-6537080, year 2016, Capacity 1496ml

20. Nissan Dayz Car, Chassis No. B21W-0473466, Year 2017

21. Honda Vezel Hybrid Car, Chassis No. RU3-1129894, year 2016

22. Suzuki Wagon-R Car, Chassis No. MH35S-109600, year 2017

23. Nissan Dayz Roox Car, Chassis No. B21A-0346728, year 2017

24. Daihatsu Hijet Cargo Van, Chassis No. S331V-0119751, year 2014, Capacity 658cc

25. Honda Fit Hybrid Car, Chassis No. GP5-1213366, Year 2016

26. Toyota CH-R Hybrid, Chassis No. ZYX10-2030563, year 2017, capacity 1797ml

27. Daihatsu Mira E:S, Chassis No. La350S-0087051, year 2018, capacity 658cc

28. Toyota Aqua Hybrid Car, Chassis No. NHP10-2545720, year 2016, capacity 1496ml

29. Suzuki Alto Car, Chassis No. HA36S-339803, year 2017, capacity 658cc

30. Daihatsu Move Car, Chassis No. LA160S-0029143, year 2017, capacity 658cc

31. Toyota Voxy Van, Chassis No. ZWR80-0035138, year 2014, capacity 1794ml

32. Suzuk Wagon-R, Chassis No. NH34S-532308

33. Honda Vezel Hybrid, Chassis No. RU3-1202746, year 2016

34. Suzuki Singray Wagon-R, Chassis No. MH44S-509107, Year 2016

35. Suzuki Alto Car, Chassis No. HA36S-367262, year 2017

Auction of leftover vehicles:

01. Suzuki Audi, Chassis No. WAUZZZGAIJ018984, mileage 3664km

02. Suzuki Bandit Car, Chassis No. MA36S-609297, year 2015

03. Toyota Passo Car, Chassis No. M710A-0005138, year 2016, capacity 998cc

04. Toyota Prius Hybrid Car, Chassis No. ZVW41-0037004, year 2016, capacity 1797

05. Toyota Aqua Hybrid Car, Chassis No. NHP10-6360564, year 2014, capacity 1496ml

06. Range Rover Evoque, Chassis No. SALVA2AG70H828587, year 2013

07. Suzuki Lapin Car, Chassis No. HE33S-179190, year 2017

08. Daihatsu Copen Car, Chassis No. LA400K-0007555, year 2014, capacity 658cc

09. Mitsubishi Mirage Car, Chassis No. A03A-0034375, year 2015

10. Daihatsu Move Car, Chassis No. LA150S-0119262

Used motor bikes:

i. New Arctic Cat ATV Bike, Chassis No. RFB14ATV3EK6T0888, year 2014, Capacity 90cc

ii. New Arctic Cat ATV Bike, Casssis No. RFB14ATVXEK6T0905, year 204, capacity 90cc

iii. New Arctic Cat ATV Bike, Chassis No. RFB14ATVXEK6T0919, year 2014, capacity 90cc

iv. New Arctic Cat ATV Bike, Chassis No. RFB14ATV2EK6T0896, year 2014, capacity 90cc

v. New Arctic Cat ATV Bike, Chassis No. RFB14ATV9EK6T0928, year 2014, capacity 90cc

vi. New Arctic Cat ATV Bike, Chassis No. RFB14ATV9EK6T0894, year 2014, capacity 90cc

vii. New Arctic Cat ATV Bike, Chassis No. RFB14ATV3EK6T0910, year 2014, capacity 90cc

viii. New Arctic Cat ATV Bike, Chassis No. RFB14ATV3EK6T0938, year 2014, capacity 90cc

April 8, 2019
Accountability framework for FBR officials suggested to make tax audit transparent

KARACHI: Pakistan Tax Bar Association (PTBA) has said that there should be accountability framework for tax officers in order to make audit transparent.

Abdul Qadir Memon, President, PTBA in a message to PTBA Tax Journal outlined eight-point recommendations to tax authorities for making audit system more transparent in order to boost confidence of taxpayers on the authorities.

Memon said that the accountability framework and service standards should be introduced for the employees of Federal Board of Revenue (FBR), more particularly for the revenue officers in respect of quality of assessment order and standing of their orders in the test of appeal including but not limited to final revenue generated by the exchequer.

The PTBA said that laws should be formulated in such a manner that there is a clarity, certainty and finality of an assessment, which has been universally recognized as hallmark of audit and an assessment.

Following are suggestions for effective audit selection mechanism and amendment of assessment based on cogent, honest, justifiable with reasoning and intelligible nexus with the tax affairs of the taxpayers and capacity to pay tax:

— To place sophisticated tax intelligence system to gather data from withholding collection of taxes and third party information collected on the basis of transactions conducted through computerized national identity cards (CNICs).

— Cases are selected by the FBR only on the basis of defined risk areas or red flags trigger tax audit. The field forces are restricted to conduct audit of only such cases.

— The amendment of assessment is framed by the field forces under the following circumstances guided the rules of justice, equity and judicial conscious:

i. Any income chargeable to tax or sales has escaped assessment, under assessed, assessed at low rate or has been misclassified on the basis of definite information.

ii. The deemed assessment is erroneous in so far as it is prejudicial to the interest of revenue.

— In line with global practice (USA, UK, New Zealand, Australia, Canada) to provide a more supportive legislative and administrative environment for existing self-assessment arrangements and to make the taxation system fairer and more certain, it is imperative that a system of Binding Public and Private Ruling for Resident and Non-Residents be introduced.

— The commissioner should not be empowered to amend the assessment as many times as may be necessary on the same issue or point, which has already been subject matter of reassessment or further assessment proceedings.

— The time limit for amendment of assessment should be reduced to two years from the end of the financial years in which the commissioner has issued the original order to the taxpayer and one year in case of amended assessment; whichever is later.

— Relevant laws under the provisions of Direct and Indirect Taxes should be amended in a manner that:

i. Once the audit for any tax year is conducted/completed under Section 177 read with Section 214C of Income Tax Ordinance, 2001; there should not be any audit of monitoring of withholding/collection of taxes and amendment of assessment unless ‘definite information’ comes into the possession of the commissioner.

ii. Once the sales tax audit for any year is conducted in respect of registered taxpayer under the Section 72B there should not be audit under Section 25 of the Sales Tax Act, 1990.

April 7, 2019
World Bank projects Pakistan’s growth to decelerate in FY19, FY20

KARACHI: World Bank has projected lower GDP growth for Pakistan during two fiscal years i.e. 2018/2019 and 2019/2020 to 3.4 percent and 2.7 percent, respectively.

The World Bank in a report released on Sunday, said that growth for Pakistan is projected to decelerate to 3.4 percent in FY19 and to 2.7 percent in FY20, as the government tightens fiscal and monetary policies.

“While domestic demand growth will slow down immediately, net ex¬ports will only increase gradually,” it added.

The World Bank said that as macroeconomic conditions improve, and a package of structural reforms in fiscal management and competitiveness is implemented, growth is expected to recover to 4.0 percent in 2020/2021.

“This baseline scenario assumes stable international oil prices and reduced political and security risks,” it added.

Inflation is expected to rise to 7.1 percent (average) in FY19 and projected to reach 13.5 percent in FY20 as a result of further exchange rate depreciation pass-through.

The trade deficit is projected to remain elevated during 2018/2019, but to narrow in 2019/2020 and 2020/2021 as the impacts of currency depreciation, domestic demand compression, and other regulatory measures to curb imports set in.

Remittances are projected to finance over 70 percent of the trade deficit.

FDI, multilateral and bilateral debt-creating flows as well as financing from international markets are expected to be the main financing sources of the current account in the near to medium term.

The fiscal deficit is projected to increase to 6.9 percent in 2018/2019 and to remain high during next two fiscal years, a result of large interest payments and a slow increase in domestic revenues.

Public debt to GDP is expected to cross 80 percent in 2018/2019 and to remain elevated in the next two years, increasing Pakistan’s exposure to debt-related shocks.

The pace of poverty reduction is expected to continue to slow-down in FY19 and FY20, following the projected growth deceleration and higher inflation rates.

Together with the macroeconomic adjustment expected over the next two years, there is an urgent need to implement structural reforms to support the growth rebound from FY21 onwards.

Economic uncertainty has increased due to protracted negotiations with the IMF.

In addition, recent regional tensions have had an impact on risk perceptions.

The low reserves position and high debt-ratios limit the buffers that Pakistan could use to absorb external shocks (such as an increase in US interest rates) and may negatively impact the government’s ability to access international markets.

Reforms to put the country on a stable growth path include increased exchange rate flexibility, improved competitiveness and lower cost of doing business.

On the revenue front, reforms to improve tax administration, widen the tax base and facilitate tax compliance are critical.

Higher inflation rates may jeopardize recent gains in poverty reduction, since poor households in urban areas are particularly affected by increases in prices, as shown by the most recent inflation hike during the 2007-08 food price crisis.

April 7, 2019
Sales Tax Act 1990: tax credit not allowed under various conditions

KARACHI: A registered sales tax person is not allowed to entitle to reclaim or deduct input tax paid on various activities of manufacturing / supplies.

The Section 8 of updated Sales Tax Act, 1990 issued by Federal Board of Revenue (FBR) explained where tax credit is not allowed.

Section 8: Tax credit not allowed

Sub-Section (1): Notwithstanding anything contained in this Act, a registered person shall not be entitled to reclaim or deduct input tax paid on –

(a) the goods or services used or to be used for any purpose other for taxable supplies made or to be made by him;

(b) any other goods or services which the Federal Government may, by a notification in the official Gazette, specify;

(c)] the goods under sub-section (5) of section 3:

(ca) the goods or services in respect of which sales tax has not been deposited in the Government treasury by the respective supplier;

(caa) purchases, in respect of which a discrepancy is indicated by CREST or input tax of which is not verifiable in the supply chain;

(d) fake invoices;

(e) purchases made by such registered person, in case he fails to furnish the information required by the Board through a notification issued under sub-section (5) of section;

(f) goods and services not related to the taxable supplies made by the registered person.

(g) goods and services acquired for personal or non-business consumption;

(h) goods used in, or permanently attached to, immoveable property, such as building and construction materials, paints, electrical and sanitary fittings, pipes, wires and cables, but excluding pre-fabricated buildings and such goods acquired for sale or re-sale or for direct use in the production or manufacture of taxable goods;

(i) vehicles falling in Chapter 87 of the First Schedule to the Customs Act, 1969 (IV of 1969), parts of such vehicles, electrical and gas appliances, furniture furnishings, office equipment (excluding electronic cash registers), but excluding such goods acquired for sale or re-sale;

(j) services in respect of which input tax adjustment is barred under the respective provincial sales tax law;

(k) import or purchase of agricultural machinery or equipment subject to sales tax at the rate of 7 percent under Eighth Schedule to this Act;

(l) from the date to be notified by the Board, such goods and services which, at the time of filing of return by the buyer, have not been declared by the supplier in his return or he has not paid amount of tax due as indicated in his return; and

(m) import of scrap of compressors falling under PCT heading 7204.4940.

Sub-Section (2): If a registered person deals in taxable and non-taxable supplies, he can reclaim only such proportion of the input tax as is attributable to taxable supplies in such manner as may be specified by the Board.

Sub-Section (3): No person other than a registered person shall make any deduction or reclaim input tax in respect of taxable supplies made or to be made by him.

Sub-Section (4): omitted

Sub-Section (5): Notwithstanding anything contained in any other law for the time being in force or any decision of any Court, for the purposes of this section, no input tax credit shall be allowed to the persons who paid fixed tax under any provisions of this Act as it existed at any time prior to the first day of December, 1998.

Sub-Section (6): Notwithstanding anything contained in any other law for the time being in force or any provision of this Act, the Federal Government may, by notification in the official Gazette, specify any goods or class of goods which a registered person cannot supply to any person who is not registered under this Act.

Sub-Section (7): Omitted.

April 7, 2019
FBR issues notices to 350 Sindh bureaucrats for non-filing

KARACHI: Federal Board of Revenue (FBR) has issued notices to 350 senior bureaucrats of Sindh government for non-filing of income tax returns.

The notices have been issued by Regional Tax Office (RTO) –II Karachi on identification of expenditures through various sources by those provincial government officers.

The FBR sources said that these government officers had never filed their annual income tax returns and asset declarations with the income tax departments.

They said that the expenditures details had been obtained through their air travels, banking transactions, purchase of property purchase etc.

The information of those provincial government officers were obtained from their salary disbursements.

They said that the tax department would first enforce income tax returns and then would initiate proceedings of concealment.

The sources said that besides taking action against bureaucrats of Sindh government the RTO –II Karachi was also taking action against 3,000 more salary persons in the private sector to bring them into tax net.

The sources said that many of these salary persons had never filed income tax returns despite having taxable income as well as other source of income.

April 7, 2019
Rupee gains 20 paisas in open market

KARACHI: The Pak Rupee gained 20 paisas in open market on Saturday owing to monitoring launched by exchange companies after meeting with State Bank of Pakistan.

The buying and selling of dollar was recorded at Rs142.30/Rs142.80 from previous day’s ending of Rs142.50/Rs142.50 in cash ready market.

The representatives of Forex Association of Pakistan (FAP) held meetings during last two days with State Bank of Pakistan to control the higher demand of dollar in open market.

In the last day meeting the FAP decided that it would not entertain non genuine buyers of dollars and would monitor the trading in the open market.

April 6, 2019
DRAP warns pharma industry against increasing drug prices

ISLAMABAD: Drug Regulatory Authority of Pakistan (DRAP) has taken notice of unauthorized increase in prices of medicines.

In this regard the authority issued directives to pharmaceutical industries asking them to ensure maximum retail price (MRP).

“Your are advised to monitor MRPs in the market and ensure that MRPs of drugs are not higher than the prices notified through SRO 1610(I)/2018 dated December 31, 2018.”

In case of stocks available in the retail shops or manufactured/imported prior to issuance of this above said SROs must be sold at previous MRPs printed on the label in the manner prescribed by the Drugs (Labeling and Packing) Rules, 1986 and stickers/ cuttings are not allowed.

The authority said that some complaints had been received that unscrupulous elements in the pharma industry had increased prices of their drugs over and above approved maximum retail prices by the federal government.

In recent past MRPs of 889 drugs were notified after approval by the federal government through SRO 1610(I)/2018 dated December 31, 2018.

In addition an increase at 9 percent over and above the notified prices was allowed on January 10, 2019. Besides, another 15 percent increase was allowed on the same date in case of several other drugs.

The authorities said that in case of non-compliance by pharma industry, legal action would be taken against violators under the Drugs Act, 1976, DRAP Act, 2012 and rules framed three under and SRO 913 dated September 09, 2019.

April 6, 2019
Weekly Review: Market to positively respond to IMF talks

KARACHI: The equity market likely to stay positive in coming weeks as the expected staff level meeting of IMF is scheduled in April 2019.

Analysts at Arif Habib Limited said that this will revive the market sentiment.

Moreover, interest rate is expected to peak following another 50 basis points hike in May 2019; which will bring clarity to the investors.

On the currency front, the analysts expect the Pak Rupee to settle at 147/USD by June 2019.

Moreover, result of offshore drilling at Indus offshore block G ‘Kekra-1’ is also expected within six weeks, where materialization of oil / gas discovery will drive the market in general and OGDC and PPL in particular.

The analysts said that this week trading commenced on a negative note despite China depositing USD 2.2 billion to support the balance of payments position and depleting foreign exchange reserves which crossed the USD 17 billion mark.

Market activity remained depressed on the back of i) 50bps increase in policy rate augmenting pressure on leveraged industries, ii) higher than expected inflationary readings; at 9.41 percent YoY in March 2019 (5-year high), iii) continuous depreciation of PKR against the Greenback, iv) delay in finalisation of the IMF program which is now expected by May, and v) projected slowdown by the Asian Development Bank of Pakistan’s GDP to 3.9 percent.

The benchmark KSE-100 of Pakistan Stock Exchange (PSX) closed at CY19’s lowest level of 37,522 points, down by 1,128 points or 2.92 percent WoW.

Contribution to the downside was led by i) Commercial Banks (-383 points) due to foreign selling, ii) Fertilizer (-134 points) amid announcement of 100,000 tons of urea import, iii) Oil and Gas Marketing Companies (-35 points) on account of slowdown in petroleum off-take by 17 percent YoY in Mar’19, iv) Pharmaceuticals (-92 points), and v) Power Generation and Distribution (-67 points). Scrip wise major losers were HBL (-122 points), UBL (-71 points), PPL (-58 points), ENGRO (-51 points), and PSO (-47 points). While the only sector that contributed positively to the index was Miscellaneous (+57 points).

Foreign selling witnessed this week clocked in at USD 3.7 million compared to a net buy of USD 0.5 million last week.

Major selling was witnessed in Fertilizer (USD 1.6 million) and Power Generation (USD 1.6 million).

On the local front, buying was reported by Individuals (USD 5.5 million) followed by Banks / DFIs (USD 4.7 million).

That said, average daily volumes for the outgoing week were down by 7.5 percent to 118.7 million shares likewise value traded declined by 20.4 percent to USD 24.9 million.

April 6, 2019
Sales Tax Act 1990: deduction of input tax by registered persons

KARACHI: A sales tax registered person is allowed to deduct input tax against output tax for determination of taxable supplies made during a period.

According to updated Sales Tax Act 1990 issued by Federal Board of Revenue (FBR), Section 7 explained the procedure of deduction of input tax by sales tax registered persons.

Section 7: Determination of tax liability.

Sub-Section (1): Subject to the provisions of section 8 and, for the purpose of determining his tax liability in respect of taxable supplies made during a tax period, a registered person shall, subject to the provisions of section 73, be entitled to deduct input tax paid or payable during the tax period for the purpose of taxable supplies made, or to be made, by him from the output tax excluding the amount of further tax under sub-section (1A) of section 3 that is due from him in respect of that tax period and to make such other adjustments as are specified in Section 9:

Provided that where a registered person did not deduct input tax within the relevant period, he may claim such tax in the return for any of the six succeeding tax periods.

Sub-Section (2): A registered person shall not be entitled to deduct input tax from output tax unless,-

(i) in case of a claim for input tax in respect of a taxable supply made, he holds a tax invoice in his name and bearing his registration number in respect of such supply for which a return is furnished:

Provided that from the date to be notified by the Board in this respect, in addition to above, if the supplier has not declared such supply in his return or he has not paid amount of tax due as indicated in his return;

(ii) in case of goods imported into Pakistan, he holds bill of entry or goods declaration in his name and showing his sales tax registration number, duly cleared by the customs under section 79, section 81 or section 104 of the Customs Act, 1969 (IV of 1969);

(iii) in case of goods purchased in auction, he holds a treasury challan, in his name and bearing his registration number, showing payment of sales tax;

Sub-Section (3): Notwithstanding anything in sub-sections (1) and (2), the Federal Government may, by a special order, subject to such conditions, limitations or restrictions as may be specified therein allow a registered person to deduct input tax paid by him from the output tax determined or to be determined as due from him under this Act.

Sub-Section (4): Notwithstanding anything contained in this Act or rules made there under, the Federal Government may, by notification in the official Gazette, subject to such conditions, limitations or restrictions as may be specified therein, allow a registered person or class of persons to deduct such amount of input tax from the output tax as may be specified in the said notification.

April 6, 2019
Increase in refund claims by registered persons selected for audit

KARACHI: Federal Board of Revenue (FBR) has selected sales tax audit of those sales tax registered persons whose refund claims increased in a month over the corresponding month last year.

According to risk parameters for selection of audit under Audit Policy 2018, the FBR selected audit cases through computerized balloting of those registered persons whose refund claim increase during a month over the corresponding month last year.

The FBR also randomly selected those cases where decline in value of supplies as compared to corresponding months of previous year.

Besides consistent increase in input tax/output tax ratio over corresponding months of previous three years were also selected through random balloting.

Other risk parameters are included:

Decrease in taxable supplies to total supplies ratio as compared to corresponding months of previous year.

Difference in declared value of sales as compared to declared turnover in Income Tax Return.

Persons declaring reduced rate sales.

Manufactures showing inadequate value addition.

Declared sales are less than imports

Decrease in payment of tax as compared to corresponding months of previous year.

Increase in refund claimed as compared to corresponding months of previous year.

Unclaimed purchase to declared purchases ratio is high.

Utilities to sales ratio is high.

Discrepancy identified by CREST.

April 6, 2019