Pkrevenue.com

Year: 2019

  • Sale tax refunds to be released on declared stock statement: FBR

    Sale tax refunds to be released on declared stock statement: FBR

    ISLAMABAD: Federal Board of Revenue (FBR) on Monday said that refunds will be issued only on stock statement declared by sales tax registered persons.

    The FBR issued Sales Tax Circular No. 04 of 2019 to explain the issuance of refund payment under FASTER refund module.

    The FBR said that refund will be processed on the basis of entries in Annex-H.

    Annexure H is a stock statement declared by a registered taxpayer through his return.

    According to the FBR this annexure is mandatory for refund claimants and they may submit this statement within 120 days from due date of return filing of particular tax period; other registered persons are encouraged to provide these details.

    The system will show and fill the relevant columns of those items whose closing balance will be greater than zero in proceeding return, but the registered person may add the new items and provide their data manually. The column wise filing details are as follows:

    This annexure will be mandatory for refund claimants who will claim any amount of refund at serial 30 of main return and they may submit this statement within 120 days from due date of return filing of particular tax period.

    In the latest circular No. 4, the FBR said that in wake of rescission of SRO 1125(I)/2011, it had committed with the exporters of the export oriented sectors i.e. textiles, leather, carpets, sports goods and surgical goods, that refunds shall be paid within 72 hours of filing of refund claim.

    For this purpose, FASTER refund module has been developed, which will process claims of exporters of five export-oriented sectors for the tax period July, 2019, and onwards.

    FBR has earlier clarified that submission of Annex-H, which is a form in the monthly sales tax return, shall be treated as submission of refund claim.

    It is added that the number of refund claims received is not significant. The exporters are facing some difficulties in filing of their tax refund claims (Annex-H) under FASTER. Many claimants have approached the Board with request that they may be allowed revision of their return on the ground that the entries made in Annex-F do not match with those in Annex-H.

    It is accordingly clarified that refund is processed on the basis of entries in Annex-H. The entries in Annex-F have no bearing on refund claim except that carry forward of value addition tax is excluded from refund amount.

    Accordingly, the claimants are advised not to revise the returns on the ground that entries in Annex-F do not match with those in Annex-H.

    They should submit Annex-H, if not already submitted so that their claims can be processed.

    Further, field formations are advised not to draw an adverse inference if the Annex-F does not match with Annex-H in case of monthly returns already submitted.

  • Asset quality of banking sector weakens on rising NPLs: SBP

    Asset quality of banking sector weakens on rising NPLs: SBP

    KARACHI: State Bank of Pakistan (SBP) on Monday said that the asset quality of banking sector weakened owing to Rs88.3 billion or 13 percent increase in Non-Performing Loans (NPLs).

    In its Mid-Year Performance Review of the Banking Sector (January – June 2019), the SBP said that the asset quality of the banking sector weakened during first half (January – June) 2019 H1CY19, breaking away from the declining trend in recent past.

    “The infection ratio (NPLs to Total Gross Loans) increased to 8.8 percent by the end of H1CY19 (8.0 percent by end H2CY18).”

    This was mainly due to an increase of Rs88.3 billion (or 13.0 percent) in NPLs during H1CY19.

    As a result, the NPLs stood at Rs768 billion by end June 2019. The fresh rise in domestic NPLs was mostly concentrated in few local private banks as well as in a specialized bank, the SBP said.

    Consequently, the infection ratio for local private banks and specialized banks increased to 7.0 percent (6.2 percent by end of H2CY18) and 43.2 percent (32.9 percent by end of H2CY18).

    With the tightening of macroeconomic conditions in CY18 and later, inflow of fresh NPLs have been on the rise.

    However, in terms of economic sectors, the higher defaults during H1CY19 were restricted to the energy and agribusiness sectors.

    Energy sector contributed 52.8 percent to the total increase in NPLs during H1CY19, while agribusiness contributed 18.6 percent. Most of the NPLs in the energy sector (96.8 percent) pertained to the public sector entities associated with electricity generation and transmission that faced constrained cash flows (due to circular debt/low recoveries).

    In case of Agribusiness, however, an element of seasonality exists in the classified loans as they peak around second quarter of each calendar year but then recede in subsequent quarters.

    Besides this seasonal phenomenon, other factors responsible for the rise in NPLs included late start of sugar crushing season, water shortage and drought conditions affecting crop yields, and delay in sale of the newly harvested kharif crops by farmers hindering their repayment capacity (Rice, Cotton and others) etc.

    Furthermore, 20.8 percent contribution to the growth in NPLs came from banks’ overseas operations, largely related to operations in the Middle East.

    In addition to Pak Rupee depreciation, the economic slowdown in some of these countries could be the reason for the higher NPLs.

    The surge in NPLs was mainly driven by the NPLs of public entities in the energy sector, which do not require provisions.

    Resultantly, the provision coverage ratio (78.4 percent in H1CY19 against 83.8 percent in H2CY18) declined.

    As a result, the net NPLs increased and net NPLs to capital ratio jumped to 11.5 percent as of end H1CY19 against 7.8 percent as of end H2CY18.

    However, it may be kept in perspective that in the aftermath of growing NPLs banks made net provisions to the tune of Rs26.40 billion during H1CY19 compared to Rs36.2 billion during CY18.

    The fund-based liquidity of the banking sector remained comfortable, despite continued moderation in liquidity ratios.

    Liquid assets to total assets ratio moderated to 48.0 percent by end June 2019 (48.7 percent by Dec- 18).

    Similarly, liquid assets to total deposits (excluding customer fixed deposits) also moderated to 81.8 percent in H1CY19 (85.0 percent in Dec-18) mainly due to higher proportionate rise in deposits.

    However, due to improved growth in fixed deposits, liquid assets to short term liabilities ratio improved to 95.6 percent (94.9 percent in Dec-18) percent over the comparable period of last year.

    Islamic Banking Institutions (IBIs) continued to augment the overall profitability of the banking sector as it contributed 26.5 percent to the overall after-tax profits during H1CY19, despite 14.4 percent share in total banking sector assets.

    The earnings ratios, which were on downtrend for last few years, improved during the half year under review Return on Equity after-tax inched up to 11.4 percent in Jun-19 from 10.7 percent in Dec- 18, while ROA improved to 0.84 percent from 0.81 percent The turnaround in profitability indicators, after three consecutive years of downturn, was primarily enabled by rising interest rates over the last year or so.

  • SBP directs banks to ensure employment quota for disable persons

    SBP directs banks to ensure employment quota for disable persons

    KARACHI: State Bank of Pakistan (SBP) on Monday directed banks to ensure compliance related to employment quota for persons with disabilities.

    In a notification, the SBP directed all banks, Microfinance banks and Development Finance Institutions to ensure compliance with the relevant law as amended from time to time.

    The SBP said that the Disable Persons’ (Employment and Rehabilitation) Ordinance, 1981 was promulgated to provide for the employment, rehabilitation and welfare of the persons with disabilities.

    Similar legislation on Provincial level is also in force. Accordingly, Federal and Provincial Government establishments as well as commercial and industrial establishments are inter-alia required to maintain quota for employment of the persons with disabilities.

  • PM inaugurates CPHGC 1320MW Coal-fired Power Plant

    PM inaugurates CPHGC 1320MW Coal-fired Power Plant

    KARACHI: Prime Minister Imran Khan on Monday inaugurated CPHGC 1320MW Coal-fired Power Plant, Hub, Balochistan and said that more collaborations on the same pattern may be seen in future.

    The prime minister said that the government will facilitate joint collaboration between Pakistani and Chinese businesses in various sectors.

    Addressing inaugural ceremony of China Hub Power Generation Plant in Balochistan on Monday, he said this is the first joint project under China Pakistan Economic Corridor and we want to see the pattern in future too. He said a large number of Chinese business corporations are interested in investing in different sectors of the economy.

    He said the government is moving towards the second phase of CPEC and it has established CPEC Authority to facilitate the projects under the program.

    The prime minister said during his recent visit to China, the Chinese President and Prime Minister expressed interest to give momentum to CPEC projects.

    The prime minister said the productivity of Chinese companies is quite higher than their counterparts in Pakistan and our country would like to benefit from it.

    He said we will introduce new techniques in farming sector in collaboration with Chinese enterprises.

    The prime minister congratulated the Hubco Chairman Habibullah Khan on the project and asked him to use more indigenous coal for power generation. He also asked him to work on water projects for Karachi.

    He regretted that Pakistan has a rich hydropower resources and capacity which was not utilized effectively by the previous governments.

    Imran Khan said government is committed to increase ease of doing business in the country to attract foreign investment. He said red tapism and undue hurdles in the way of business are being removed.

    Imran Khan said Balochistan is the province that is full of rich mineral deposits. He said during his visit to the US chairman of company previously working on Rekodik project informed him that Pakistan has one of the largest and finest quality gold reserves in the world. Chairman said they are still interested in working on the reserves as they believe that incumbent government of Pakistan is free of corruption. In past, a small group of people plundered the national wealth and filled their pockets.

    The prime minister said apart from mineral resources, the province of Balochistan is also blessed with huge fisheries resources and its development can help earn valuable foreign exchange.

    Imran Khan said PTI government inherited a record debt which led to more inflation, devaluation of rupee and other challenges. However, difficult decisions were made which have started yielding positive results.

    The Prime Minister said we have to give clean governance to our country for the future generations. Imran Khan said we are committed to mobilize the youth of the country for national development.

    He said youth are the biggest asset of Pakistan and government will give them skills training to work in various sectors. He said centers of artificial intelligence, robotics and other modern fields are being opened to prepare our youth for the modern work requirements.

    Earlier, in his address Balochistan Chief Minister Jamal Kamal said investment worth billions of dollars in the province will change the outlook of Balochistan. He said Balochistan will become a hub of investment in the coming days.

    Jam Kamal Khan said Prime Minister Imran Khan is taking special interest in development of Balochistan.

    He said it is an unexploited province and is the only place in Pakistan that can boost the economic frontiers of the country in the coming years. The Chief Minister said Balochistan is endowed with rich mineral resources that are largely untapped and investors can take advantage of these assets.

    Chinese ambassador Yao Jing, Federal Ministers and other senior officials were also present on the occasion.

  • Stock market falls by 785 points on FATF warnings

    Stock market falls by 785 points on FATF warnings

    KARACHI: The stock market fell 785 points on Monday owing to decision of Financial Action Task Force (FATF) an its warning on compliance by February 2020.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 33,085 points as against 33,870 points showing a decline of 785 points.

    Analysts at Arif Habib Limited said that the market took heavy bantering today on the basis of latest decision of FATF to keep Pakistan in grey list.

    “Although, the market participants had same expectation, by and large, what took them by surprise was the intimation and warning tone by the FATF, in case this last extended deadline till February 2020 fails to meet objective,” they said.

    Besides, beginning of rollover week has its own effect, which resulted in index losing around 800 points during the session and closing at -785 points.

    Selling was observed across the board, with 273 scrips showing decline among actively traded stocks on all share index, 38 in Advance and 15 unchanged.

    Banking sector led the volumes table with 19.3 million shares followed by Cement (18.1 million) and Chemical (15.1 million).

    Among scrips, KEL registered highest volumes with 11.2 million shares, followed by LOTCHEM (9.8 million) and BOP (7.9 million).

    Sectors contributing to the performance include Banks (-227 points), E&P (-107 points), Cement (-91 points), Power (-75 points), O&GMCs (-66 points).

    Volumes increased from 115.2 million shares to 130.1 million shares (+13 percent DoD). Average traded value increased slightly from US$ 31.4 million to US$ 31.7 million (+1 percent DoD).

    Stocks that contributed significantly to the volumes include KEL, LOTCHEM, BOP, FCCL and UNITY, which formed 33 percent of total volumes.

    Stocks that contributed positively include NESTLE (+12 points), ATLH (+4 points), JICL (+4 points), SHFA (+3 points) and KTML (+2 points). Stocks that contributed negatively include HBL (-50 points), MCB (-49 points), LUCK (-47 points), HUBC (-46 points), and PPL (-42 points).

  • Rupee ends stable despite higher dollar demand

    Rupee ends stable despite higher dollar demand

    KARACHI: The Pak Rupee ended stable against dollar on Monday despite higher demand for import and corporate payments.

    The rupee ended Rs155.91 to the dollar, the same level of last closing on last Friday’s, in interbank foreign exchange market.

    Currency dealers said that earlier in the day the demand for import and corporate payment was high and rupee was under pressure.

    However, sufficient supply of the greenback helped the local unit to gain earlier day’s losses.

    The foreign currency market was initiated in the range of Rs1556.95 and Rs156.02. The market recorded day high of Rs155.99 and low of Rs155.90 and closed at Rs155.91.

    The exchange rate in open market also witnessed stable rupee value. The buying and selling of dollar was recorded at Rs155.70/Rs156.20, the same closing level on last Friday, in cash ready market.

  • Tax collected on prize bond winning to be final

    Tax collected on prize bond winning to be final

    KARACHI: The withholding tax collected on winning of prize bond shall be final tax liability either it is collected from person appeared on Active Taxpayers List (ATL) or not.

    Sources in Federal Board of Revenue (FBR) said that the withholding tax collected on winning of prize bonds may not be adjusted against the total tax liability of a taxpayer.

    Similarly, the withholding tax deducted on winning from a raffle, lottery or winning a quiz, prize offered by companies will also not be adjustable.

    The collection of tax has been made under Section 156 of Income Tax Ordinance, 2001. While from tax year 2020 the withholding tax under this section has been increased by 100 percent for those persons not appearing on ATL.

    Section 156: Prizes and winnings

    Sub-Section (1): Every person paying 10[prize on] a prize bond, or winnings from a raffle, lottery, prize on winning a quiz, prize offered by companies for promotion of sale, or cross-word puzzle shall deduct tax from the gross amount paid at the rate specified in Division VI of Part III of the First Schedule.

    Sub-Section (2): Where a prize, referred to in sub-section (1), is not in cash, the person while giving the prize shall collect tax on the fair market value of the prize.

    Sub-Section (3): The tax deductible under sub-section (1) or collected under sub-section (2) shall be final tax on the income from prizes or winnings referred to in the said sub-sections.

    The tax rate as specified under Division VI of Part III of the First Schedule of Income Tax Ordinance, 2001, shall be:

    (1) The rate of tax to be deducted under section 156 on a prize on prize bond or cross-word puzzle shall be 15 percent of the gross amount paid.

    (2) The rate of tax to be deducted under section 156 on winnings from a raffle, lottery, prize on winning a quiz, prize offered by a company for promotion of sale, shall be 20 percent of the gross amount paid.

    However, with the introduction of Tenth Schedule of Income Tax Ordinance, 2001 the tax rate to be collected on such winning will be increased by 100 percent from persons not appearing on the ATL.

    Therefore the tax rate on winning prize bond from person not appearing on ATL will be 30 percent. Similarly, the rate of tax will be 40 percent from persons wining winnings from a raffle, lottery, prize on winning a quiz, prize offered by a company for promotion of sale.

  • No refund, input adjustment to be entertained on invoice issued prior or after of blacklisting

    No refund, input adjustment to be entertained on invoice issued prior or after of blacklisting

    KARACHI: Federal Board of Revenue (FBR) said invoices issued by a person prior or after blacklisting for sales tax will not be entertained for refunds or input adjustment.

    The FBR issued Sales Tax Act, 1990 updated till June 30, 2019 incorporating amendments brought through Finance Act, 2019.

    Section 21 of the Act explained blacklisting and suspension of a taxpayer for sales tax.

    Section 21: De-registration, blacklisting and suspension of registration

    Sub-Section (1): The Board or any officer, authorized in this behalf, may subject to the rules, de-register a registered person or such class of registered persons not required to be registered under this Act.

    Sub-Section (2): Notwithstanding anything contained in this Act, in cases where the Commissioner is satisfied that a registered person is found to have issued fake invoices or has otherwise committed tax fraud, he may blacklist such person or suspend his registration in accordance with such procedure as the Board may by notification in the official Gazette, prescribe.

    Sub-Section (3): During the period of suspension of registration, the invoices issued by such person shall not be entertained for the purposes of sales tax refund or input tax credit, and once such person is black listed, the refund or input tax credit claimed against the invoices issued by him, whether prior or after such black listing, shall be rejected through a self-speaking appealable order and after affording an opportunity of being heard to such person.

    Sub-Section (4): Notwithstanding anything contained in this Act, where the Board, the concerned Commissioner or any officer authorized by the Board in this behalf has reasons to believe that a registered person is engaged in issuing fake or flying invoices, claiming fraudulent input tax or refunds, does not physically exist or conduct actual business, or is committing any other fraudulent activity, the Board, concerned Commissioner or such Officer may after recording reasons in writing, block the refunds or input tax adjustments of such person and direct the concerned Commissioner having jurisdiction for further investigation and appropriate legal action.

  • Pakistan spends Rs42.4 billion for import of mobile phones in three months

    Pakistan spends Rs42.4 billion for import of mobile phones in three months

    KARACHI: Pakistani nationals have spent Rs42.4 billion for import of mobile phones in three months despite challenging economic conditions.

    The import of mobile phones registered 71.5 percent growth to Rs42.4 billion during first quarter (July – September) of fiscal year 2019/2020 as compared with Rs24.72 billion in the corresponding period of the last year, official statistics revealed.

    It is interesting to note that the surge in import of mobile phones has been witnessed when the economy is facing challenges and imports of other things are on declining trend.

    Sources in Pakistan Customs said that the substantial increase in mobile phones was due to anti-smuggling measures taken by the government.

    They said that now a mobile phone would have active network only when it was verified through a system introduced by Pakistan Telecom Authority (PTA).

    The sources said that mobile devices are required to verify their IMEI through phone registration system of the PTA otherwise such phones would not have connections of existing cellular networks in the country.

    The source said that in the past a huge number of mobile phones were brought in the country without paying duty and taxes. But now those mobile that were not offered for registration would not be activated.

    The sources further attributed the sharp increase in value to massive decline in rupee value.

    In dollar term the import of mobile phones posted 35 percent increase to $269 million during first quarter of current fiscal year as compared with $199 million in the same period of the last fiscal year.

    The import of mobile phones in September 2019 witnessed even more sharp increase of 69 percent in dollar term and 113 percent in Pak Rupee term.

    In term of Rupees the country imported mobile phones worth Rs16.48 billion in September 2019 as compared with Rs7.73 billion in the same month of the last year.

  • Harsh penalties for pilferage of transshipped goods

    Harsh penalties for pilferage of transshipped goods

    KARACHI: Customs laws has defined harsh penalties for pilferage or replaced enroute of transshipment of goods without payment of duty.

    Federal Board of Revenue (FBR) issued Customs Act, 1960 updated till June 30, 2019 incorporating changes brought through Finance Act, 2019.

    According to the customs laws

    If any goods which are loaded for transshipment, are pilfered, replaced en-route or failed to reach the port of destination, or any person transships goods not allowed to be transshipped;

    Then such goods and the conveyance illegally carrying these goods shall be liable to confiscation and any person including the custodian involved in the offence and the bonded carrier shall be liable to a penalty not exceeding ten times the value of the goods and he shall further be liable, upon conviction by a Special Judge, to imprisonment for a term not exceeding seven years.

    If any person contravenes any rule relating to transshipment other than mentioned above;

    Then such person including the custodian and the inland carrier shall be liable to penalty not exceeding five hundred thousand rupees or three times the amount of duties and taxes involved.

    Under Section 121 of the Act, the transshipment of goods without payment of duty has been allowed.

    Section 121: Transshipment of goods without payment of duty

    Sub-Section (1): Subject to the provisions of section 15 and the rules, the appropriate officer may, on application by the owner of any goods imported at any customs-station and specially and distinctly manifested at the time of importation as for transshipment to some other customs-station or foreign destination, grant leave to transship the same without payment of duty, if any, chargeable on such goods with or without any security or bond for the due arrival and entry of the goods at the customs-station of destination:

    Provided that at customs-station where the Custom Computerized System, is operational, the system may automatically authorize transshipment to other customs-station subject to risk selectivity criteria.

    Sub-Section (2): The Board may, subject to rules and such conditions as it may deem fit to impose, authorize certain carriers to transport goods under the multimodal, scheme. Goods transported under the multimodal scheme shall be specially and distinctly manifested at the time of importation as for transshipment to some other customs-station or foreign destination and shall not –

    (a) require distinct permission for transshipment from the customs-station of first entry into the country to be transported to the customs-station of destination. The principal carrier issuing the multimodal bill of lading or air way bill will be responsible for the sanctity of the cargo during transportation between the customs-station of first entry into the country to the customs-station of destination; and

    (b) be subject to the risk management system at the customs station of first entry.

    Sub-Section (3): The Board may, subject to such conditions as it may deem fit, grant license to any carrier to carry goods under the multimodal scheme.