KARACHI – The Pakistani Rupee strengthened against the US Dollar on Monday, gaining 18 paisas. The improved economic indicators and reduced demand for import payments were cited as contributing factors to the rupee’s resurgence.
(more…)Month: November 2020
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Tax return filing reaches record high at 2.92 million
ISLAMABAD: The filing of income tax return has reached a new high of 2.92 million following effective measures taken by the tax authorities to encourage persons having taxable income to file their return, according data released by Federal Board of Revenue (FBR) on Monday.
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Income tax rate on sale of petroleum products
The Federal Board of Revenue (FBR) has recently announced an update to the rate of income tax on the sale of certain petroleum products for the tax year 2021, spanning from July 01, 2020, to June 30, 2021.
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Reduced rate of sales tax granted on services for sale, purchase of immovable properties
KARACHI: A reduced sales tax rate of 10 percent is granted on service provided or rendered by persons engaged in sale and purchase of immovable properties.
The Sindh Revenue Board (SRB) issued working tariff updated up to November 01, 2020.
The SRB issued the rate of sales tax on services provided or rendered in the matter of sale, purchase or hire.
The SRB said that the sales tax rate shall be 13 percent on services provided for purchase or sale or hire of immovable properties. However, reduced rate of 10 percent is allow with condition that input tax credit adjustment shall not be admissible.
Similarly, the rate of sales tax is 13 percent on services provided by property dealers. A reduced rate of 10 percent is available with condition that input tax credit adjustment shall not be admissible.
The rate of sales tax shall be 13 percent on renting of immovable property services. However, a reduced rate of three percent is available with condition that input tax credit adjustment shall not be admissible. The SRB said that the tax shall be exempted on renting of immovable property services provided or rendered to an individual person whose income does not exceed the maximum amount that is not chargeable to tax under the Income Tax Ordinance, 2001.
The rate of sales tax is 13 percent on services provided by car or automobile dealers. A reduced rate of 10 percent is available with condition that input tax credit adjustment shall not be admissible.
The SRB said that sales tax rate shall be 13 percent on renting of machinery equipment, appliances and other tangible goods. However, a reduced rate of 5 percent is available with condition that input tax credit adjustment shall not be admissible.
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Advance tax rate on sale to retailers updated
ISLAMABAD: Federal Board of Revenue (FBR) has updated rate of advance income tax on sale to retailers during tax year 2021 (July 01, 2020 to June 30, 2020).
The FBR issued Income Tax Ordinance, 2001 (updated up to June 30, 2020) after incorporating amendment brought through Finance Act, 2020.
The rate of collection of tax under section 236H on the gross amount of sales shall be:
The rate of advance tax on sale of electronics shall be one percent. The rate of advance tax in case of sales to other goods shall be 0.5 percent.
Following is the text of Section 236H of Income Tax Ordinance, 2001:
236H. Advance tax on sales to retailers.— (1) Every manufacturer, distributor, dealer, wholesaler or commercial importer of electronics, sugar, cement, iron and steel products, motorcycles, pesticides, cigarettes, glass, textile, beverages, paint or foam sector, at the time of sale to retailers, and every distributor or dealer to another wholesaler in respect of the said sectors, shall collect advance tax at the rate specified in Division XV of Part IV of the First Schedule, from the aforesaid person to whom such sales have been made.
(2) Credit for the tax collected under sub-section (1) shall be allowed in computing the tax due by the retailer on the taxable income for the tax year in which the tax was collected.
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Sales tax exempted on services provided by marriage halls on area up to 800 square yards
KARACHI: Sindh Revenue Board (SRB) has said that marriage halls and laws are exempted from payment of 13 percent sales tax on services, which are located on plots measuring 800 square yards.
The SRB issued working tariff updated up to November 01, 2020.
The provincial revenue authority said that services provided or rendered by marriage halls and laws are subject to 13 percent sales tax.
However, the exemption from whole of sales tax on services provided by marriage halls and laws which are located on plot measuring 800 square yards or less.
The exemption is not available in case of marriage halls and laws:
(i). which are air-conditioned on any day in a financial year;
(ii). located within the building, premises or precincts of a hotel, motel, guest house, restaurant or club whose services are liable to tax;
(iii). as are owned, managed or operated by caterers whose services are liable to tax;
(iv). which are franchisers or franchisees; and
(v) having branches or more than one hall or lawn in Sindh.
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FBR developing software to eliminate bogus invoices: CTO Chief
KARACHI: Federal Board of Revenue (FBR) is working to develop a new software which will eliminate flying / bogus invoices, Dr. Aftab Imam, Chief Commissioner, Corporate Tax Office (CTO) Karachi said during his visit to Pakistan Hosiery Manufacturers Association (PHMA).
The chief commissioner assured the exporters that all the issues of exporters will be resolved on top priority without delay, a statement issued by PHMA on Saturday quoted the chief commissioner as saying.
The chief commissioner stated that exporters may personally visit his office to meet and discuss their individual issues in order to resolve them. He stated after transformation to FASTER plus, the sales tax refund system was efficiently processing the claims. There were certain checks in the system which was necessary.
He said that CTO was playing its due role in policy making by communicating the matters and issues related to exporters by sending to the Board for implementation thereof.
Commenting on the Post Refund Audit notices, he added that all the income tax notices issued bear a barcode while the Post Refund audit notices regarding sales tax bear no barcode, however, they are valid notices.
The system is going through developmental phase and in next few weeks Post Refund Audit notices issued shall also reflect the barcode.
Replying to huge demand of documents in the notices, he opined that particular documents which are not available in the online system like stock and proof of payment should be given.
Responding to the requests of issuance of zero rated certificates, he informed that he has already written to FBR for the purpose. Upon confirmation, the requested certificates shall be issued on urgent basis.
Earlier Tariq Munir, Chairman (SZ), Pakistan Hosiery Manufacturers & Exporters Association welcomed the Dr. Aftab Imam, Chief Commissioner, Corporate Tax Office (CTO) Karachi who was accompanied by Zulfiqar Khokhar, Collector to PHMA.
Speaking on the occasion, Muhammad Jawed Bilwani, Chief Coordinator & Former Central Chairman, Pakistan Hosiery Manufacturers & Exporters Association invited the attention of Chief Commissioner CTO-Karachi on burning issue of exporters related to Sales Tax Refund / Audit, Income Tax Refund / Audit, Zero Rated Certificate for reduced tariff of electricity and gas and other issues.
He was of the view that after a lapse of 16 months, after various consultative sessions, suggestion of exporters, FASTER refund system has been improved and also transformed to FASTER plus which is appreciable as the system is efficiently processing the refunds electronically up to 80 percent without human involvement.
Remaining 20 percent may have some issues of filing which after resolution shall also be processed on fast track.
He was of the view that due to speedy refunds increasing trend in textile exports is witnessed. He stated that several members have informed that still amounts are missed and deferred in the FASTER system which should be looked into and rectified. He proposed that total missing amount should be reflected in the Sales Tax Refund MIS.
Bilwani also highlighted the matter of Notices of Post Audit Refund of Sales Tax as well as Income Tax issued to exporters demanding huge documentation which is already available with FBR system and same should be done away with and only necessarily required relevant documents should be demanded because the entire textile export chain is documented.
He also urged that all the FBR Notices should have barcodes and should sent electronically. The exporters should be provided the facility to apply for zero rated certificate regarding reduced tariff of gas and electricity to FBR and same should also be provided electronically.
FBR and SRB system are linked and integrated. exporters are in practice to adjust WWF amount against income tax refund. Hence, the FBR should intimate to the SRB that the exporters have paid the WWF amount.
On this occasion, Abdul Jabbar Gajiani, Senior Vice Chairman, Bashir Ghaffar Vice Chairman, Khizer Mehboob, Chairman, Taxation Committee, Abdur Rehman Former Vice Chairman PHMA, Saleem Parekh, Qadir Bilwani, Ilyas Gigi, Advocate Arshad Shehzad, Tax Advisor presented and other member exporters through zoom participated in the meeting.
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Banking system witnesses Rs222 billion withdrawal in October
The State Bank of Pakistan (SBP) has reported a significant withdrawal of Rs222 billion from the banking system during October 2020. According to SBP statistics, banking deposits fell to Rs16,664 billion by the end of October 2020, down from a record high of Rs16,886 billion at the close of September 2020.
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Rate of tax on sale to distributors, dealers and wholesalers
ISLAMABAD: Federal Board of Revenue (FBR) has updated rate of advance income tax on sale to distributors, dealers and wholesalers during tax year 2021 (July 01, 2020 to June 30, 2020).
The FBR issued Income Tax Ordinance, 2001 (updated up to June 30, 2020) after incorporating amendment brought through Finance Act, 2020.
The FBR updated the rate of advance income tax on sale to distributors, dealers and wholesalers under Section 236G of Income Tax Ordinance, 2001.
The rate of collection of tax under section 236G shall be at 0.7 percent on sale of fertilizers and 0.1 percent on sale of other than fertilizers/
The text of section 236G is as follow:
Section 236G. Advance tax on sales to distributors, dealers and wholesalers.—
(1) Every manufacturer or commercial importer of electronics, sugar, cement, iron and steel products, fertilizer, motorcycles, pesticides, cigarettes, glass, textile, beverages, paint or foam sector, at the time of sale to distributors, dealers and wholesalers, shall collect advance tax at the rate specified in Division XIV of Part IV of the First Schedule, from the aforesaid person to whom such sales have been made.
(2) Credit for tax collected under sub-section (1) shall be allowed in computing the tax due by the distributor, dealer or wholesaler on the taxable income for the tax year in which the tax was collected.
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Weekly Review: market likely move positive on improvement economic indicators
KARACHI: The stock exchange likely to move positive during upcoming week on the back of improved macro-economic front.
Analysts at Arif Habib Limited said that the market to remain green due to reasons included: improvement on the macro-economic front amid reduction in trade deficit (rising exports and decreasing imports); strengthening PKR/USD parity; no expectation of immediate rate hike; and robust dispatches reported by cyclical sectors.
On the other hand, upcoming auto data (released by PAMA) is expected to attract investors’ interest in the automobile sector.
However, a surprise swing in the US elections may disrupt global investors’ confidence together with rising global coronavirus cases as daily cases crossed 600,000 mark for the first time on November 05, 2020, exerting pressure on countries to impose a lockdown.
The benchmark KSE-100 is currently trading at a PER of 7.2x (2021) compared to Asia Pac regional average of 14.1x while offering a dividend yield of ~6.2 percent versus ~2.6 percent offered by the region.
This week trading commenced on a negative note and the index nosedived by 776 points on Monday due to i) continuous surge in Covid-19 cases together with rising infection ratio from 2 percent per day to 4 percent, ii) dismissal of review petition on GIDC case by the Honorable supreme court, and iii) budding pressure on global equities and commodities in anticipation of the US presidential election.
However, the negative performance was short lived as the index displayed a rebound on Tuesday and increased by 1,369 points (highest day increase after April 17, 2020) as i) nation-wide lockdown was ruled out by the NCOC, ii) announcement of an electricity relief package for industrial sector by Prime Minister, iii) CPI at 8.9 percent (lower then anticipation), and iv) recovery in global equities with Biden in the lead in US elections.
As a result, the KSE-100 index closed at 40,732 points, up by 844 points or 2.11 percent WoW.
Contribution to the upside was led by i) Commercial Banks (203 points), ii) Oil and Gas Exploration Companies (149 points), iii) Technology and Communication (97 points), iv) Cement (74 points), and v) Fertilizer (57 points). Scrip-wise major gainers were POL (90 points), TRG (83 points), MEBL (61 points), BAFL (35 points), and HMB (33 points). Whereas, scrip-wise major losers were HBL (38 points), FFC (14 points) PAKT (13 points), MUREB (6 points) and APL (6 points).
Foreigners offloaded stocks worth of USD 5.50 million compared to a net sell of USD 21.34 million last week. Major selling was witnessed in Commercial Banks (USD 3.46 million) and E&P (USD 1.86 million). On the local front, buying was reported by Individuals (USD 5.37 million) followed by Insurance Co. (USD 3.63 million). That said, average daily volumes and traded value for the outgoing week were down by 21 percent and 20 percent to 368 million shares and USD 79 million, respectively.