Day: February 15, 2021

Tax collected on immovable properties made final liability on payment through RDAs

ISLAMABAD: The collection of withholding tax on immovable properties has been made final liabilities in case payment made through Roshan Digital Accounts (RDAs).

The changes have been brought through Tax Laws (Amendment) Ordinance, 2021. The Federal Board of Revenue (FBR) posted the ordinance on its website on Monday.

An amendment has been made to Section 236C of the Income Tax Ordinance, 2001, which is related to deduction of withholding tax on sale of immovable properties.

According to the amendment that if the seller or transferor is a non-resident individual holding Pakistan Origin Card (POC) or National ID Card for Overseas Pakistanis (NICOP) or Computerized National ID Card (CNIC) who had acquired the said immovable property through a Foreign Currency Value Account (FCVA) or NRP Rupee Value Account (NRVA) maintained with authorized banks in Pakistan under the foreign exchange regulations issued by the State Bank of Pakistan (SBP), the tax collected under the section from such persons shall be final discharge of tax liability in lieu of capital gain taxable under Section 37 earned by the seller or transferor from the property so disposed of.

Similar change has been made in Section 236K of the Income Tax Ordinance, 2001. This section is related to deduction of withholding tax on purchase of immovable property.

According to the amendment that if the buyer or transferee is a non-resident individual holding Pakistan Origin Card (POC) or National ID Card for Overseas Pakistanis (NICOP) or Computerized National ID Card (CNIC) who has acquired the said immovable property through a Foreign Currency Value Account (FCVA) or NRP Rupee Value Account (NRVA) maintained with the authorized banks in Pakistan under the foreign exchange regulations issued by the SBP, the tax collected under this section from such persons shall be final discharge of tax liability for such buyer or transferee.

According to the SBP, there are two types of accounts offered under Roshan Digital Accounts.

These are:

Foreign Currency Value Account (FCVA)

NRP Rupee Value Account (NRV)

February 15, 2021
Prices of petroleum products kept unchanged

ISLAMABAD: The federal government has decided to keep the prices of petroleum products unchanged for next fortnight.

According to a statement issued on Monday, the government has decided not to change the prices of petroleum products for next fortnight.

The prices as of February 01, 2021 remain effective for the rest of the month.

The government on January 31, 2021 announced raise in petroleum prices. Following prices were increased and effective from February 01, 2021:

The price of petrol has been increased by Rs2.70 per liter to Rs111.90 from previous rate of Rs109.20.

The rate of high speed diesel has been enhanced by Rs2.88 per liter to Rs116.07 from Rs113.19.

The price of kerosene oil has been increased by Rs3.54 per liter to Rs80.19 from Rs76.65.

The rate of light diesel oil has been increased by Rs3.00 per liter to Rs79.23 from Rs76.23.

The new prices of petroleum products are applicable from mid night February 01, 2021.

February 15, 2021
Stock market gains 567 points on improved remittances

KARACHI: The stock market gained 567 points on Monday owing to rise in foreign remittances and expectations of better financial results.

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 46,375 points as against 45,808 points showing an increase of 567 points.

Analysts at Arif Habib Limited said that the market priced in the positive fundamentals relating to foreign remittances as well as the expectation of better quarterly results of the corporate sector, which has so far posted +60 percent growth.

Cement sector continued uptrend on the prospects of better results, whereas E&P sector benefited from an increase in international crude oil prices.

Selling pressure witnessed last week from institutional and foreign investors subsided in banks and fertilizer sectors that resulted in improved performance across the board.

EFERT declared financial results along with dividend that brought support to the benchmark Index from overall fertilizer sector.

Similarly, HBL & UBL rebounded cautiously during the session, adding contribution to the Index. Among scrips, WTL topped the volumes with 40.3 million shares, followed by MLCF (35.6 million) and TELE (28.7 million).

Sectors contributing to the performance include E&P (+116 points), Technology (+73 points), Cement (+67 points), Pharma (+48 points) and Banks (+46 points).

Volumes increased from 442.7 million shares to 486.4 million shares (+10 percent DoD). Average traded value also increased by 19 percent to reach US$ 155.9 million as against US$ 131.2 million.

Stocks that contributed significantly to the volumes include WTL, MLCF, TELE, ANL and HUMNL, which formed 31 percent of total volumes.

Stocks that contributed positively to the index include OGDC (+54 points), TRG (+45 points), DAWH (+33 points), DGKC (+33 points) and SYS (+30 points).

Stocks that contributed negatively include HUBC (-8 points), FFC (-7 points), NBP (-6 points), KOHC (-6 points) and BAFL (-6 points).

February 15, 2021
Super tax made permanent for banks

ISLAMABAD: The levy of super tax has been made permanent for banking companies beyond Tax Year 2021, sources in Federal Board of Revenue (FBR) said on Monday.

Tax Laws (Amendment) Ordinance, 2021 has been promulgated on February 12, 2021 after approval by the President of Pakistan.

As per the ordinance the levy of super tax on banks shall continue beyond Tax Year 2021. Through the ordinance the levy shall apply in tax year 2021 and onwards.

With this amendment the banks shall pay the super tax at four percent in subsequent tax years. For the banking companies the tax year 2022 has commenced from January 01, 2021.

The one-time super tax was imposed by inserting Section 4B of Income Tax Ordinance, 2001 through Finance Act, 2015.

The Income Tax Ordinance, 2001 explained the super tax as:

“4B. Super tax for rehabilitation of temporarily displaced persons.― (1) A super tax shall be imposed for rehabilitation of temporarily displaced persons, for tax years 2015 and onwards, at the rates specified in Division IIA of Part I of the First Schedule, on income of every person specified in the said Division.

(2) For the purposes of this section, “income” shall be the sum of the following:—

(i) profit on debt, dividend, capital gains, brokerage and commission;

(ii) taxable income (other than brought forward depreciation and brought forward business losses) under section (9) of this Ordinance, if not included in clause (i);

(iii) imputable income as defined in clause (28A) of section 2 excluding amounts specified in clause (i); and

(iv) income computed, other than brought forward depreciation, brought forward amortization and brought forward business lossess under Fourth, Fifth, Seventh and Eighth Schedules.

(3) The super tax payable under sub-section (1) shall be paid, collected and deposited on the date and in the manner as specified in sub-section (1) of section 137 and all provisions of Chapter X of the Ordinance shall apply.

(4) Where the super tax is not paid by a person liable to pay it, the Commissioner shall by an order in writing, determine the super tax payable, and shall serve upon the person, a notice of demand specifying the super tax payable and within the time specified under section 137 of the Ordinance.

(5) Where the super tax is not paid by a person liable to pay it, the Commissioner shall recover the super tax payable under subsection (1) and the provisions of Part IV,X, XI and XII of Chapter X and Part I of Chapter XI of the Ordinance shall, so far as may be, apply to the collection of super tax as these apply to the collection of tax under the Ordinance.

(6) The Board may, by notification in the official Gazette, make rules for carrying out the purposes of this section.”

In tax year 2018 the rate of super tax was four percent for banking companies on percentage of income and three percent on person other than a banking company, having income equal to or exceeding Rs500 million.

In tax year 2020 the tax rate at 4 percent was maintained for banking companies. However, in other cases it was abolished.

With the new amendment, the banking companies shall continue to pay the super tax with not time frame.

February 15, 2021
Rupee weakens by 45 paisas against dollar on high import payment demand

The Pakistani Rupee experienced a depreciation of 45 paisas against the US Dollar on Monday, ending the day at Rs159.27 in the interbank foreign exchange market. This decline comes after a period of consecutive gains, attributed to heightened demand for import and corporate payments.
(more…)

February 15, 2021
SBP allows housing loan on personal guarantee

KARACHI: The State Bank of Pakistan (SBP) on Monday eased condition for availing loan for housing loan by allowing personal guarantee.

The SBP said that currently applicants face difficulties in obtaining housing finance, especially for low cost housing, as banks are reluctant to take the risk of the house not being completed or documentation completion.

The completion of housing unit and mortgage creation takes time. In order to address this issue for applicants and banks, the SBP has allowed acceptance of a third party guarantee for this period up to a maximum of one year.

With the aim to facilitate the banks in extending low cost housing finance, SBP has allowed them to accept personal guarantee of third party until the housing unit is completed and the mortgage is perfected.

The guarantee will remain valid for a maximum period of one year. This step will help promote home ownership of potential borrowers wishing to avail housing finance under Government Markup Subsidy Scheme issued by State Bank of Pakistan on October 12, 2020.

Third party guarantee will cover the period from the disbursement of loan to the time when construction is completed and risk coverage becomes available by Pakistan Mortgage Refinance Company. Acceptance of third party personal guarantee will provide additional comfort to banks for extending low cost housing finance, an area in which banks have keen interest for its business potential.

It is expected that with this move, banks will increase their efforts to ensure that the benefits of the markup subsidy scheme reach marginalized segments of the society who currently do not own a house.

February 15, 2021
Withholding tax up to Rs200,000 imposed on sale of new car within 90 days

ISLAMABAD: The Federal Board of Revenue (FBR) has imposed up to Rs200,000 as withholding tax on sale of motor cars within 90 days of first registration, sources said on Monday.

The withholding tax has been imposed till June 30, 2021. The revenue generation measure has been taken in order to discourage the trend of ‘on money’.

Following withholding income tax rates have been imposed on motor vehicles:

01. Tax rate at Rs50,000 has been imposed on sale of up to 1000CC motor vehicles.

02. Tax rate at Rs100,000 has been imposed on sale of motor vehicles between 1000CC and 2000CC.

03. Tax rate up to Rs200,000 has been imposed on motor vehicles with engine capacity of 2000CC and above.

In order to apply the rates an amendment to Section 231B of Income Tax Ordinance, 2001 has been made.

Following is the text of the amendment:

“Every motor vehicle registration authority of Excise and Taxation Department shall collect advance tax from the buyers of locally manufactured motor vehicles who subsequently sell it within ninety days of delivery of such vehicle whether prior to or after registration.”

The FBR said that no collection of the withholding tax under the new amendment would be made after June 30, 2021.

February 15, 2021
Workers remittances grow by 24 percent in seven months

KARACHI: The remittances sent by the overseas Pakistani workers posted 24 percent growth during the first seven months of the current fiscal year as the inflows of remittances exceeded over $2 billion for eight consecutive months, State Bank of Pakistan (SBP) said on Monday.

The overseas Pakistani workers have sent $16.47 billion during July – January of fiscal year 2020/2021 as compared with $13.28 billion in the corresponding period of the last fiscal year.

The SBP said that workers’ remittances had exceeded $2 billion for the eighth consecutive months in January 2021.

The inflows of workers remittances posted growth of 19.50 percent to $2.27 billion in January 2021 as compared with $1.9 billion in the same month of the last year. However, remittances were lower from the December 2020 level of $2.4 billion.

A large part of workers’ remittances during July-January 2020/2021 was sourced from Saudi Arabia ($4.5 billion), United Arab Emirates ($3.4 billion), United Kingdom ($2.2 billion) and United States ($1.4 billion).

This sustained increase in workers’ remittances largely reflects growing use of banking channels that is attributed to continuous efforts by the government and SBP to attract inflows through official channels, limited cross border travel amid the second wave of COVID-19 and flexible exchange rate regime.

February 15, 2021
Illicit cigarettes worth Rs549 million confiscated in seven months

ISLAMABAD: Pakistan Customs has confiscated non-duty paid cigarettes worth Rs549 million during first seven months of the current fiscal year, a statement said on Sunday.

A spokesman of Federal Board of Revenue (FBR) said that over 7.1 million sticks of illegal cigarettes had been confiscated during the period under review.

The spokesman said that the FBR had issued instructions to field formation of Inland Revenue and Pakistan Customs to accelerate their efforts against smuggled and non-duty paid cigarettes.

The FBR chairman issued instructions to both the field formations in this regard.

In the anti-smuggling efforts to prevent movement of illegal cigarettes the Intelligence and Investigation of Inland Revenue had conducted 65 operations. In these operations, the IR authorities confiscated 44.827 million sticks of cigarettes worth Rs95.51 million. Out of these amount the authorities had recovered Rs2.2 million and remaining amount was in litigation before the court.

The FBR chairman had directed the tax authorities to expand the anti-smuggling operation across the country.

The customs authorities have been issued special instructions for enhancing vigilance at sea ports, air ports and dry ports to prevent smuggling of illicit cigarettes.

The spokesman said that the customs authorities had recovered huge quantity of non-duty paid cigarettes on the basis of information.

The spokesman further said that in order to avoid misuse auction process, the FBR had imposed complete ban on auction of confiscated cigarettes.

February 15, 2021