Day: June 18, 2021

Filing income tax return on July 01 impossible due to various reasons: KTBA
KARACHI: As the Federal Board of Revenue (FBR) has decided to open IRIS portal for income tax return filing for tax year 2021 but on the other hand a tax bar objected that making compliance of return filing on first day of July was impossible due to various reasons.

The Karachi Tax Bar Association (KTBA) on Friday responded to draft income tax return form issued by the FBR, which was issued through SRO 730(I)/2021 dated June 11, 2021.

The tax bar said that practically it was impossible for any taxpayer, be it individual, Association of Person (AOP) or a company to file return of income particularly on the first day of July or immediately thereafter owing to following factors:

Finally, we may add that practically it is impossible for any taxpayer, be it Individual, AOP or Company to file return of income particularly on the first day of July or immediately thereafter owing to following factors:
- Certificates for the purpose of Sec. 149 are issued by the employers broadly by the end of July so is the case of other Withholding Certificates by the Withholding Agents.
- Closing of books and completion of financial statements on thirtieth June is effectively impossible as Sales Tax Return for June is filed by the mid of July.
- Mainly the taxpayer starts compiling necessary information & documents to prepare and file the returns in the first week of July and normally it takes at least a month for this purpose. As such the pace of filing of return in July is almost nil and very slow.
The tax bar suggested that for the purpose of Section 118 of the Income Tax Ordinance, 2001, the FBR should fix the deadline to file return keeping in view the above as well.

The KTBA however appreciated the FBR for issuing draft Income Tax Return Forms in respect of Tax Year 2021 for this Year are relatively available earlier albeit the timelines are not in consistent with Rule 34A of Income Tax Rules 2002 nor approved Change Request Form (CRF) is evenly shared in order to let us track and trace the changes incorporated in the draft returns.

Secondly please appreciate that returns are not available in excel format to test the computations thus requirement of User Acceptance Test (UAT) of an amended return for testing environment is also not followed as required in Rule 34A(2)(e) read with sub-rule (3) ibid.

The tax bar said that any timeline for the purpose of Sec.237 of the Income Tax Ordinance, 2001, shall not take effect unless due diligence prescribed in sub-rule (3) and (4) ibid, is followed in letter and spirit.

It hoped the FBR will soon upload the amended return of income on IRIS portal for the purpose of UAT and time prescribed for suggestions/ objections in rules will be allowed accordingly.
June 18, 2021
Beverage Cans plans to raise Rs3.3 billion in Initial Public Offering

KARACHI: Pakistan Aluminium Beverage Cans Ltd (PABC) is planning to raise at least Rs 3.3 billion by offering a 26 per cent stake to institutional and ordinary investors in an initial public offer (IPO) on the Pakistan Stock Exchange (PSX).

Book building will take place on June 22 and 23, followed by public subscription on June 29 and 30, a statement said on Friday.

The entire offer of 93.8 million ordinary shares, or 26 per cent of the post-IPO shareholding, will be offered through the book-building process at a floor price of Rs35 per share. Successful bidders will be provisionally allotted only 75 per cent of the issue size and the remaining shares will be offered to the retail investors at the strike price.

It means PABC will raise at least Rs3.3 billion in the IPO. But based on the interest from investors during the book building process, the strike price can rise by 40 percent (Rs49 a share), thus helping the company collect Rs4.6 billion.

Ashmore Mauritius PABC Ltd, a specialist emerging markets investment manager based in Mauritius, currently holds 51 per cent shareholding in the company while Liberty Group, a leading player in textile and power sectors, owns the remaining 49 per cent stake. With the exit of Ashmore post-IPO, Liberty Group, general public and Soorty Enterprises will own 54 per cent, 26 per cent and 20 per cent shareholding in the company.

The company started its operations in 2017 as the country’s only local manufacturer of aluminum beverage cans. Until then, bottlers in Pakistan and Afghanistan relied on expensive imports to package their beverages in environment-friendly aluminum cans.

PABC supplies to the bottlers of all major carbonated drinks, including PepsiCo and Coca-Cola, in both Pakistan and Afghanistan. Exports to Afghanistan constituted 35 per cent of the company’s sales in calendar year 2020.

Established on a 20.9-acre piece of land in Faisalabad’s Special Economic Zone with a current rated capacity of 700 million cans per annum, PABC continues to enjoy a 10-year tax holiday. The company is increasing its rated capacity by almost 36 per cent to 950 million cans per annum by July next year.

It has grown its revenue at an annualised rate of 18.7 per cent in the last five years. In the third full year of its operation (2020), the company’s net profit amounted to Rs610.7 million, up 314 per cent from 2019. It expects its bottom line to grow at 140 per cent in 2021.

Euromonitor International puts the size of Pakistan’s soft drinks market at 3.8 billion litres per annum. It expects the market to grow at a five-year annualised rate of seven per cent to reach 5.3 billion litres in 2025 on the back of rising purchasing power, urbanisation and favorable demographics.

With the estimated market size of 275 million cans, aluminium beverage cans in Pakistan account for only 3.6 per cent of total soft drinks sales as opposed to the global average of 19 per cent.

Growing can penetration may increase their sales to 650 million cans by 2025, delivering an annualised growth rate of 19 per year. PABC will be its key beneficiary as the can imports are virtually non-existent due to high freight costs and duties.

PBAC’s biggest export market is Afghanistan as the country does not have local beverage glass manufacturing facilities. It commands over 50 per cent market share, thanks to its contracts with key beverage bottlers, including franchisees of Coca-Cola and Pepsi, in Afghanistan.

In addition, PBAC recently signed agreements and initiated exports to leading beverage players in the United States. North America accounts for more than one-third of the global consumption of aluminium cans mainly because of the environmental concerns. The company is also in discussion with key beverage bottlers in Bangladesh and Iraq.

June 18, 2021
Knowledge Platform launches free online solution for exam preparation

ISLAMABAD: To enhance continued support to teachers and students, Knowledge Platform has launched a free online examination preparation solution called ‘Exam Prep Master’.

This solution will prepare SSC students, who are studying to appear in the Federal and Punjab Boards’ Matriculation examinations in July 2021.

Knowledge Platform, a leading ed-tech organisation in Pakistan, is aware of the challenges schools, teachers, and students face to effectively prepare for the board examinations.

Talhah Munir Khan, CEO, Knowledge Platform, stated: “Covid-19 has changed the way students are obliged to prepare for their board exams. With zero or less classes being held, the resources are limited for exam preparation.

“To address this issue, we have come up with a solution suitable for students and teachers whereby they can prepare for their examinations in a short time span. We are obliged to assist our youth in these unprecedented and difficult times, and we will continue our support for them with innovative learning solutions.”

‘Exam Prep Master’ is an online preparation platform that includes a wide range of selected practice questions with solutions, based on past board examination papers.

The aim is to support the students academically and reduce their exam-related anxiety by providing a real-life examination experience, thus, helping them prepare in limited available time for their board exams.

The online preparation solution is comprised of Mock Exams, Animated Video Lessons, Exam Tips, Cheat Sheets and Past Papers. Other key features and benefits of this examination preparation solution include free of cost support for all, Grades Covered from 9th and 10th, biology, chemistry, mathematics, physics subjects are covered in this solution.

Self-diagnostic test to check if students are ready for the board exam, two mock tests of 20 questions each per grade per subject, to help students practice, weekly publishing of additional mock tests and solutions within study groups, immediate availability of report card showing students’ strong and weak skills are the key features of this solution.

Opportunity for students to study at their own pace using a mobile phone, tablet, or laptop in the comfort of their homes. Students may directly register for the online examination preparation programme from Learn Smart Pakistan.

Knowledge Platform, the leading learning solutions company in Pakistan, is already working with 450,000+ students and 1,000+ schools across Pakistan.

June 18, 2021
Stocks gain 81 points in narrow range trading

KARACHI: The stock market gained 81 points on Friday while trading in narrow range trading activity during the day. The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 48,239 points as against previous day’s close of 48,158 points, showing an increase of 81 points.

Analysts at Arif Habib Limited said that the market traded in a narrow range between -135 points and +254 points, closing the session +81 points.

Refineries, Cement, Fertilizer, O&GMCs and Technology sector inched up, which helped index trade in the positive territory.

Concerns of redemption with some mutual funds maintained selling pressure.

Among scrips, HUMNL led the volumes with 88.1 million shares, followed by WTL (76.4 million) and BYCO (70.7 million).

Sectors contributing to the performance include Banks (77 points), Vanaspati (-12 points), Cement (+58 points), Refinery (+39pst), Technology (+19 points).

Volumes declined from 1117.4 million shares to 750.6 million shares (-33 percent DoD). On the contrary, Average traded value increased by 5 percent to reach US$ 131.8 million as against US$ 124.9 million.

Stocks that contributed significantly to the volumes include HUMNL, WTL, BYCO, UNITY and SILK, which formed 44 percent of total volumes.

Stocks that contributed positively to the index include LUCK (+31 points), NRL (+20 points), POL (+20 points), TRG (+19 points) and FFC (+14 points).

Stocks that contributed negatively include HBL (-63 points), MTL (-15 points), OGDC (-14 points), MCB (-13 points) and UNITY (-12 points).

June 18, 2021
KIBOR rates on June 18

KARACHI – The State Bank of Pakistan (SBP) has released the Karachi Interbank Offered Rates (KIBOR) as of Friday, June 18, 2021.
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June 18, 2021
Rupee falls by 15 paisas against dollar

The Pakistani Rupee faced a depreciation of 15 paisas against the US Dollar on Friday, closing at Rs156.89 in the interbank foreign exchange market.
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June 18, 2021
FBR forms committees to remove anomalies in Finance Bill

ISLAMABAD: The Federal Board of Revenue (FBR) on Friday formed committees to identify and remove technical and legal anomalies in the Finance Bill, 2021.

The FBR formed following committees:

Sultan Ali Allana, Chairman, HBL has been appointed as chairman of the business anomaly committee. Ch. Muhammad Tarique, Member (IR- Policy), FBR is co-chairman of the committee. The other members of the committee are included:

01. Ehsan A Malik, CEO, Pakistan Business Council

02. M. Shariq Vohra, President, Karachi Chamber of Commerce and Industry

03. Irfan Siddiqui, President, Overseas Investors Chamber of Commerce and Industry

04. Sherbaz Ilyas Ghazanfar Bilour, President, Sarhad Chamber

05. Abdul Samad, President, Quetta Chamber

06. Mian Naseer Hayat Maggo, President, Federation of Pakistan Chambers of Commerce and Industry

07. Mian Tariq Misbah, President, Lahore Chamber of Commerce and Industry

08. Adil Bashir, Chairman, All Pakistan Textile Mills Association

09. Asif Peer, President, American Business Council

10. Asad Shah, Director (External Affairs), PTC

11. Amir Waheed, ex-President of Islamabad Chamber

Naeem Akhtar Sheikh, UHY Hassan Naeem & Co. has been appointed as chairman of the anomaly technical committee constituted by the FBR. The co-chairman of the committee are: Ch. Muhammad Tarique, Member (IR-Policy), FBR; and Syed Hamid Ali, Member (Customs –Policy), FBR,

The other members of the committee are:

01. Ashfaq Tola, FCA, FCMA

02. Abdul Qadir Memon, Patron Pakistan Tax Bar, Karachi

03. Syed Yawar Ali, Chairman, Pakistan Business Council, Karachi

04. Shahzad Hussain, Ex- Partner, A F Ferguson & Co.

05. Khurram Mukhtar, Patron-in-Chief, PTEA

06. Ms. Sadia Nazeer, FCA, Partner KPMGA

07. Hafiz Muhammad Idrees, Advocate, Supreme Court, Ex-President, Tax Bar

08. Habib Fakhruddin, CA

09. Abdul Wahab Kodvai

The committees have been given tasks to review the anomalies identified and to advise FBR on removal of anomalies.

June 18, 2021
Tax amendments made for income of salaried persons, individuals

KARACHI: The Finance Bill, 2021 has proposed certain amendments in Income Tax Ordinance, 2001 related to income of salaried persons and business individuals.

According to a presentation made at post budget 2021/2022 webinar of Karachi Tax Bar Association (KTBA) the major changes proposed through the Finance Bill 2021, are:

— Interest income above Rs5 million taxable at normal rates (previously Rs. 36 million); withholding @15 percent (previously 10 percent) for interest income below Rs. 500,000.

— Exemption for medical allowance / reimbursement withdrawn, which needs to be reconsidered.

— Interest income distributed by Provident Fund above Rs. 500,000 taxed @ 10 percent – conflict with 6th Schedule needs to be addressed.

— Rental income taxable at normal rate.

— No tax on transfer of assets via gift / inheritance etc. to non-resident relatives.

— Giftee allowed to claim FMV of gifted assets, after a holding period of 2 years.

— Individuals have been made a withholding agent for payment of commission (having turnover of Rs. 100 million).

June 18, 2021
Final tax regime allowed for export of services

KARACHI: The Finance Bill 2021 has proposed a final tax regime for export of IT and IT enabled services.

According to commentary on budget 2021/2022 released by KPMG Taseer Hadi & Co. currently, tax deduction on foreign proceeds from export of goods are taxed at 1 percent which is considered as final tax.

The Finance Bill proposes similar taxation regime for following specified services:

—Export of IT and IT enabled services where tax credit under section 65F is not available;

—Services or technical services rendered outside Pakistan or exported from Pakistan;

—royalty, commission or fees derived by a resident company from a foreign enterprise in consideration for the use outside Pakistan of any patent, invention, model, design, secret process or formula or similar property right, or information concerning industrial, commercial or scientific knowledge, experience or skill made available or provided to such enterprise;

—construction contracts executed outside Pakistan; and

—other services rendered outside Pakistan as notified by the Board from time to time.

The tax deductible will be final tax subject to following conditions:

(i) Income tax return has been filed;

(ii) withholding tax statements for the relevant tax year have been filed;

(iii) sales tax returns under Federal or Provincial laws have been filed, if required under the law; and

(iv) no credit for foreign taxes paid shall be allowed.

The Bill also proposes an option for taxation under Normal Tax Regime which is to be exercised every year at the time of filing of income tax return.

The Bill proposes while explaining the nature and source of any amount, investment, money, valuable article, expenditure, referred to in section 111, a taxpayer takes into account any source of income under this section, he shall not be entitled to take credit of a sum that can be reasonably attributed to the business activity under this section.

June 18, 2021
Banks asked to use income estimation model for low cost housing finance

KARACHI: State Bank of Pakistan (SBP) on Thursday directed the banks to use a newly developed model for income estimation for extension of low cost housing finance.

The SBP said in order to facilitate low cost housing finance applicants with informal income, the central bank asked banks to develop and deploy income estimation model for extension of low cost housing finance to such applicants.

This measure is expected to ease difficulties being faced by general public in availing housing finance under Government’s Markup Subsidy Scheme (G-MSS), commonly known as Mera Pakistan Mera Ghar.

The SBP said the Pakistan Banks’ Association (PBA), through a consultative process, has developed and circulated among banks a baseline income estimation model. The purpose of this model is to assess income and repayment capacity on the basis of routine expenditures like house rents, utility bills and educational expenses etc. of a potential borrower who earns from informal sources.

The SBP asked the banks to use PBA’s baseline model, customize the same, or develop their own income estimation model.

Banks are required to confirm within 4 weeks that they have made their informal income proxy models operational, the SBP said. The availability of these models is expected to greatly enhance prospects of informal income applicants to secure housing finance from the banks, it added.

With this move, it is expected that financially excluded segment will be able to avail financing under G-MSS. On the other hand, this tool will enable banks to expand their outreach and cater to the financing needs of people having informal sources of income.

It is worth mentioning here that the SBP, with the support of banking industry, is working to reduce the hurdles being faced by the general public to availing housing finance under G-MSS.

A number of steps have already been taken to make this facility available to general public, especially low cost housing finance applicants.

These steps include relaxation of debt burden ratio, extension of housing finance against personal guarantee, development of online complaint resolution portal and establishment of banks’ joint call center to address queries.

Further, standardization and simplification of i) loan application form ii) facility offer letter and iii) documentary requirements for approval and disbursement are also proving beneficial for the applicants under G-MSS. As of June 15, 2021, banks have received applications of around Rs. 90 billion against which an amount of around Rs. 30 billion has already been approved whereas banks are processing rest of the applications.

June 18, 2021