Pkrevenue.com

Author: Mrs. Anjum Shahnawaz

  • FBR explains tax on deemed income from immovable property

    FBR explains tax on deemed income from immovable property

    ISLAMABAD: The Federal Board of Revenue (FBR) has explained the new introduced tax on deemed income through Finance Act, 2022.

    The FBR issued Income Tax Circular No. 15 of 2022/2023 to explain important amendment brought through Finance Act, 2022 to the Income Tax Ordinance, 2001.

    The FBR said that a new section 7E has been introduced through Finance Act, 2022 whereby for tax year 2022 and onwards, a resident person is treated to have derived income equal to five per cent of fair market value of the capital assets situated in Pakistan which will be chargeable to tax at the rate of 20 per cent under Division VIIIC of Part I of First Schedule of the Ordinance.

    READ MORE: Super tax to apply for Tax Year 2022 and onwards: FBR

    Following exclusions have been provided to which this section will not apply:

    (i) One capital asset owned by the resident person;

    (ii) Self-owned business premises from where the business is carried out by the persons appearing on the active taxpayer’s list at any time during the year;

    READ MORE: Pakistan enhances income tax rates for banks

    (iii) Self-owned agriculture land where agriculture activity is carried out by the person but excluding farmhouse and annexed land. Farmhouse has been defined in this section;

    (iv) Capital asset allotted to —

    (a) A Shaheed or dependents of a Shaheed belonging to Pakistan Armed Forces;

    (b) A person or dependents of a person who dies while in the service of Pakistan armed forces or federal or provincial government;

    READ MORE: Declaring beneficial owner made mandatory for companies, AOPs

    (c) A war wounded person while in service of Pakistan armed forces or federal or provincial government;

    (d) An ex-serviceman and serving personnel of armed forces or ex-employees or serving personnel of federal and provincial governments who are original allotees of the capital asset as duly certified by the allotment authority;

    (v) Any property from which income is chargeable to tax under the Ordinance and tax leviable has been paid;

    (vi) Capital asset in the first year of acquisition on which tax under section 236K has been paid;

    READ MORE: Pakistan reintroduces capital value tax on motor vehicles

    (vii) Where fair market value of the capital assets in aggregate excluding capital assets mentioned in serial nos. (i) to (vi) above does not exceed rupees twenty-five million;

    (viii) Capital assets which are owned by a provincial government or local government;

    (ix) Capital assets owned by local authority, a development authority, builders and developers for land development and construction subject to the condition that such persons are registered with Directorate General of Designated Non-Financial Businesses and Professions.

  • FBR warns officials to shun exerting political pressure

    FBR warns officials to shun exerting political pressure

    ISLAMABAD: The Federal Board of Revenue (FBR) on Friday warned its officials to shun exerting political pressure in service matters.

    The FBR in an official note said that it had observed with concern that some officers/officials resort to exerting political pressures on the top management in connection with their transfers/postings/deputations and other service matters in total disregard to Rule 19 & 29 of Government Servants (Conduct) Rules, 1964 read with the instructions (printed at S.No. 14.3, 14.4 & 14.5 of ESTA CODE, edition 2015).

    READ MORE: Super tax to apply for Tax Year 2022 and onwards: FBR

    Despite repeated counselling/warnings, the practice still continues and, therefore, it is once again informed that the said act is a “Misconduct” under the Government Servant (Conduct) Rules, 1964 read with Rule 2(1)(k) of Civil Servants (E&D) Rules, 2020 (unbecoming of officers professional conduct) and attracts disciplinary action under the relevant rules.

    READ MORE: Pakistan enhances income tax rates for banks

    In view of the above, all officers/officials of IRS & PCS are hereby warned once again to shun this attitude. It may please be noted that such officers/officials using political influences for service matters have been marked and necessary observations have been placed in their personal dossiers.

    “It goes without saying that such observations will be one of the main considerations at the time of making their career decisions including promotion and disciplinary proceedings besides placement and rotations,” the FBR said.

    READ MORE: Declaring beneficial owner made mandatory for companies, AOPs

    Therefore, at the cost of the repetition, all officers/officials of IRS are once again advised to be cautious of the seriousness of this subject at all times.

    The FBR asked field heads to disseminate this information with the needed seriousness to all officers/officials under their command.

    READ MORE: Pakistan reintroduces capital value tax on motor vehicles

  • Prices of essential items increase by 32.82%

    Prices of essential items increase by 32.82%

    ISLAMABAD: The prices of essential items in Pakistan have registered a growth of 32.82 per cent Year on Year (YoY) basis by week ended July 21, 2022.

    According to weekly inflation based on Sensitive Price Indicator (SPI) data released by Pakistan Bureau of Statistics (PBS), the prices of essential items increased by 32.82 per cent by week ended July 21, 2022 when compared with July 22, 2022.

    READ MORE: Pakistan inflation crosses 33% on high petroleum prices

    The SPI is computed on weekly basis to assess the price movements of essential commodities at shorter interval of time so as to review the price situation in the country.

    The SPI comprises of 51 essential items collected from 50 markets in 17 cities of the country.

    The year on year trend depicts an increase of 32.82 per cent, Diesel (106.16 per cent), Petrol (103.34 per cent), Pulse Masoor (91.29 per cent), Onions (88.46 per cent), Vegetable Ghee 1 Kg (76.85 per cent), Mustard Oil (75.78 per cent), Cooking Oil 5 litre (75.35 per cent), Vegetable Ghee 2.5 Kg (71.71 per cent), Washing Soap (60.25 per cent), Chicken (58.41 per cent), Gents Sponge Chappal (52.21 per cent), Pulse Gram (51.46 per cent), Garlic (43.70 per cent) and LPG (40.47 per cent).

    READ MORE: Petroleum prices in Pakistan push inflation 13-year high

    While major decrease observed in the prices of Chillies Powdered (43.42 per cent), Sugar (15.51 per cent), Tomatoes (6.18 per cent), Gur (2.72 per cent) and Pulse Moong (0.72 per cent).

    The SPI for the current week ended on July 21, 2022 recorded a decrease of 0.22 per cent. Decrease observed in the prices of food items, Tomatoes (7.04 per cent), Bananas (3.34 per cent), Vegetable Ghee 1 Kg (1.14 per cent), Onions (0.46 per cent), Sugar (0.44 per cent), Vegetable Ghee 2.5 Kg (0.42 per cent), Gur (0.32 per cent) and Rice Basmati Broken (0.19 per cent), non-food items Diesel (14.62 per cent) and Petrol (7.41 per cent), with joint impact of (-1.03 per cent) into the overall SPI for combined group of (-0.22 per cent).

    READ MORE: Average inflation estimated up to 12% in FY22

    On the other hand, an increase observed in the prices of Chicken (3.80 per cent), Georgette (3.44 per cent), Shirting

    (2.53 per cent), Garlic (2.25 per cent), Pulse Mash (2.07 per cent), Potatoes (1.56 per cent), Pulse Masoor (1.43 per cent), Pulse Moong (1.39 per cent), Cooking Oil 5 litre (1.35 per cent) and Tea Lipton (1.29 per cent).

    During the week, out of 51 items, prices of 31 (60.78 per cent) items increased, 11 (21.57 per cent) items decreased and 09 (17.65 per cent) items remained stable.

    READ MORE: Average inflation estimated up to 12% in FY22

  • Rupee hits new midday low of Rs228.50 against dollar

    Rupee hits new midday low of Rs228.50 against dollar

    KARACHI: The Pakistani Rupee (PKR) made a new midday trading low of Rs228.50 against the US dollar on Friday in interbank foreign exchange market.

    The dollar is being traded at Rs228.50, up Rs1.69 from last day’s closing of Rs226.81 in the interbank foreign exchange market.

    READ MORE: Rupee ends to new low at Rs226.81 against dollar in interbank

    Currency experts said that the rupee under severe pressure due to high dollar demand for external payments.

    The foreign exchange reserves of the country have further declined.

    Pakistan’s foreign exchange reserves have declined by $368 million to $15.242 billion by week ended July 15, 2022. The foreign exchange reserves of the country were $15.61 billion a week ago i.e. July 07, 2022.

    READ MORE: PKR plunges Rs227 to dollar at interbank midday trading

    The country’s foreign exchange reserves hit all-time high of $27.228 billion on August 27, 2021. Since then the foreign exchange reserves have declined by $11.986 billion.

    The official reserves of the State Bank also depleted by $388 billion to $9.329 billion by week ended July 15, 2022 as compared with $9.717 billion a week ago.

    READ MORE: Rupee hits fresh low Rs224.92 to dollar at interbank closing

    The foreign exchange reserves held by the central bank witnessed a record high at $20.146 billion by week ended August 27, 2021. Since then the official reserves of the SBP declined by $10.817 billion.

    The SBP on July 07, 2022 announced a hike of 125 basis points in policy rate to bring it to 15 per cent. The purpose of increasing the interest rate was to curb the demand and support the rupee value. However, the effort of the SBP failed to support the rupee value.

    READ MORE: Pakistani Rupee crashes to Rs222 against Dollar at closing on July 19, 2022

  • Super tax to apply for Tax Year 2022 and onwards: FBR

    Super tax to apply for Tax Year 2022 and onwards: FBR

    ISLAMABAD: The Federal Board of Revenue (FBR) on Thursday said that super tax will be applicable for tax year 2022 and onwards.

    The FBR issued Income Tax Circular No. 15 of 2022/2023 to explain important amendments made to Income Tax Ordinance, 2001 through Finance Act, 2022.

    READ MORE: Pakistan enhances income tax rates for banks

    The FBR said that a new section 4C to Income Tax Ordinance, 2001 has been introduced through Finance Act, 2022 and this section will apply for tax year 2022 and onwards.

    Except for the persons whose income as envisaged in this section is below Rs150 million, all other persons including those assessed under Fourth, Fifth and Seventh Schedules to the Ordinance are liable to pay super tax on graduated rates ranging from 1% to 4% based on graduated income slabs provided in Division JIB of Part I of First Schedule given as under:

    READ MORE: Declaring beneficial owner made mandatory for companies, AOPs

    S. No.Income under Section 4CRate of Tax
    1.Where income does not exceed Rs150 million0% of the income
    2.Where income exceeds Rs150 million 1% of the income but does not exceed Rs200 million1% of the income
    3.Where income exceeds Rs200 million 2% of the income but does not exceed Rs250 million2% of the income
    4.Where income exceeds Rs250 million but does not exceed Rs300 million3% of the income
    5.Where income exceeds Rs300 million4% of the income

    However, for tax year 2022 the rate of super tax under this section will be 10% instead of 4%, where the income of the persons engaged, partly or wholly, in business of airlines, automobiles, beverages, cement, chemicals, cigarette & tobacco, fertilizer, iron & steel, LNG terminal, oil marketing, oil refining, petroleum & gas exploration and production, pharmaceuticals, sugar and textiles exceeds Rs.300 million. For tax year 2023, this super tax on income of banking companies will be 10% if the income for the year exceeds Rs. 300 million.

    READ MORE: Pakistan reintroduces capital value tax on motor vehicles

    For the purposes of this section, the income will 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 the Ordinance, excluding amounts specified in (i) above;

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

    (iv) Income computed, other than brought forward depreciation, brought forward amortization and brought forward business losses under Fourth, Fifth and Seventh Schedule.

    READ MORE: Customs duty exemption, concession granted

    Super tax payable under this section will be paid on the date and manner as specified in under section 137(1) of the Ordinance.

    In case of default by the person liable to pay super tax under this section, Commissioner through an order in writing will determine the liability of the person and proceed to recover the same under applicable provisions of the Ordinance, the FBR added.

  • Pakistan enhances income tax rates for banks

    Pakistan enhances income tax rates for banks

    ISLAMABAD: Pakistan has enhanced tax rates for banks through amendments introduced through Finance Act, 2022.

    In this regard the apex tax agency of the country, i.e. Federal Board of Revenue (FBR) on Thursday issued Income Tax Circular No. 15 of 2022/2023 to explain important amendments made to Income Tax Ordinance, 2001 through Finance Act, 2022.

    READ MORE: Declaring beneficial owner made mandatory for companies, AOPs

    The FBR said that tax rates for banking companies are enhanced as explained hereunder:

    The taxable income arising from additional income of banking companies earned from additional investment in Federal Government securities for tax year 2020 and 2021 was taxable at the rate of 37.5 per cent instead of rates provided in Division II of Part I of First Schedule of the Income Tax Ordinance, 2001.

    READ MORE: Pakistan reintroduces capital value tax on motor vehicles

    This provision was further amended through Finance Act, 2021, whereby income attributable to investment in the Federal Government securities of banking companies was made taxable on the basis of advances to deposit ratios at graduated tax rates of 40 per cent, 37.5 per cent and 35 per cent, if ratio was up to 40 per cent, 40-50 per cent and above 50 per cent respectively.

    The Finance Act, 2022 has introduced enhanced rates of tax on taxable income of banks attributable to investment in Federal Government securities.

    READ MORE: Customs duty exemption, concession granted

    The enhanced rates for tax year 2022 are 55 per cent, 49 per cent and 35 per cent if gross advances to deposit ratio was upto 40 per cent, 40-50 per cent or above 50 per cent respectively.

    For tax year 2023, and onwards tax rates will be 55 per cent, 49 per cent and 39 per cent if gross advances to deposit ratio is up to 40 per cent, 40 -50 per cent or above 50 per cent respectively.

    The changes have been incorporated by substituting sub-rule (6A) of rule 6C of Seventh Schedule to the Ordinance.

    READ MORE: Commodities’ illegal movement to be treated as smuggling

    The tax rate on income of banking companies has been enhanced to 39 per cent for tax year 2023 from current 35 per cent through amendment in Division II of Part I of First Schedule of the Ordinance.

    Additionally, the application of section 4B has been restricted up to tax year 2022 in case of banking companies.

  • Declaring beneficial owner made mandatory for companies, AOPs

    Declaring beneficial owner made mandatory for companies, AOPs

    ISLAMABAD: The Federal Board of Revenue (FBR) on Thursday said that declaration of beneficial owner has been made mandatory for companies and Association of Persons (AOPs) under income tax laws.

    (more…)
  • Pakistan stocks slump by 628 points on rupee fall

    Pakistan stocks slump by 628 points on rupee fall

    KARACHI: Pakistan stocks fell by 628 points on Thursday owing to continuous decline in rupee value against the US dollar.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) fell to 39,832 points from last day’s closing of 40,460 points, showing a decline of 628 points.

    READ MORE: Pakistan stocks gain 71 points in range bound trading

    Analysts at Arif Habib Limited said that the benchmark KSE-100 index witnessed a bloodbath session today due to economic and inflationary concerns along with rupee depreciation against US Dollar.

    The rupee made a new historic low at Rs226.81 to the dollar on July 21, 2022 as compared with previous day’s closing of Rs224.92 in the interbank foreign exchange market.

    READ MORE: Pakistan stocks plunge 978 points on rupee devaluation

    They said that the market opened in the positive zone but investors opted for selling which dragged the index to an intraday low of 658 points.

    Volumes continued to remain dull across the board on the contrary decent volumes were observed in the 3rd tier stocks.

    READ MORE: Pakistan stocks plunge 708 points in bloodbath session

    Sectors contributing to the performance include Fertilizer (-100.0 points), Banks (-91.2 points), E&P (-78.8 points), Cement (-60.9 points) and Chemical (-45.4 points).

    Volumes increased from 141.7 million shares to 158.0 million shares (+11.5 per cent DoD). Average traded value decreased by 4.8 per cent to reach US$ 18.9 million as against US$ 19.8 million.

    Stocks that contributed significantly to the volumes are WTL, TPLP, UNITY, CNERGY and PRL.

    READ MORE: Weekly Review: stocks likely to stay positive

  • Rupee hits fresh low Rs224.92 to dollar at interbank closing

    Rupee hits fresh low Rs224.92 to dollar at interbank closing

    KARACHI: The free-fall continued in Pakistan Rupee (PKR) against the dollar on Wednesday as the local currency ended fresh low of Rs224.92 in the interbank foreign exchange market.

    The exchange rate recorded a decline of Rs2.93 to end at Rs224.92 to the dollar from last day’s closing of Rs221.99, the previous historic low of the rupee, in the interbank foreign exchange market.

    READ MORE: Pakistani Rupee crashes to Rs222 against Dollar at closing on July 19, 2022

    Currency experts said that the local unit was under pressure due to political instability.

    Furthermore, the Fitch rating agency has downgraded the Pakistan outlook to negative from positive.

    The experts also believed that the falling foreign exchange reserves also putting pressure on rupee stability.

    The foreign exchange reserves of Pakistan have depleted by $454 million to $15.742 billion by week ended June 30, 2022. The foreign exchange reserves of the country were at $16.196 billion a week ago i.e. June 24, 2022.

    READ MORE: Rupee plummets record low at Rs215.20 to dollar

    The country’s foreign exchange reserves hit all-time high of $27.228 billion on August 27, 2021. Since then the foreign exchange reserves have declined by $11.486 billion.

    The official reserves of the State Bank also recorded a decline of $493 million to $9.816 billion by week ended June 30, 2022 as compared with $10.309 billion a week ago.

    The central bank attributed the decline in foreign exchange reserves to external debt repayments.

    READ MORE: Fitch revises Pakistan’s outlook to negative

    It is pertinent to mention that the SBP received about $2.3 billion from Chinese banks for buildup of foreign exchange reserves. However, despite receiving the amount the external debt payment kept the pressure on the reserves.

    The foreign exchange reserves held by the central bank witnessed a record high at $20.146 billion by week ended August 27, 2021. Since then the official reserves of the SBP declined by $10.33 billion.

    The SBP on July 07, 2022 announced a hike of 125 basis points in policy rate to bring at 15 per cent. The purpose of increasing the interest rate was to curb the demand and support the rupee value. However, the effort of the SBP failed to support the rupee value.

    READ MORE: PKR slips to Rs210.95 against dollar despite IMF agreement

  • Pakistan’s import of CBU motor cars surges by 21% in FY22

    Pakistan’s import of CBU motor cars surges by 21% in FY22

    ISLAMABAD: The import of Completely Built Unit (CBU) motor cars into Pakistan has surged by 21 per cent in fiscal year 2021/2022.

    According to data released by Pakistan Bureau of Statistics (PBS) on Tuesday, the import of CBU motor cars increased to $310.41 million during fiscal year 2021/2022 as compared with $256.2 million in the preceding last fiscal year.

    READ MORE: Prices of KIA Motors raised up to 19.3% amid rupee devaluation

    In terms of rupee, the import of CBU motor cars posted a growth of 34.51 per cent to Rs54.67 billion during fiscal year 2021/2022 as compared with Rs40.65 billion in the preceding fiscal year.

    The overall import of CBU vehicles registered an increase of 59.3 per cent to $616.39 million in the fiscal year under review as compared with $386.95 million in the preceding fiscal year.

    The country imported CBU buses, trucks and other heavy vehicles worth $302 million and CBU motor cycles worth $4.12 million during the fiscal year 2021/2022.

    READ MORE: Rolls-Royce, Hyundai signs pact to lead advanced air mobility market

    On the other hand the import of Completely Knocked Down (CKD) motor cars recorded a massive growth of 52 per cent to $1.7 billion during fiscal year 2021/2022 as compared with $1.12 billion in the preceding fiscal year.

    The overall import of CKD motor vehicles recorded an increase of 54 per cent to $2.44 billion in fiscal year 2021/2022 as compared with $1.58 billion in the preceding fiscal year.

    Analysts believed that the import of CBU and CKD motor vehicles would fall in the current fiscal year due to high interest rates, regulatory measures and significant rise in prices of raw material in the international market.

    READ MORE: Global car manufacturers agree to introduce electric mini-commercial vans

    Analysts believed that amid continuous decline of the local currency against greenback, further price hike in car prices is imminent. “This would be the first time where we have seen the highest frequency (4x) of price increases by the auto industry in a fiscal year,” analysts at Insight Research said.

    The main reasons are higher freight charges, abrupt movement in PKR/USD followed by launch of new model cars with lower localization which further add fuel to the price hike.

    The localization policy started in 1987 and continued till 2004, which required compulsory localization for the automotive industry. However, automobile assemblers are still behind the required level of localization.

    READ MORE: Pakistan car sales surge 54 per cent in FY22

    The major players including Indus Motors, Honda Car and Pak Suzuki have been assembling vehicles since 1992, but localization level of these assemblers are still very low despite their long presence in the market.

    In such situation, it will difficult for new players to achieve high localization as older players are still far behind the required level of localization. Moreover, local auto parts manufactures are sensitive to PKR/USD parity as they are reliant on imported raw materials for production. Thus, making the end product expose to PKR devaluation.

    The analysts said that higher interest rate environment, currency devaluation and auto financing hindrances may pose threat to demand going forward especially in low segment cars under 1000cc.