The rate of tax on return on investment in sukuks received from a special purpose vehicle has been defined under Section 5AA of Income Tax Ordinance, 2001.
(more…)Author: Mrs. Anjum Shahnawaz
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FPCCI rejects hike in petroleum, electricity prices
The Businessmen Panel (BMP) of Federation of Pakistan Chambers of Commerce and Industry’s (FPCCI) has rejected hike in prices of petroleum products and electricity.
BMP Chairman Mian Anjum Nisar, while strongly reacting to increase in electricity base tariff by Rs 1.39 per unit for the second time in one year, along with exorbitant hike of Rs10.49 per litre in petrol prices, has said that the government has declared another minibudget by burdening the trade and industry with billions of rupees new taxes in the form of huge increase in electricity, gas and petroleum rates.
FPCCI’s Businessmen Panel Chairman Mian Anjum Nisar observed that the government has raised the petroleum product price for the third consecutive time in one month period, lifting it by more than Rs20 per litter to Rs137.79 per litre, as the authorities hiked the oil prices by Rs4.50 on Sept 16, then by Rs5.50 on Oct 1 and now by Rs10.49 per litter on Oct 16, 2021.
“It is unfortunate that the authorities had reduced the petroleum rates just by Rs1.50 one and a half months back on Sept 1, 2021,” he added.
Moreover, the federal government has announced to increase electricity base tariff by Rs 1.39 per unit across the country from Nov 1, while it had already enhanced the base power tariff by Rs 1.95 per unit in January this year along with quarterly and monthly electricity price hike under fuel adjustment formulas, totaling the power price hike to over Rs5 per unit, he claimed.
He said that the National Electric Power Regulatory Authority (NEPRA) has allowed an increase of Rs1.65 per unit in power tariff, under quarterly adjustments, which will empower the distribution companies to collect Rs173 billion from consumers in the next one year. He said that the trade and industry were expecting some relief at the expiry of early adjustments of Rs1.62 per unit on Sept 30, 2021, however, the NEPRA announced the transfer of new adjustments equal to Rs1.65 per unit to the consumers with effect from Oct 1, 2021.
FPCCI former president rejected the increase in power prices along with the periodic hike in rates of petroleum products. He said the increase in power and fuel prices will increase the cost of production for the industrial section which in turn will impact the ease of doing business and exports. This will ultimately hit the economy as envisioned by the Prime Minister, he maintained.
Condemning the government’s move, the ruling group chief of apex chamber said the increase was being done to meet the conditions of the International Monetary Fund.
It is unfortunate that Minister for Finance Shaukat Tarin had pledged a day earlier – on October 14, 2021 in Washington DC while attending the annual meeting of IMF – that electricity tariff will not be increased.
Rejecting the latest increase in electricity and petroleum prices, he termed it a cruel decision by the authorities, which will bring the economy to a grinding halt. Millions more will be unemployed while millions are facing abject poverty and starvation. Imposition of 17 per cent sales tax on exempted items, increase in petrol, electricity prices is not just for the economy, he said.
He further said the government had dropped a new bomb on the trade and industry at a time when inflation and unemployment was at an all-time high and the economy was facing total collapse because of government’s incompetence.
The government blindly acted on the terms of the IMF and did not bother to care about the public interest. He warned that severe inflation was creating a serious problem of economic viability of the country which was not a good omen for Pakistan.
Businessmen Panel Chairman Mian Anjum Nisar said the constant increases in energy rates on the behest of the International Monetary Fund (IMF) would make the Pakistani products uncompetitive in the international market.
He opposed the government’s move of raising power tariff by more than Rs5 per unit, besides lifting rates of petroleum products twice a month to qualify for the revival of the stalled $6 billion IMF loan program, leading the economy towards point of no return due to interference of the International Monetary Fund.
Mian Anjum Nisar said it was imperative to make power and gas tariffs for domestic, as well as export sectors compatible with the tariff being applied in regional and neighboring countries.
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Digital payment facility made must for corporate clients
KARACHI: The State Bank of Pakistan (SBP) has made it mandatory for its regulated entities (REs) including banks, microfinance banks, payment system operators and payment system providers to provide digital means of payments to their corporate clients to enable businesses for sending and receiving their payments.
Ina statement issued on Friday, the central bank said the SBP has now made it mandatory for its regulated entities (REs) including banks, microfinance banks, payment system operators and payment system providers to provide digital means of payments to their corporate clients to enable businesses for sending and receiving their payments.
SBP, in its recent Circular, has asked its regulated entities to facilitate their institutional clients including corporations, companies, and partnerships for making large value payments through digital channels.
Regulated entities are now required to extend online portals/platforms for digital payments & receipts of corporates including online interbank fund transfer services, online bill/invoice sharing and payment services like over the Counter (OTC) digital payments services/facilities, card payments using Point of Sale (POS) terminals, QR codes, mobile devices, ATMs, Kiosk or any other digital payments enabled device.
In order to monitor the progress of implementation of these instructions, SBP has advised banks to submit roadmap of implementing these measures within 30 days.
Banks are also required to submit quarterly progress reports to SBP on the number of businesses facilitated for digitization of their payments and receipts.
SBP expects that these measures would increase documentation of value chains and help businesses manage their large value transactions more effectively.
The initiative will also facilitate implementation of Federal Board of Revenue’s recently introduced measures on integration of businesses with FBR system and conducting of corporate payments through digital means.
Regulated entities are also required to make all efforts to onboard non-corporate players including Sole Proprietors, SMEs and MSMEs for the provision of digital payments.
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Indenters not paying tax despite rate reduction: SRB
KARACHI: Khalid Mehmood, Chairman, Sindh Revenue Board (SRB) on Friday said that many indenters are still not paying tax and opted to approach court.
SRB chairman stated this while sharing views with the members of Karachi Chamber of Commerce and Industry (KCCI).
Khalid Mehmood said that sincere efforts were made to resolve the indenters issue whose tax was reduced from 13 percent to 3 percent yet, many indenters were still reluctant to pay tax and have gone into litigations. “If they (Indenters) have any other feasible option, it can be shared with SRB and we will take it into consideration,” he assured.
He said that point of sale measure was being taken to capture sales of restaurants, beauty parlors and other outlets where a large number of cash transactions were taking place. “In this regard, we will be requiring your cooperation as it will be a substantive move,” he added.
Chairman SRB said: “Instead of being a typically strict tax collecting authority, we try our best to make SRB a taxpayers’ friendly institution and we have succeeded in attaining this objective to a certain extent.
“Even in those matters in which there were differences between the SRB and the business community, we usually act leniently in terms of enforcement and the Board has been overall enjoying good relations with the business community of Karachi.”
He added that any unwarranted notice received by members of the business community can be brought to SRB high-ups’ notice who are always available to listen to and amicably resolve the issues.
Chairman BMG Zubair Motiwala, while congratulating SRB Chairman on achieving record tax collection of Rs128 billion, stated that there was a huge potential for further growth as SRB has created an enabling and cordial environment in which the taxpayers were being facilitated as much as possible which was a very nice approach.
He stressed that out of a total revenue of Rs128 billion, Karachi must be contributing somewhere around Rs110 billion and out of this huge contribution, the Sindh government should look into the possibility of spending half of the amount on development of Karachi.
He further pointed out that the Worker Welfare Fund (WWF), which was either being submitted to SRB or FBR, was a serious issue that stands unresolved to date. Many taxpayers, who submit it to FBR, adjust WWF in Income Tax Returns but those taxpayers, who submit it to SRB, cannot carry out adjustment in IT returns.
Hence, the SRB and FBR will have to sit together to deal with this issue as it puts the business community in confusing situation, he added.
He further stated that sales tax on Exports was not being charged anywhere around the world hence it should not be charged here as well because all the services including shipping lines and terminals operators etc. were being availed for exports. “SRB must also rationalize its tax rates in consultation with KCCI as there was plenty of space available in numerous sectors where the tax rate can either be reduced or enhanced”, he opined.
Vice Chairman BMG Haroon Farooki, in his remarks, stated that the business community faces a lot of problems and remains confused on various occasions when parallel taxes were being demanded by the FBR and SRB as well and both claim that these taxes fall under their domain. “This clash between the two tax collecting authorities puts legitimate taxpayers in a discomfortable position who sometimes even have to go to courts to settle the issues but it is high time that FBR and SRB must sit together to decide their domains in order to set the loyal taxpayers free from all the trouble”, he added.
He mentioned that taxation issues of indenters, security agencies and travels agents etc. have still not been addressed at SRB level which require attention.
Vice Chairman BMG Jawed Bilwani stressed that although Karachi contributes 95 percent revenue to SRB but sector-wise and city-wise breakup was unavailable. “SRB should look into the possibility of publicizing this important info so that we could examine the statistics and give inputs on where the tax rate needs to be enhanced and where it has to be reduced.”
President KCCI Muhammad Idrees, while welcoming Chairman SRB, stated that since Khalid Mehmood assumed charge, SRB’s revenue has been constantly increasing every year and it was heartening to see that most of the revenue was being contributed by the business & industrial community of Karachi. “We have no problem in contributing so much and we can contribute even more but the funds being generated from Karachi must be utilized on the infrastructure of this city which was in bad shape.”
He appreciated the support and cooperation being extended by Chairman SRB who has promptly resolved numerous issues highlighted by KCCI.
Chairman Businessmen Group (BMG) Zubair Motiwala, Vice Chairmen BMG Haroon Farooki and Jawed Bilwani, President KCCI Muhammad Idrees, Senior Vice President Abdul Rehman Naqi, Advisor SRB Mushtaq Kazmi and KCCI Managing Committee Members attended the meeting.
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Dollar retreats from all time high against PKR
KARACHI: The US dollar lost two paisas against the Pak Rupee (PKR) on Friday amid external payment demand.
The rupee ended at Rs171.18 to the dollar from previous day’s closing of Rs171.20 in the interbank foreign exchange market. The dollar recorded all time high at Rs171.20 a day earlier.
Currency experts said that high international commodity prices and rising domestic demand after ease in coronavirus cases escalated the demand for imported goods.
The import bill registered a sharp growth of 65 per cent to $18.63 billion during the first quarter (July – September) of the current fiscal year as compared with $11.28 billion in the corresponding quarter of the last fiscal year.
The State Bank of Pakistan (SBP) during the past few days introduced various measures to discourage outflow of dollars. However, these measures are unable to stop depreciation in rupee value.
The local currency remained under pressure since the start of the current fiscal year. The local unit has lost Rs13.64 or 8.66 per cent against the dollar from Rs157.54 on June 30, 2021 to Rs171.18 to date.
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Bank holiday announced
KARACHI: State Bank of Pakistan (SBP) on Friday announced that banks shall remain closed on October 19, 2021 on the occasion of Eid Milad-un-Nabi (Sallallahu Alayhi Wa-Sallam).
In a statement, the central bank said that it will remain closed on Tuesday, October 19, 2021 (i.e. 12th Rabi-ul-Awal, 1443 A.H.)
on the occasion of Eid Milad-un-Nabi (Sallallahu Alayhi Wa-Sallam).
Similar instructions have been also communicated to chief executives and presidents of commercial banks, Development Financial Institutions (DFIs) and Microfinance Banks (MFBs).
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Habib Bank declares Rs26.44 billion 9-month profit
KARACHI: Habib Bank Limited (HBL) on Friday announced Rs26.44 billion as profit after tax for nine month period ended September 30, 2021.
The profit after tax of the bank was Rs24.98 billion in the same period of the last year.
The earning per share of the bank was at Rs18.03 for the nine months period ended September 30, 2021 as compared with Rs17.03 EPS.
Total income of the bank during January – September 2021 fell to Rs112 billion as compared with Rs113 billion n the same period of the last year.
Net markup income of the bank fell to Rs90.01 billion during the period under review as compared with Rs92.96 billion in the same period of the last year. Non markup income increased to Rs22.02 billion as compared with Rs20 billion.
Operating expenses were at Rs62.04 billion as compared with Rs62.77 billion.
Provisioning and write-offs fell to Rs3.9 billion during January – September 2021 as compared with Rs7.28 billion in the same period of the last year.
On a quarterly basis the bank declared a decline of 11.11 per cent in profit after tax (PAT) for the quarter ended September 30, 2021.
According to financial statement, the bank recorded Rs8.96 billion as net profit for the quarter July – September 2021 as compared with Rs10.08 billion in the same quarter of the last fiscal year.
Total income of HBL recorded 6.33 per cent decline to Rs40.40 billion for the quarter under review as compared with Rs43.13 billion in the same quarter of the last year.
Net Markup Income of the bank posted a decline of 9.6 per cent to Rs32.28 billion for the quarter ended September 30, 2021 as compared with Rs35.71 in the same quarter of the last year.
However, non-markup income registered a growth of 9.29 per cent to Rs8.11 billion as compared with Rs7.42 billion.
Operating expenses of the bank grew to Rs23.161 billion for the quarter ended September 30, 2021 as compared with Rs22.612 billion in the same quarter of the last year.
Similarly, the provisioning and write-offs fell to Rs1.75 billion for the quarter ended September 30, 2021 as compared with Rs3.04 billion in the same quarter of the last year.
The earning per share for the quarter fell to Rs6.17 as compared with Rs6.85.
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Cadastral mapping to develop authentic land record: PM
ISLAMABAD: Prime Minister Imran Khan on Thursday said that cadastral mapping will help in development of an authentic land record database.
Prime Minister Imran Khan chaired a meeting of the National Coordination Committee (NCC) on Housing, Construction & Development to review the progress made on existing and new projects.
While receiving a briefing from Surveyor General of Pakistan Maj. Gen. Shahid Pervez, the Prime Minister remarked that Cadastral Mapping would help in development of an authentic land record database. It would help in clearly identifying demarcation of land and thereby eliminate illegal encroachments, added the prime minister.
Moreover, the authentic database would also contribute towards enhancing revenues received from lands, the prime minister said.
The Prime Minister further said: “Land-use changes need to be checked where green vegetation areas are being converted to urban projects.” He advised all the provincial and Azad and Jmmu and Kashmir governments to expedite legislation to put a stop to land-use changes.
The Prime Minister stated that protection of green spaces and agricultural lands is essential for environmental considerations and to safeguard food security. However, construction projects would be allowed under regulations.
The NCC meeting was briefed that, under Phase-I of the mapping exercise, 90 per cent digitization of State Lands has been completed in Punjab, 96 per cent in Khyber Pakhtunkhwa and 50 per cent in Balochistan.
Chairman CDA informed that with the help of Cadastral Maps, CDA has started imposition of fines on encroachers and the amount collected is being used for compensation of general masses who were defrauded by illegal housing societies.
The NCC meeting was attended by Federal Minister Fawad Ahmed, Minister of State Farrukh Habib, SAPM Dr. Shehbaz Gill, SAPM Malik Amin Aslam, Minister Local Govt. Punjab Mian Mehmood ur Rasheed, MNA Aftab Siddiqui, Chairman Naya Pakistan Housing & Development Authority Lt. Gen. (R) Anwar Ali Haider, Chairman FBR, Surveyor General of Pakistan, and senior officers. Chief Secretaries of Punjab, Balochistan, Sindh and AJ&K; and ACS Khyber Pakhtunkhwa joined the meeting via video link.
Earlier the Prime Minister also chaired a meeting to review progress on Ravi Urban Development Project and Central Business District Lahore.
The Prime Minister directed the concerned authorities to expedite progress as these projects are very important for attracting Foreign Direct Investment in the Country.Deputy Governor State Bank of Pakistan and Chief Secretary Gilgit Baltistan also joined the NCC meeting via video link.
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Pakistan assures World Bank of reforming power sector
ISLAMABAD: Pakistan on Thursday assured the World Bank of taking measures to reform the power sector in the country with special focus on reducing circular debt.
Federal Minister for Finance and Revenue Shaukat Tarin held a meeting today with Axel van Trotsenburg, Managing Director World Bank and the Bank’s Pakistan team at the World Bank Headquarters in Washington DC.
Dr. Asad Majeed Khan, Ambassador, Dr. Murtaza Syed, Deputy Governor SBP and Mr. Naveed Kamran Baloch, Alternate Executive Director, World Bank were also present.
Omar Ayub Khan, Federal Minister for Economic Affairs and Mohammad Hammad Azhar, Federal Minister for Energy joined the meeting virtually from Islamabad, says a press release received here from Washington DC.
The finance minister appreciated the Bank’s support to Pakistan over the decades and acknowledged the continuing support being extended to Pakistan.
He highlighted the measures taken by the Government to accelerate completion of projects funded by the Bank which were in the pipeline, with special focus on agriculture, housing and construction sectors.
The finance minister assured that the Government was also keen to reform the power sector in the country with special focus on reducing circular debt.
The finance minister reiterated that the government is fully committed to implementing structural reforms, protecting social spending and boosting social safety nets in order to protect the vulnerable segments of the society.
Minister for Energy Hamad Azhar shared the measures being taken by the Government to reform the power sector and rationalize power sector subsidies.
MD Axel van Trotsenburg informed the delegation on the importance that the Bank places on cooperation with Pakistan and said that the Bank was looking forward to continuing the bilateral cooperation in the future.
He said that the Bank was partnering with Pakistan in implementing one of the largest programme by the Bank for Pakistan and acknowledged that a lot of progress has been made on implementation of structural reforms in various sectors.
MD Axel van Trotsenburg also conveyed gratitude and appreciation for the Government’s assistance in the timely and efficient transiting of the Bank’s staff from Kabul.
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Trade discount should be displayed on invoice: FBR
ISLAMABAD: The Federal Board of Revenue (FBR) on Thursday said that trade discount if any to be given by a retailer has to be depicted on the invoice horizontally i.e. from left to right
The FBR on August 9, 2021 issued SRO 1006(I)/2021 and specified standardized format for sales tax invoice detailing minimum requirement for the integrated point of sale (POS) system.
The definition of trade discount as mentioned in the value of supply in sub-section (46) of Section 2 the Sales Tax Act, 1990 is meant for Business to Business transactions and does not cover retail sector and the business to consumer transaction.
The FBR said it had received various representations from the taxpayers and Bar Councils seeking clarification of the term ‘trade discount’ as stated in sub-section (46) of Section 2 of the Sales Tax Act, 1990 whether the term also covers ‘cash discount’ given by retailers to end consumers, for the purpose of depiction in the standardized Sales Tax invoice under SRO 1006(1)/2021 dated 09.08.2021.
The matter has been examined by the Board, it is clarified that the discount if any to be given by a retailer has to be depicted on the invoice horizontally i.e. from left to right.
The captions such as total, sales tax paid, discount allowed appearing at the bottom of the invoice are standalone notations and do not necessarily add or subtract one another.