Pkrevenue.com

Author: Mrs. Anjum Shahnawaz

  • Additional tax on transfer of unregistered motor vehicles to continue

    Additional tax on transfer of unregistered motor vehicles to continue

    ISLAMABAD: The levy of withholding tax to discourage on money on transfer of motor vehicles will continue beyond July 01, 2021.

    The Federal Board of Revenue (FBR) in an explanation to Finance Act, 2021 said that application of withholding tax on motor vehicles transferred without registration will continue during current fiscal year and onwards.

    The FBR said that in order to discourage ‘on’ money, additional tax of Rs.50,000 , Rs.100,000 and Rs.200,000 for vehicles upto 1000 cc, between 1000cc and 2000cc and beyond 2000cc respectively was imposed where a vehicle is sold within 90 days of its ownership.

    This was introduced vide Tax Laws (Amendment) Ordinance, 2021. It was applicable till 30.06.2021. Due to its positive impact, it has been continued. Further, the period of 90 days has been withdrawn.

    Now the persons buying motor vehicles would be required to get them registered in their own names otherwise, this tax would be collectable.

  • FBR highlights automation of procedures through Finance Act 2021

    FBR highlights automation of procedures through Finance Act 2021

    ISLAMABAD: The Federal Board of Revenue (FBR) has highlighted measures taken through Finance Act, 2021 to automate the procedures for facilitating taxpayers.

    The FBR through an income tax circular highlighted the following measures taken for automation of procedures:

    Automated issuance of refunds

    In order to claim refunds, a taxpayer has to file refund application and provide documents for physical verification. To facilitate taxpayers, centralized automated refund system has been introduced where there will be no requirement for application and verification. The system based verified refunds would be issued directly into the bank accounts of taxpayers without any face to face contact. Enabling legal framework has been provided through insertion of section 170A in the Ordinance.

    Prompt issuance of exemption certificate

    The delay in the issuance of exemption certificate is a major concern of taxpayers. Time limitation of fifteen days shall be observed for issuance of exemption certificate for all corporate taxpayers which was earlier available to public listed companies only. After the lapse of statutory time limit, the web portal would automatically issue exemption certificate to the taxpayers. Necessary changes have been introduced in Section 153 and 159 of the Ordinance. However, commissioner has been empowered to cancel or modify the certificate with reasons in writing.

    E-hearing

    In order to provide faceless tax administration, reducing compliance cost and saving precious time of the taxpayers, the mechanism of e-hearing has been devised. Enabling legal provisions for admissibility of evidence collected during e-hearing have been introduced through 227E of the Ordinance.

    Minimizing requirements for tax compliance

    Taxpayers are subject to multiple compliances. Currently they are required to update their profile periodically. This requirement costs time, energy and resources. In order to facilitate taxpayers in line with ease of doing business this requirement has been withdrawn through substitution of section 114A of the Ordinance.

    Electronic filing of appeal

    The mechanism of online filing of appeals has been made available to taxpayers. However, enabling legal provisions were lacking which have been introduced through section 127 in the Ordinance.

    Removal of requirement of multiple notices in concealment cases

    It has been provided under law that where notice for amendment of assessment has been issued confronting taxpayer regarding concealment of income, no separate notice under section 111 will be required.

  • Scope of withholding agents expanded for collection on immovable properties transactions

    Scope of withholding agents expanded for collection on immovable properties transactions

    ISLAMABAD: The Federal Board of Revenue (FBR) has said that certain persons/authorities have been brought in to the definition of withholding agents for collection of tax on immovable property transactions.

    In this regard the FBR said that changes have been made to Income Tax Ordinance, 2001 through Finance Act, 2021.

    The FBR said that all persons effecting sale and purchase of properties are required to collect tax under section 236C and 236K of the Ordinance.

    However, due to the lack of explicit provision certain persons like public and private real estate projects, joint ventures and private commercial concerns are not collecting these taxes which is giving rise to undue litigation.

    These have been added in the list of withholding agents in section 236C and 236K.

    Law provides mechanism for collection of tax on purchase of property in installments where payment for purchase of property is made in installments.

    Such taxpayers have to pay withholding tax again at the time of transfer. It has been made possible that such person may not be subjected to double withholding tax collection by amending explanation in section 236K .

  • Withholding tax rates for industrial, commercial consumers revised

    Withholding tax rates for industrial, commercial consumers revised

    ISLAMABAD: The Federal Board of Revenue (FBR) has said that withholding tax rates for industrial and commercial consumers have been revised.

    Withholding tax on domestic electricity consumption was collected at the flat rate of 7.5% if the monthly domestic electricity bill exceeded Rs. 75,000.

    In order to promote documentation and broadening of tax base this withholding tax has been:

    — done away with in case of persons appearing on Active Taxpayer’s List irrespective of amount of bill.

    — threshold for collection of tax has been reduced from Rs. 75,000 to Rs. 25,000.

    The new rate of collection of tax from commercial and industrial consumers from gross amount of bills shall be as set out in the following Table, namely :-

    TABLE

    S.NoGross amount of BillTax
    1upto Rs. 500Rs. 0
    2exceeds Rs. 500 but does not exceed Rs. 20,00010% of the amount
    3exceeds Rs.20,000Rs. 1950 plus 12% of the amount exceeding Rs. 20,000 for commercial consumers Rs. 1950 plus 5% of the amount exceeding Rs. 20,000 for industrial consumers

    Taxpayer’s are entitled for exemption certificate under section 235 on discharge of their advance tax liability. However the language of law was constructed to the effect that advance tax liability for the whole tax year was required to be discharged to obtain this certificate. Now this ambiguity has been resolved by making necessary changes in sub section (3) of section 235 of the Ordinance. Now the taxpayer can obtain certificate for a quarter by discharging their advance tax liability for the quarter.

  • Services export brought under final tax regime

    Services export brought under final tax regime

    ISLAMABAD: The Federal Board of Revenue (FBR) has said that export of services has been brought under final tax regime effect from July 01, 2021.

    The FBR in an explanation to Finance Act, 2021 stated that in line with the policy of the government to attract legal flow of remittances into the country and to promote export of services in all sectors of economy, a special regime at par with export of goods regime has been introduced through insertion of section 154A of the Income Tax Ordinance, 2001.

    The service providers would be subjected to 1 per cent withholding tax under Division IVA of Part III of First Schedule of the Ordinance on their export proceeds remitted in Pakistan through Banks and authorized dealers of foreign exchange. This would be final tax.

    The Board has also been empowered to include or exclude certain services from operation of this section. Moreover, the Board may prescribe rules for the purposes of this section.

  • Changes made to minimum tax regime through Finance Act 2021

    Changes made to minimum tax regime through Finance Act 2021

    ISLAMABAD: The Federal Board of Revenue (FBR) has issued explanation to changes made through Finance Bill, 2021 in Income Tax Ordinance, 2001 related to minimum tax regime.

    The FBR said that previously, minimum tax on turnover at the rate of 1.5 per cent of turnover was payable by all companies and individuals/ Association of Persons (AOPs) having turnover exceeding Rs. 10 million. This is an alternative tax. It is payable when the normal tax liability in cases of exemption, loss, tax credits or for any other reason, is less than tax payable on turnover basis.

    It can be carried forward for adjustment against next year’s tax liability however it cannot be carried forward if person has sustained loss for a year. 4 different types of changes have been made in this regime which are summarized below:

    — Generalized reduction in minimum turnover tax paid from 1.5 per cent to 1.25 per cent

    — Enhanced threshold for individuals and AOPs from Rs10 million to Rs100 million to pay minimum tax

    — Allowing carrying forward of minimum tax for adjustment against normal tax liability even in cases of loss to provide relief to businesses sustaining loss and to maximize equity

    Division IX of Part I of First schedule has been substituted as below:

    1. 0.75 per cent minimum tax to be applicable on:

    (a) Oil marketing companies, Sui Southern Gas Company Limited and Sui Northern Gas Pipelines Limited (for the cases where annual turnover exceeds rupees one billion.)

    (b) Pakistan International Airlines Corporation; and

    (c) poultry industry including poultry breeding, broiler production, egg production and poultry feed production

    2. 0.5 per cent to be applicable as minimum tax on:

    (a) oil refineries

    (b) motorcycle dealers registered under the Sales Tax Act, 1990

    3. 0.25 per cent to be applicable as minimum tax on:

    (a) Distributors of pharmaceutical products, fast moving consumer goods and cigarettes;

    (b) petroleum agents and distributors who are registered under the Sales Tax Act, 1990;

    (c) rice mills and dealers

    (d) Tier-1 retailers of fast moving consumer goods who are integrated with board or its computerized system for real time reporting of sales and receipts;

    (e) Person’s turnover from supplies through e-commerce including from running on online marketplace as defined in clause (38B) of Section 2.

    (f) Persons engaged in the sale of purchase of used vehicles

    (g) flour mills

    4. in all other cases the minimum tax rates shall be 1.25 per cent

  • Overseas Pakistanis deposit $1.56 billion through Roshan Digital Account: SBP

    Overseas Pakistanis deposit $1.56 billion through Roshan Digital Account: SBP

    KARACHI: State Bank of Pakistan (SBP) on Saturday said that overseas Pakistanis have deposited $1.56 billion through Roshan Digital Account during past 10 months.

    The SBP said that since its launch by the Prime Minister of Pakistan on September 10, 2020, Roshan Digital Account has attracted significant interest from overseas Pakistanis.

    “According to the new web page released today, 181,556 accounts have been opened from 171 countries across the world and $ 1.562 billion has been deposited in these accounts through end-June 2021.”

    In line with SBP’s commitment to transparency in its key policy measures, SBP from today has begun releasing regular data on the progress of Roshan Digital Account (RDA).

    This web page will be updated on a monthly basis. This periodic update was also requested by market participants.

    Since its launch by the Prime Minister of Pakistan on 10th September 2020, Roshan Digital Account has attracted significant interest from overseas Pakistanis.

    According to the new web page released today, 181,556 accounts have been opened from 171 countries across the world and $1.562 billion has been deposited in these accounts through end-June 2021.

    The webpage shows monthly trends in the number of accounts opened, deposits, and investments in Naya Pakistan Certificates (NPCs) and the stock market.

    The data shows an accelerating trend across all these dimensions over the last few months. June 2021 saw the highest monthly amount of deposits ($ 310 million) and NPC investments ($ 233 million) since the launch of Roshan Digital Account. As of end-June 2021, $ 1050 million has been invested in NPCs, with $621 million in conventional NPCs and $429 million in Islamic NPCs.

    Roshan Digital Account is a landmark initiative of the State Bank which seamlessly connects the Pakistani diaspora to the Pakistani financial system and economy.

    For the first time, it allows overseas Pakistanis to open a bank account in Pakistan in a completely digital manner, without needing to visit any bank branch or embassy.

    The account enables overseas Pakistanis to undertake all kinds of banking transactions in Pakistan, including paying school and utility bills for their families, funds transfer, e-commerce, car financing through Roshan Apni Car and making charitable donations through Roshan Samaaji Khidmat.

    At the same time, the account provides exclusive investment opportunities in Naya Pakistan certificates offering attractive returns in both conventional and Shariah-compliant forms, as well as the Pakistani stock market and real estate.

    The tax treatment is simple, freeing overseas Pakistanis from the need to file a tax return in Pakistan on income derived from investments through the account. Importantly, the account is fully repatriable, giving overseas Pakistanis the comfort of being able to remit the money in their accounts back to where they live without any difficulty.     

  • Weekly Review: market likely to perform well on growth expectations

    Weekly Review: market likely to perform well on growth expectations

    KARACHI: The stock market likely to perform well on expectations of growth in various accounts, including commencement of tight monetary stance.

    Analysts at Arif Habib Limited said that the market to perform well in 2021/2022 on account i) robust earnings growth forecast of cement, steel and allied sectors amid strong cyclical demand driven by historic high PSDP allocation and focus on Naya Pakistan Housing scheme, ii) expectation of an Auto and Refinery policy, iii) downwards sticky oil prices supporting the E&P sector, and iv) commencement of monetary tightening which should once again garner interest in commercial banks.

    The benchmark KSE-100 of Pakistan Stock Exchange (PSX) is currently trading at a PER of 6.9x (2021) compared to Asia Pac regional average of 16.5x while offering a dividend yield of ~6.9 per cent versus ~2.3 per cent offered by the region.

    The market remained range bound this week with volatile trading on account of June-end closing and adjustment of portfolios. Moreover, as the debate on the Federal Budget moved towards final stages in the Parliament, some stiffness was witnessed in the political climate.

    Albeit, the Budget was passed with a majority vote. The market also gained momentum on the first day of the new fiscal year, erasing previous losses. The index closed at 47,686 points, up by 0.2 per cent / 83 points WoW.

    Sector-wise positive contributions came from i) Technology (105 points), ii) Pharma (68 points), iii) Food and Personal care (51 points), iv) Tobacco (22 points), and v) Insurance (14 points). Whereas, the sectors that contributed negatively include Commercial Banks (46 points), Power Generation & Distribution (44 points), Oil & Gas Exploration Companies (39 points), Oil & Gas Marketing (36 points) and Refinery (18 points). Scrip-wise positive contributors were TRG (88  points), AGP (54  points), LUCK (41  points), UNITY (37  points) and MEBL (25  points). Scrip-wise negative contributors were HBL (67  points), HUBC (65  points), UBL (38  points), OGDC (35  points) and HASCOL (34  points).

    Foreign selling continued this week clocking-in at USD 8.4 million compared to a net sell of USD 7.9 million last week. Selling was witnessed in Commercial Banks (USD 3.2 million) and Other sectors (USD 1.4 million). On the domestic front, major buying was reported by Individuals (USD 13.6 million and Companies (USD 13.4 million). Average volumes arrived at 622 million shares (down by 10 per cent WoW) while average value traded settled at USD 107 million (down by 4 per cent WoW).

  • New rates of regulatory duty on imported smart phones

    New rates of regulatory duty on imported smart phones

    ISLAMABAD: Federal Board of Revenue (FBR) has notified new rates of regulatory duty to be imposed on imported mobile phones during.

    The FBR issued SRO 840(I)/2021 dated June 30, 2021 to notify regulatory duty on 599 tariff lines.

    Following are the rates of regulatory duty on mobile phone with effect from July 01, 2021:

    HS CodeDescriptionRegulatory Duty
    8517.1219Other having C&F Value up to US$ 30 per set excluding Smart PhonesRs.300/set
    8517.1219Other (having C&F Value above US$ 30 per set but not exceeding US$ 100 per set, including Smart Phones having C&F value up to US$ 30 per set)Rs.3,000/set
    8517.1219Other (having C&F Value above US$ 100 per set but not exceeding US$ 200 per set)Rs.7,500/set
    8517.1219Other (having C&F Value above US$ 200 per set but not exceeding US$ 350 per set)Rs.11,000/set
    8517.1219Other (having C&F Value above US$ 350 per set but not exceeding US$ 500 per set)Rs.15,000/set
    8517.1219Other (having C&F Value above US$ 500 per set)Rs.22,000/set
  • Tax officials’ power to amend assessment without audit selection withdrawn

    Tax officials’ power to amend assessment without audit selection withdrawn

    KARACHI: Federal Board of Revenue (FBR) has said that the powers of Inland Revenue officers to conduct an inquiry for amendment of assessment without selection of audit have been withdrawn.

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