Pkrevenue.com

Author: Mrs. Anjum Shahnawaz

  • FBR forms committees to remove anomalies in Finance Bill

    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.

  • Tax amendments made for income of salaried persons, individuals

    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).

  • Final tax regime allowed for export of services

    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.

  • Banks asked to use income estimation model for low cost housing finance

    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.

  • Finance Bill proposes blanket powers to tax machinery: KTBA

    Finance Bill proposes blanket powers to tax machinery: KTBA

    KARACHI: The federal government through Finance Bill, 2021 proposed certain amendments in tax law, which will give blanket powers to tax machinery, said Zeeshan Merchant, President, Karachi Tax Bar Association (KTBA).

    Merchant was addressing at the post budget 2021/2022 seminar held on Thursday.

    “We at KTBA feel that the FBR is actively pursuing the policy to create a friendly relationship between the taxpayers and the tax collectors,” he said, adding that we feel certain amendments proposed in the law have given blanket powers to the tax machinery.

    Merchant said that the government had presented the budget, which had ingredients of both a sense of direction though based on certain assumption and some measures to increase the tax base.

    KTBA president said that the bar was grateful to the government for timely action taken after the issues highlighted by the KTBA and now it is heard that certain proposed amendments would have now be drafted.

    While discussing the budget, he said that senior citizens had not been taken care of and they were treated at par with normal taxpayers.

    He said that the bill had proposed to omit section 114A of the Income Tax Ordinance, 2001. But it should be clarified by the tax authorities that nothing requires to be done in this regard.

    He said that the discretionary power had been give to assistant commissioner to arrest a person for concealment of assets.

    Zeeshan Merchant said that nothing has been done to bring retailers into the tax net like an effort has been made in SMEs sector.

    He highlighted that the budget had some positive measures, included: increase in minimum tax threshold from Rs10 million to Rs100 million; reduction in minimum tax rate from 1.5 percent to 1.25 percent; minimum tax not to levy in case of losses; distributors brought in the fold of minimum tax; exemptions allowed for those availing tax credit; separate tax regime for SMEs.

  • KIBOR rates on June 17

    KIBOR rates on June 17

    KARACHI: The State Bank of Pakistan (SBP) issued Karachi Interbank Offered Rates (KIBOR) as on Thursday, June 17, 2021.

    Following are the KIBOR rates as on June 17, 2021.

     TenorBIDOFFER
    1 – Week6.927.42
    2 – Week6.967.46
    1 – Month7.017.51
    3 – Month7.227.47
    6 – Month7.447.69
    9 – Month7.508.00
    1 – Year7.588.08
  • Stocks tumble on persistent selling pressure

    Stocks tumble on persistent selling pressure

    KARACHI: The stock market tumbled on Thursday as selling pressure continued during the day. The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 48,158 points as against previous day’s closing of 48,481 points, showing a decline of 323 points.

    Analysts at Arif Habib Limited said that the market tumbled again today with a drop of 365 points during the session and closing -323 points.

    Refineries, O&GMCs, Cement, Engineering, Banks, Fertilizer and Technology stocks saw persistent selling pressure despite budget incentives announced last Friday.

    E&P companies were relatively unscathed on the back of stable oil prices, which hovered around US$ 74/bbl. Among scrips, WTL topped the volumes with 243 million shares, followed by SILK (187.6 million) and KEL (57.4 million).

    Sectors contributing to the performance include Banks (-62 points), Power (-44 points), O&GMCs (-34 points), Technology (-29 points) and Refinery (-28 points).

    Volumes increased from 936.6 million shares to 1117.4 million shares (+19 percent DoD). Average traded value declined by 13 percent to reach US$ 125.1 million as against US$ 142.9 million.

    Stocks that contributed significantly to the volumes include WTL, SILK, KEL, BYCO and HUMNL, which formed 50 percent of total volumes.

    Stocks that contributed positively to the index include POL (+14 points), OGDC (+10 points), PSX (+10 points), FCEPL (+9 points) and LUCK (+6 points). Stocks that contributed negatively include HUBC (-31 points), TRG (-28 points), HBL (-26 points), UNITY (-24 points) and PSEL (-15 points).

  • Rupee gains 22 paisas on inflows

    Rupee gains 22 paisas on inflows

    KARACHI: The Pak Rupee on Thursday gained 22 paisas against the dollar owing to substantial inflows witnessed during the day.

    The rupee ended Rs156.74 to the dollar from previous day’s closing of Rs156.96 in the interbank foreign exchange market.

    Currency experts said that the market witnessed inflows of workers’ remittances and export receipts, which helped the rupee to make gain.

    They said that the dollar demand for import and corporate payments was remained high during the day.

  • Finance Bill 2021: tax treatment of capital gain on disposal of immovable properties

    Finance Bill 2021: tax treatment of capital gain on disposal of immovable properties

    KARACHI: The Finance Bill 2021 has proposed various changes to Income Tax Ordinance, 2021 to capital gain tax on disposal of immovable properties.

    In its commentary on budget 2021/2022, KPMG Taseer Hadi & Co. Chartered Accountants said that taxation of gain on disposal Gain on disposal of immovable property is currently taxable on separately provided slab rates by computing the such gain on the basis of holding period as envisaged under sub-sections (1A) read with (3A) of section 37.

    The Finance Bill 2021 proposes to provide for taxability of gain on disposal of immovable property where such gain exceeds Rs. 5 million as normal capital gain subject to tax under applicable tax rates provided under normal slab rates or corporate tax rates.

    However, benefit of holding period shall still be taken into account while computing the taxable capital gain.

    Amendment has also been proposed to tax this gain at 5 percent instead of existing slab rates varying from 2.5 percent to 10 percent. Thus, the gain below Rs. 5 million computed by taking benefit of holding period shall be subject to tax @ 5 percent.

    The Finance Bill also proposes to insert explanation in sub-section (1A) of section 37 that where a person purchases and sells immovable property in the ordinary course of business, such gain shall be taxable as business income and not as capital gain.

    This fiction has always remained subject matter of dispute though eventually decided by the court upholding the stance of tax authorities that such gain should be taxed as business income.

    Currently under section 37(4A) where a capital asset becomes the property of the person inter-alia through gift, the fair market value of the asset, on the date of its transferor acquisition by the person shall be treated to be the cost of the asset.

    This historically as bestowed two-pronged benefits i.e. exempting gain on such disposal from tax in the hands of transferor and simultaneously entitling the transferee to a revalued cost to be claimed as deduction on subsequent sale.

    The bill proposed that if the capital asset acquired through gift is disposed of within two years of its acquisition and the Commissioner is satisfied that this constitutes a tax avoidance scheme then the recipient of the gift shall be treated to have acquired the asset for a cost equal to the cost for the person disposing the asset i.e. the historical cost.

  • Highlights of relief in duty, taxes for import, local supply of cars

    Highlights of relief in duty, taxes for import, local supply of cars

    KARACHI: The government has proposed relief in duty and taxes on import and local supply of motor cars up to 850CC in order to enable lower income group to purchase the motor vehicles.

    According to a commentary on budget 2021/2022 issued by KPMG Taseer Hadi & Co. Chartered Accountants, in recent years, the prices of automobiles in Pakistan have seen a sharp rise due to multiple factors, making them unaffordable for common man.

    The Finance Bill 2021 proposes to rationalize the tariff structure of the automobile sector in order to address this matter in the following manner:

    For motor vehicles up to 850cc, the Bill proposes to abolish import taxes including minimum value addition tax. In the case of locally manufactured vehicles with engine capacity upto 850cc, the Bill proposes to reduce sales tax from 17 percent to 12.5 percent and abolish federal excise duty.

    In case of local supply of locally manufactured Electric Vehicles (EV) i.e., small cars or SUVs with battery capacity up to 50 kwh and Light Commercial Vehicles(LCV)with battery capacity up to 150 kwh, the Finance Bill 2021 proposes to levy sales tax at reduced rate of 1 percent whereas import of the same is excluded from minimum value addition tax with 25 percent reduction in custom duty till 30.06.2026.

    However, import of CKD kits for these EVs is proposed to be taxed at reduced customs duty rate of 1 percent with exemption / exclusion from chargeability of sales taxand minimum value addition tax.

    In addition, the Bill proposes to reduce sales tax on Hybrid Electric cars with capacity up to 1800 cc to 8.5 percent.

    The Bill further proposes to reduce levy of minimum tax on turnover from 1.5 percent to 0.25 percent in case of persons engaged in sale and purchase of used vehicles while also abolishing withholding of income tax on purchase of used vehicles from general public.

    However, the collection of advance tax is proposed to be made from the original purchaser who sells it without registration, at the rates ranging from Rs. 50,000 to Rs. 200,000.