ISLAMABAD – The Federal Board of Revenue (FBR) announced on Saturday that the number of returns filedfor the tax year 2020 has surged to around 2.9 million as of May 01, 2021, marking a substantial growth of 12 percent compared to the same period last year.
(more…)Author: Mrs. Anjum Shahnawaz
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FBR fears coronavirus spread to affect revenue collection in last two months
ISLAMABAD: Federal Board of Revenue (FBR) has feared that fast spread of coronavirus in the third wave may affect the efforts of revenue collection during the last two months.
The FBR in a statement on Saturday said that the revenue collection during the last days of April was slowed down because of measures taken by the government to stop spread of coronavirus.
The FBR feared that spread of coronavirus may affect the revenue collection efforts in the last two months of the current fiscal year.
The FBR issued revenue collection figures that showed it achieved a 14 percent growth in net revenue collection for the period July – April 2020/2021.
However, the revenue body is still facing challenging task to generate over Rs900 billion to achieve revised downward annual target of Rs4,690 billion.
The FBR has been assigned Rs4.96 trillion revenue collection target for the fiscal year 2020/2021. However, after consultations the International Monetary Fund (IMF) had revised downward the revenue collection target to Rs4.691 trillion for the ongoing fiscal year.
As per the provisional collection, the FBR collected Rs3,780 billion during July – April 2020/2021 as compared with Rs3,320 billion in the same period of the last fiscal year, showing a increase of 14 percent.
However, the collection was higher than Rs3,637 billion – the assign collection target for the period under review.
The FBR said that it had collected record revenue in April 2021. The FBR collected Rs384 billion in April 2021, which was 57 percent higher when compared with Rs240 billion in the same month of the last year.
The gross revenue collection of the FBR was Rs3,976 billion during first 10 months of the current fiscal year as compared with Rs3,438 billion in the corresponding months of the last fiscal year.
The issuance of refunds grew by 65 percent during first 10 months of the current fiscal year. The FBR issued refunds worth Rs195 billion during July – April 2020/2021 as compared with Rs118 billion in the same period of the last fiscal year.
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WTO tariff heading proposed for sales tax on services
KARACHI: Tax practitioners have urged the Federal Board of Revenue (FBR) to adopt tariff headings of World Trade Organizations (WTO) for effectively impose sales tax services.
Tax practitioners under the umbrella of Karachi Tax Bar Association (KTBA) held a pre-budget 2021/2022 conference and discussed issues of sales tax on services.
It is discussed that all the service sales tax laws contain their own list of taxable services, which are couched in such a way that there are many entries with overlapping scope which lead to interpretational issues.
Further all the provincial laws envisage origin as well as destination principle for levying tax on service- double taxation Proposal.
It is recommended that the government should co-ordinate to promulgate negative list approach and specify place of supply rules at earliest.
It is suggested: “WTO tariff heading for services may also be adopted.”
It is discussed that despite lapse over ten years, since promulgation of 18th Constitutional Amendment, disputes regarding jurisdiction and basis for levying the sales tax are still unresolved.
A lot of unnecessary litigation on such issues has piled up.
National Tax Council has been announced to resolve such issues, however, no tangible results till date.
It is proposed that the governments should resolve jurisdictional disputes at earliest.
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FPCCI urges following coronavirus SOPs to avert industrial halt
KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Saturday urged trade and industry to follow SOPs related to coronavirus in order to avert complete halt of industrial and economic activities.
FPCCI’s ruling group BMP Chairman Mian Anjum Nisar has asked the traders to strictly follow the government’s SOPs in markets for curbing the spread of deadly coronavirus and averting halt of the industrial wheel.
Moreover, there is also need to speed up vaccination process, especially for the industry workers in the country, for the smooth operation of trade and industry, he added.
“The businessmen themselves have to ensure a strict implementation of the standard operating procedures in markets and commercial areas in order to curb the spread of Covid-19 pandemic,” he said and warned that the third wave of coronavirus had spread to dangerous levels and the situation demanded that the business community play a role in strict compliance with the SOPs in business areas to control further Covid-19 infections.
Mian Anjum Nisar stressed that a reduction in coronavirus cases would help the government to consider easing restrictions on businesses, as it would cause great losses to trade activities, render thousands of daily-wage workers and other workers jobless, making the lives more miserable, fuel a further increase in inflation besides badly impacting the economy.
He said that during the third wave of coronavirus the situation has been deteriorating mainly due to lack of implementation of COVID-19 standard operating procedures and the solution lies in speeding up our vaccination programs, instead of opting for closure of trade and industry amidst GDP growth of just 1.5 percent. He said that in view of combating the coronavirus situation the government can impose smart lockdown where required, as complete lockdown would halt industry.
The FPCCI former president pointed out that due to the previous lockdowns, Pakistan’s economy had suffered a loss of billions of dollars while millions of workers lost their jobs. Pakistan’s economy suffered negative growth last fiscal year for the first time in the history due to Covid-19, he said, adding that the best way to save the economy and businesses from more losses is to follow the SOPs.
He observed that the complete lockdowns had created havoc globally, as the countries, which were providing loans had also came under debts while Pakistan is already facing financial crunch due to huge burden of debts. So, complete lockdown is not a good option, he added.
He observed that the government will have to make visible reduction in taxes in the budget to help revive the businesses, which are near to bankruptcies owing to slowdown amidst coronavirus.
He asked the government to take concrete steps to attract foreign investment, saving the livelihood of millions of workers associated with various sectors, as foreign investment in Pakistan’s long-term projects like power plants and oil and gas exploration.
The BMP Chairman said that with a view to save the economy from the impacts of the slowdown due to the COVID-19 the government should announce special incentives for a cash-strapped SMEs, which represents more than 90 percent of around 3.2 million business enterprises in Pakistan, contributing 40 percent to the GDP, employing more than 80 percent of non-agricultural workforce, and generating 25 percent of export earnings.
He expressed dissatisfaction over the financial packages by the government for the businesses to deal with the financial crunch, called for a significant cut in import duties and waiver of sales tax, income tax and additional income taxes, for the smooth running of trade and industry.
He asked the government to expedite the process of vaccination and supply ample quantity of doses not only to the whole public but also to the trade and industry.
Mian Anjum Nisar said that rising mortality in the midst of the third Covid-19 wave and growing anxiety in the business circles over possible restrictions on international travel and trade necessitate ramping up the pace of vaccination.
To speed up inoculations, the government will need to bridge vaccine supply gaps with active participation from the federating units and the private sector, he added.
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April inflation records double digit increase
Pakistan’s headline inflation, based on the Consumer Price Index (CPI), witnessed a notable increase of 11.10 percent on a year-on-year (YoY) basis in April 2021, according to data released by the Pakistan Bureau of Statistics (PBS).
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Weekly Review: Corona restriction may put pressure on market
KARACHI: A possible strict lockdown due to rise in coronavirus cases in the country may put pressure on the stock market during next week.
Analysts at Arif Habib Limited said that the National Command and Operation Center (NCOC) had instructed stricter restrictions and shorter working hours, while a complete lockdown is still a possibility.
This could potentially continue to add pressure to the market next week.
The ongoing third wave of the novel coronavirus is likely to keep sentiment under pressure, while in addition to a strong results season (particularly cyclical sectors) we may see the market react on a positive note in the upcoming week.
The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 6.6x (2021) compared to Asia Pac regional average of 16.0x while offering a dividend yield of ~7.4 percent versus ~2.6 percent offered by the region.
The week commenced on a positive note on Monday due to heavy investment from a major fund. For the remainder of the week the index was under pressure due to rise in the infection ratio, lockdowns in certain areas of the country and reduced business timings.
Finally, a discussion of a possible complete lockdown is still on the cards which added extra pressure to the index. On a positive note inflows to foreign exchange through the Roshan Digital Account (RDA) crossed the USD 1bn this week, while the Current Account posted a nominal deficit of USD 47 million for March 2021. The KSE-100 Index closed the week at 44,262 points, declining 445 points WoW.
Sector-wise negative contributions came from i) Technology & Communication (110) ii) Cement (95), iii) Tobacco (555 points), iv) Engineering (49 points) and v) Automobile Assembler (43 points).
Whereas sectors that contributed positively include i) Textile Composite (25 points), and ii) Chemical (16 points). Scrip-wise negative contributors were TRG (82 points), MCB (65 points), PAKT (55 points), NBP (39 points) and INIL (31 points) while positive contributors included HBL (48 points), BAHL (36 points), FFC (34 points), COLG (31 points) and UBL (24 points).
Foreign selling this week clocking-in at USD 13.1 million compared to a net buy of USD 7.3 million last week. Selling was witnessed in Commercial Banks (USD 4.8 million) and Technology and Communication (USD 1.5 million).
On the domestic front, major buying was reported by Other Organization (USD 16.1 million) and Mutual Funds (USD 13.4 million). Average volumes arrived at 331 million shares (down by 0.5 percent WoW) while average value traded settled at USD 110 million (up by 14 percent WoW).
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Shaukat Tarin assures FPCCI of taking on board before making economic decisions
ISLAMABAD: Finance Minister Shukat Tarin on Friday assured the representatives of Federation of Pakistan Chambers of Commerce and Industry (FPCCI) to have a regular interaction.
He also affirmed that all key stakeholders would be taken on board before making important economic decisions.
The finance minister held a meeting with the FPCCI members through a video link. Adviser to the PM on Commerce Abdul Razak Dawood, SAPM on Finance and Revenue Dr. Waqar Masood, Chairman FBR and other senior officers participated in the meeting.
While addressing the meeting, the Finance Minister briefed the participants about the economic priorities of the Government.
He also outlined that the Government is adhering to strict financial discipline for achieving macro-economic stability and enhancing revenue generation.
The Minister also outlined that Pakistan’s economy is showing signs of recovery amid Coronavirus pandemic, with construction and manufacturing sectors in lead. However, the third wave of COVID-19 is particularly challenging, he added.
The Minister also stressed the role of Chambers of Commerce and Industry as a bridge between the Government and the traders for active coordination and welcomed suggestions from the members of FPCCI on the occasion.
The representatives of FPCCI felicitated the Finance Minister on assuming new responsibilities and discussed the matters related to sales tax harmonization and rationalization of taxes.
In his concluding remarks, the Finance Minister stated that the suggestions presented during the meeting would be accorded due consideration.
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Prices of petroleum products kept unchanged
ISLAMABAD: The federal government on Friday decided not to increase the prices of petroleum products during next fortnight in order to provide relief to the consumers during the holy month of Ramazan.
A statement said that in line with the vision of the Prime Minister to provide relief to the consumers in the holy month of Ramazan, the government has decided not to increase the prices of the petroleum products.
The implementation of this proposal requires an adjustment in the rates of petroleum levy on all petroleum products and a reduction in sales tax as well in case of kerosene oil and light diesel oil.
It is pertinent to mention that the government was not charging any Petroleum Levy (PL) on Kerosene and light diesel oil.
The cumulative revenue impact of the decision will be Rs. 4.8 billion.
The prices of petroleum products w.e.f May 01, 2021 are as follows:
MS Petrol Rs.108.56/liter
High Speed Diesel Rs. 110.76/liter
Kerosene oil Rs. 80.00/liter
Light Diesel Oil Rs. 77.65/liter
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FBR promotes IRS officers to BS-19
ISLAMABAD: Federal Board of Revenue (FBR) has promoted officers of Inland Revenue Service (IRS) to BS-19 on regular basis with immediate effect.
The FBR promoted following BS-18 IRS officers to BS-19 on regular basis:
1. Zeeshan Asif
2. Ms. Amina Batool
3. Syed Mashkoor Ali
4. Shahzad Ali Khan
5. Ms. Kiran Maqsood
6. Muhammad Imran
7. Soban Ahmad
8. Ms. Hira Nazir
9. Muhammad Asif
10. Tanvir Hussain Bhatti
11. Ms. Nafeesa Bano
12. Sami Ullah Khan
13. Zulfiqar Ali
14. Abid Hussain Gulshan
15. Mohammad Hayat Khan
16. Shoukat Ali
17. Sohail Ahmad
18. Rao Shahzad Akhter Ali Khan
19. Ch. Murtaza Ali Akbar
20. Syed Hasan Sardar
21. Ms. Sana Aslam Janjua
The FBR said that the officers, if drawing performance allowance prior to issuance of this notification, will continue to draw the same after regular promotion to BS-19.
The officers, already working in BS-19 on acting charge basis or on OPS basis as Additional Commissioner / Additional Director / Secretary FBR (HQ), Islamabad shall actualize promotion at their present place of posting.
For actualization of promotion in
BS-19 on regular basis of the remaining officers, separate orders shall be issued.
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SHC declares income tax on undistributed profits as unconstitutional
KARACHI: Sindh High Court (SHC) on Friday declared levy of tax on undistributed profits under Section 5A of Income Tax Ordinance, 2001 as unconstitutional and set aside all the show cause notices and demand notices issued by the tax authorities under the section.
A division bench of the SHC ordered in Sapphire Textile Mills Limited vs Federation of Pakistan & Others: “insertion of Section 5A in the Income Tax Ordinance, 2001, including amendments theretho from time to time, does not fall within the parameters delineated per Article 73 of the constitution of Pakistan, 1973, hence, the provision impugned is found to be ultra vires of the constitution, and is hereby struck down.”
It ordered further that as a consequence, any show cause / demand notices or constituents thereof, seeking enforcement of Section 5A of the Income Tax Ordinance, 2001, are hereby set aside.
A large number of taxpayers filed petition before the higher court seeking relief against action initiated by Federal Board of Revenue (FBR).
The petitioners challenged the Section 5A of the Income Tax Ordinance, 2001, which was initially inserted in the Ordinance through Finance Act, 2015 and amended through Finance Act, 2017, ostensibly in order to induce certain public companies to distribute dividends among their shareholders.
In original form, as inserted through Finance Act, 2015, the tax was levied upon the reserves of a company. However, post Finance Act, 2017 the levy befell upon accounting profit before tax of a company.
The petitioners requested the court to declare the provision as unconstitutional. The plain reading of Section 5A suggests that it amounts to double taxation, as income received or taxed in the same hand ceases to be income.
It is submitted: “the regulation of companies is undertaken inter alia vide the Companies Act, 2017, being special in nature, and any attempt at such regulation by inserting penal provisions into the Ordinance routed through a money bill, was prima facie unmerited.”
Counsel for the respondents submitted: “5A did not amount to double taxation as it contemplated an independent levy.”
It was argued that 5A identified a class to be taxed, hence, could not be considered discriminatory.
It was concluded that the legislature had ample power to regulate economic behavior and 5A was merely one specie of exercise of such power.
The court observed that 5A of the Ordinance amounts to legislation, not contemplated in the Constitution to be undertaken vide a money bill. “In such a scenario no rationale has been articulated before us to justify the regulation of companies behavior, pertaining to dividends, to be effected vide a money bill, within the mandate of Article 73 of the Constitution, while abjuring the regular legislative process.
“Therefore, it is our deliberated view that section 5A of Income Tax Ordinance, 2001 cannot be sustained on the constitutional anvil; hence, could not be construed to have legal effect.”