Pkrevenue.com

Author: Mrs. Anjum Shahnawaz

  • FBR collects Rs1.8bn advance tax on capital gains from sale of securities

    FBR collects Rs1.8bn advance tax on capital gains from sale of securities

    KARACHI: Federal Board of Revenue (FBR) has collected Rs1.8 billion as advance tax on capital gains from sale of securities during first nine months of the current fiscal year.

    According to statistics made available on Thursday, the Large Taxpayers Office (LTO) Karachi collected Rs1.8 billion during July – March 2020/2021 as compared with Rs1.63 billion in the corresponding period of the last fiscal year, showing an increase of 10 percent.

    The FBR collects adjustable advance tax on capital gain from sale of securities under Section 147(5B) of the Income Tax Ordinance, 2001.

    The rate of advance tax is two percent of the capital gains derived during the quarter, where holding period of a security is less than six months.

    The rate of advance tax is 1.5 percent of the capital gains derived during the quarter, where holding period of a security is more than six months but less than twelve months.

    The collection of advance tax on capital gains from sale of securities fell sharply by 96 percent to Rs11.24 million when compared with Rs269 million in the same month of the last year.

  • NTDC sets up control center to monitor power supply during Sehr, Iftar and Traweeh

    NTDC sets up control center to monitor power supply during Sehr, Iftar and Traweeh

    LAHORE:  National Transmission and Dispatch Company Limited (NTDC) has setup Central Control Center at 220 kV grid station, New Kotlakhpat, Lahore to monitor and keep a close liaison with NPCC and all DISCOs during Sehr, Iftar and Traweeh, a statement said on Wednesday.

    The monitoring cell has been established in compliance of directions of Ministry of energy (Power Division). The Central Control Center will monitor stability of the Power System.

    Engr. Dr. Khawaja Riffat Hassan visited the control center and checked the arrangements. He said that the Central Control Center will work round the clock under the supervision of GM (Asset Management) North and dedicated team will look after continuous and uninterrupted power supply to all distribution companies throughout the country.

    He said that in order to meet any emergency Regional Control Centers of Asset Management at Islamabad, Multan, Hyderabad & Quetta have also been established.

    MD NTDC further said that in case of a fault at any Grid Station or Transmission Line of NTDC across Pakistan, the control center will monitor the team mobilisation and material directly and latest information will be shared with the Ministry of Energy (Power Division) and respective DISCOs.

  • Harmonization of sales tax to complete by June

    Harmonization of sales tax to complete by June

    ISLAMABAD: Harmonization of sales tax between federal and provincial tax authorities may be completed by end-June 2021, officials in the Federal Board of Revenue (FBR) said on Wednesday.

    The FBR said that the authorities were in the process of harmonizing the service sales tax across provincial jurisdictions, with support from the World Bank, which will be completed by end-June 2021.

    The officials said that the government had shown commitment to the International Monetary Fund (IMF) of taking several measures including broadening of sales tax base.

    The government has committed to reforms the General Sales Tax (GST) system, underpinned by a unified tax base and within the confines of the current constitution.

    The authorities will: (i) eliminate all zero-rated goods (Fifth Schedule), except on export and capital machinery goods and move them to the standard sales tax rate; (ii) remove reduced rates under the Eight Schedule and bring all those goods to the standard sales tax rate; (iii) eliminate exemptions (Sixth Schedule) excluding a small subset of goods (i.e., basic food, medicines, live animals for human consumption, education and health-related goods) and bring all others to the standard rate; and (iv) remove the Ninth Schedule to replace a specific tax rate for cell phones with the standard rate.

    These reforms are expected to yield an estimated 0.7 percent of GDP on an annualized basis.

    Moreover, the authorities are also in the process of harmonizing the service sales tax across provincial jurisdictions, with support from the World Bank, expected to be completed by end-June 2021.

  • ECC approves customs duty withdrawal on cotton, yarn import

    ECC approves customs duty withdrawal on cotton, yarn import

    ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet on Wednesday approved the withdrawal of customs duty to ensure smooth supply of cotton and cotton yarns to the value-added industry, while bridging the gap between domestic production and overall demand for the inputs.

    Federal Minister for Finance, Revenue, Industries and Production, Muhammad Hammad Azhar, chaired the ECC meeting.

    Federal Minister for Planning, Development and Special Initiatives Asad Umar, Federal Minister for Privatization Muhammad Mian Soomro, Federal Minister for Maritime Affairs Ali Haider Zaidi, Federal Minister for Energy Omar Ayub Khan, Federal Minister for National Food Security and Research Syed Fakhar Imam, Adviser to the PM on Institutional Reforms and Austerity Dr. Ishrat Hussain, SAPM on Revenue Dr. Waqar Masood, SAPM on Power and Petroleum Tabish Gauhar, Federal Secretaries, senior representatives of Provincial governments, Chairman BOI and other senior officers participated in the meeting. Governor State Bank of Pakistan joined through a video link.

    Power Division presented a summary regarding waiver of minimum 66% Take-or-Pay commitment in Power Purchase Agreement(s) (PPA) & Gas Supply Agreement(s) (GSA) of three RLNG based Public Sector Power Plants namely Quaid-e-Azam Thermal Power Plant, Balloki Power Plant and Haveli Bahadur Shah Power Plant.

    These amendments would envisage submission of a Monthly Production Plan (MPP) as a binding on the Power Purchaser and the Power Seller wherein the Power Purchaser shall be entitled to submit demand requirement as needed, at least seventy five days before the start of each such month, which will be finalized by the System Operator and Operating Committee under the PPA.

    The concept of a Monthly Delivery Plan (MDP) for deliveries of Gas under the GSA, has been paired with the Monthly Schedule as provided under PPA. The MPP will come into effect from the year 2022.

    After seeking input from relevant stakeholders, the Committee approved the summary and appreciated the concept of Monthly Production Plan (MPP) as a cost-effective solution, enabling the Power and Gas purchasers to make requisite purchases in line with actual requirements instead of following a fixed arrangement.

    Power Division also presented another summary proposing amendment to the Facilitation Agreement and Amendment to the GoP Guarantee Agreement with KAPCO. It included the proposal that the project may be withdrawn from the Privatization Commission and entrusted to Private Power and Infrastructure Board (PPIB).

    After due deliberation, the Committee approved the summary, in principle, subject to formal vetting by the Law Division. Secretary, M/o Commerce presented a summary before the ECC for withdrawal of Customs Duty on import of Cotton Yarns under PCT 5205, 5206 and 5207 till 30th June, 2021.

    The ECC also approved a Technical Supplementary Grant for Finance division amounting to Rs.11.7 billion as the share of the Federal Government for the establishment of 4 mother and child hospitals in Punjab.

  • Karachi Tax Bar highlights issues in input tax adjustment on provincial invoices

    Karachi Tax Bar highlights issues in input tax adjustment on provincial invoices

    KARACHI: Karachi Tax Bar Association (KTBA) on Wednesday wrote a letter to chairman of the Federal Board of Revenue (FBR) highlighting issues faced by taxpayers on disallowance of input adjustment against entry of provincial invoices.

    The tax bar said: this is with reference to above cited subject and the following intimation uploaded on the web portal of Federal Board of Revenue:

     “Manual entry of provincial invoices for input tax credit of services in Annex A is disallowed from 01 April 2021 for the tax period from March 2021, Taxpayers as buyers will get monthly input tax credit based on submission of sales invoices and Return in respective tax authority for which the data is made available in Purchase Data Tab. For previous data please contact at [email protected] subject Services data.”

    KTBA highlighted the following issues which the Members of KTBA in general and Taxpayers in particular are facing due to the sudden change made through intimation on the web portal:

    Till the filing of this letter, the data/invoices of all provinces are not synchronized and are not readily available automatically; this is not only creating problems for the Taxpayers to claim the Provincial Input Tax (Services Input Tax), but the Taxpayers would not be able to submit their monthly Sales Tax Returns for the Tax Period of March 2021 (last date of e-filing April 18, 2021) due to non-availability of Service Input Tax.

    In most of cases, the KTBA observed that Service Input Tax data prior to Tax Period March 2021 is not available; due to which the Taxpayers are unable to claim Service Input Tax for tax periods prior to tax period March 2021.

    At present, banks and other businesses such as courier services etc., as a routine deposit Provincial Sales Tax (Service Tax) as a bulk entry instead of depositing the same against each Taxpayer which is affecting in claiming the Service Input Tax.

    At present, Service Input Tax of only those Taxpayers is being retrieved who have e-filed / submitted their returns which is unnecessarily delaying the filing of Sales Tax Returns as Service Input Tax is not available.

    Our Members have informed that in certain cases, Taxpayers in some cases are unable to claim Service Input Tax in the Sales Tax Returns though the same is available under Annexure A.

    Apart from above, there are other teething issues which are practically creating issues for the Taxpayers and Members of KTBA alike which are including but not limited to withholding tax on Service Tax showing as payable, Service Input Tax entries once deleted are not uploaded again and deferment of Service Input Tax, etc.

    In view of above, the KTBA highlighted the following for your kind perusal and ready action:

    Till the time this new system is fully functional; KTBA suggest to use both old as well as new system for claim of Service Input Tax to allow taxpayers to claim genuine Service Tax paid by them;

    Old system of claim of Service Input Tax should be phased out in gradually instead of sudden disallowance;

    Once the system is fully functional, KTBA suggests providing an option to claim Service Input Tax manually, which for any reason is not available up by the system, through manual entry with the option to upload the Service Tax Invoice not uploaded automatically. Such entry should then be checked and if found otherwise be routed through S. No. 7 (a) (b) (c) of the Sales Tax Return;

    Ensure invoice wise entry by all Taxpayers ensuring entry against NTN / STRN of each Taxpayer in order not only to streamline the process but to proper claim of Input Tax both Federal and Provincial;

    Claim of Service Input Tax be allowed instead of marking the same is “input tax not claimable”;

    Field relating to Withholding tax on provincial sales tax should be removed from the Federal Sales Tax return; and

    Feature of re-uploading of Service Input Tax be made available.

    Although, KTBA feels that use of IT based technology/digitalization of records is the only way to resolve the multi-faceted complex issues vis-à-vis to address the issues of flying / fake input tax; however, sudden implementation of new scheme in the midst of MOU signed by the Federation and the Provinces to develop one Sales Tax Return is likely to create chaos and disorder for the Taxpayers.

    In view of above submissions, KTBA feels that appropriate measures including but not limited to extension of date for the Tax Period of March 2021 for filing of Sales Tax Return and resolution of above highlighted issued be addressed forthwith to ease the pressure of the Taxpayers and Members of KTBA alike.

  • FBR recommended to reduce minimum tax for chemical companies

    FBR recommended to reduce minimum tax for chemical companies

    KARACHI: Federal Board of Revenue (FBR) has been urged to reduce minimum tax rate for chemical companies having large turnover with low profit margins.

    Overseas Investors Chamber of Commerce and Industry (OICCI) in its proposals for budget 2021/2022 submitted to the FBR, recommended that minimum tax rate should be reduced to 0.2 percent for large chemical companies with large turnover with low profit margins.

    It further recommended that clause b of Section 148(7) of Income Tax Ordinance,  2001 as deleted by the Finance Act, 2017 should be restated, which read as follows: “148(7) b fertilizer by manufacturer of fertilizer” to allow adjustment of tax deducted at import stage for fertilizer imported by a fertilizer manufacturer so as not to make it a final tax.

    It recommended that exemption under Clause 42 read with section 153(3) of the Income Tax Ordinance, 2001 be available to all terminals without discrimination. The said clause be re-worded as follows:

    “(42) The provisions of sub-section 3 of section 153 shall not apply in respect of payments received by a resident person for providing services by way of operation of terminal(s) at a sea-port in Pakistan or of an infrastructure project covered by the Government’s Investment Policy, 1997.”

    For the fertilizer industry, the GST on supply of natural gas as feed stock is at 5 percent and as fuel stock is 17 percent. However, the output GST rate on sales of finished goods i.e. urea is 2 percent. This mismatch between input and output GST results in excessive input tax refundable build-up.

    GST rate on supply of natural gas for fertilizer industry should be zero percent.

    For the sales tax rate on raw material of paints, the OICCI made following recommendations:

    i. Sales tax of 25 percent should be imposed on some basic raw materials like Titanium dioxide and other following categories for commercial importers.

    ii. Enforcement measures to be made more effective in consultation with OICCI members, who are established taxpayers, to penalize tax evaders.

    The OICCI highlighted that macro nutrients being imported under Chapter 31 of Pakistan Customs Tariff, enjoy reduced duties and taxes representing only 8 percent of the value imported whilst in case of micronutrients being imported under Chapter 28, the import duties and taxes are quite high representing 29% of import value.

    It recommended to make necessary amendments in the revenue regulation to reduce sales tax and import duties on import of micronutrients.

  • Stock market gains 262 points on corporate results

    Stock market gains 262 points on corporate results

    KARACHI: The stock market gained 262 points on Wednesday as investors were remained positive on quarterly financial corporate results.

    The benchmark KSE-100 index closed at 45,311 points as against previous day’s closing of 45,048 points, showing an increase of 262 points.

    Analysts at Arif Habib Limited said that first day of Ramadan marked positive opening for the benchmark KSE100 index with an overall increase of 299 points during the session and closed +262 points.

    Proximity to announcement of quarterly corporate results made investors take a positive view on the market. Buying activity was observed in cyclical sectors such as Autos, Cement and Steel. O&GMCs saw SNGP performing, besides Refinery and Technology stocks where NETSOL hit upper circuit today.

    Among scrips, FNEL remained the volume leader with 43.1 million, followed by MDTL (20.2 million) and GGL (19.5 million).

    Sectors contributing to the performance include Technology (+46 points), Cement (+35 points), Banks (+29 points), E&P (+26 points) and Refinery (+24 points).

    Volumes declined from 473.4 million shares to 341.9 million shares (-28 percent DoD). Average traded value also declined by 11 percent to reach US$ 108.5 million as against US$ 120.7 million.

    Stocks that contributed significantly to the volumes include FNEL, MDTL, GGL, TRG and WTL, which formed 35 percent of total volumes.

    Stocks that contributed positively to the index include TRG (+32 points), FFC (+19 points), HBL (+19 points), LUCK (+18 points) and ATRL (+17 points). Stocks that contributed negatively include MCB (-12 points), POL (-9 points), ABL (-4 points), KTML (-3 points) and UNITY (-3 points).

  • Normal corporate tax rate for banking sector recommended

    Normal corporate tax rate for banking sector recommended

    KARACHI: Foreign investors have recommended that corporate tax rates for the banking sector should be aligned with other sectors.

    At present the banking sector is paying 35 percent corporate tax rate as compared with 29 percent corporate tax rate for other sectors.

    Overseas Investors Chamber of Commerce and Industry (OICCI) in its proposals for budget 2021/2022 submitted to the Federal Board of Revenue (FBR) recommended that corporate tax rates for the banking sector should be aligned with other sectors.

    Further super tax relief, as granted to other industries, should be given to banking sector as well.

    Regarding the issue of Tax Deduction on Profit on Debt under section 151 of Income Tax Ordinance, 2001, the OICCI recommended that there should be a uniform withholding tax rate of 15 percent for all payments of profit on debt by omitting below provision inserted through Finance Act, 2020:

    “Provided that the rate shall be 10 percent in cases where the taxpayer furnishes a certificate to the payer of profit that during the tax year yield or profit paid is rupees five hundred thousand rupees or less”, and Circular be withdrawn, to avoid litigation between banks and department.

    For enhanced rate of tax on Additional income from additional investment in Federal Government Securities (Rule 6C of Seventh Schedule), the OICCI recommended Rule 6C of seventh schedule of Income Tax Ordinance, 2001 should be deleted whereby enhanced rate of 37.5 percent is applied on banks income from additional investment in Federal Government Securities.

    According to Rules for person not appearing in Active Taxpayer List (Section 100BA and Tenth Schedule) if a withholding tax agent is satisfied that a person not appearing in Active Taxpayers List (ATL) is not required to file return, then before deducting tax he will furnish to the Commissioner a notice carrying particulars of taxpayer along with reason on the basis of which it is considered that the person is not required to file a return.

    The OICCI recommended to delete the rule as branch managers are not conversant with tax laws. Alternatively, if FBR is satisfied that a person is not required to file return of income, his CNIC/Name should be included in an Exempt Taxpayer List (Similar to ATL) which should be issued periodically.

    The original provision of the Seventh Schedule should be restored where provision for bad debts as per the Prudential Regulations of SBP and supported by an Auditors certificate was allowable as a tax deduction to the banks. Alternatively, threshold for allowing provision for bad debts should be increased to 2 percent of gross advances to corporate customers.

    The rule 9 of the Seventh Schedule of ITO 2001 should be deleted as it is being misused and leading to unnecessary litigation.

  • Car sales register 37pc growth in nine months

    Car sales register 37pc growth in nine months

    KARACHI: The sales of locally assembled cars registered 37 percent growth in first nine months (July – March) 2020/2021 owing to higher demand following ease in coronavirus restriction during the period.

    According to Pakistan Automotive Manufacturers Association (PAMA) the car sales recorded 134,522 units during first nine months of the current fiscal year as compared with 98,425 units in the corresponding period of the last fiscal year.

    Analysts attributed the rise in car sales to ease in restrictions related to coronavirus during the current fiscal year, which resulted in acceleration in economic activities.

    According to analysts of Topline Securities, the car sales have increased by 27 percent MoM in March 2021 (highest since March 2019), taking 9MFY21 sales growth to 37 percent YoY.

    The same, including Lucky Motors Corporation (KIA, non-member of PAMA), is up by around 20 percent MoM (highest since October 2018) with 9MFY21 sales growth estimated at around 46 percent YoY.

    Sales are up 198 percent YoY (as reported by PAMA) in March 2021, however YoY sales growth is misleading, in their view, because of lockdowns in March last year due to COVID-19.

    Indus Motor Company (INDU) sales increased the most by 53 percent MoM as the company had witnessed supply issues in Feb-2021. Sales growth was primarily driven by Hilux sales, which were up by 103 percent MoM.

    New entrants in the industry, Hyundai Nishat sold 723 units in March 2021 with the inclusion of Hyundai Elantra, while Lucky Motor Corporation sold around 2,000 units, as per our channel checks.

    Atlas Honda (ATLH) recorded motorbike sales of 125,030 units in March 2021, up 20 percent MoM. In 9MFY21, sales have increased by 25 percent YoY.

    Tractor sales in Mar-2021 are up by 89 percent YoY and 24 percent MoM.

    Millat Tractors (MTL) recorded increase of 71 percent YoY (+17 percent MoM) while Al Ghazi Tractors (AGTL) sales increased by 133 percent YoY (+40 percent MoM), respectively.

  • Share market gains 71 points in narrow range trading

    Share market gains 71 points in narrow range trading

    KARACHI: The share market increased by 71 points on Tuesday in narrow range trading session, analysts said.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 45,048 points as against previous day’s closing of 44,978 points, showing an increase of 71 points.

    Analysts at Arif Habib Limited said that the market traded in a narrow range between -198 points and +155 points, closing the session +71 points.

    Main board scrips have largely been in consolidation and today was no different. Banking sector stocks inched up with particular interest in UBL, especially by the end of session.

    Technology stocks witnessed a see-saw moment when NETSOL rebounded and hit upper circuit, whereas TRG (which went upper circuit yesterday) bore selling pressure and traded below LDCP. Among small caps, GGL, GGGL, HUMNL and TELE remained in the limelight.

    Among scrips, FNEL topped the volumes with 106.5 million shares, followed by UNITY (29.8 million) and BYCO (28.5 million).

    Sectors contributing to the performance include BANKS (+89 points), O&GMCs (+15 points), Technology (-59 points), and Power (-19 points).

    Volumes declined from 503.5 million shares to 473.4 million shares (-6 percent DoD). Average traded value also declined by 8 percent to reach US$ 120.8 million as against US$ 130.7 million.

    Stocks that contributed significantly to the volumes include FNEL, UNITY, BYCO, TRG and WTL, which formed 47 percent of total volumes.

    Stocks that contributed positively to the index include UBL (+28 points), HBL (+18 points), BAHL (+17 points), SNGP (+13 points) and FFBL (+12 points). Stocks that contributed negatively include TRG (-67 points), ENGRO (-28 points), HUBC (-19 points), MLCF (-4 points) and KOHC (-4 points).