Pkrevenue.com

Author: Mrs. Anjum Shahnawaz

  • FBR urged to withdraw CNIC condition under sales tax law

    FBR urged to withdraw CNIC condition under sales tax law

    KARACHI: Federal Board of Revenue (FBR) has been urged to withdraw the mandatory requirement of Computerized National Identity Card (CNIC) on buying and selling under Sales Tax Act, 1990 till the time a sufficient number gets register for sales tax.

    Karachi Chamber of Commerce and Industry (KCCI) has highlighted the issue as by amendment to Section 8 (Sub-Sec.1, Clause M) of Sales Tax Act, and addition of 10th Schedule, it is mandatory to provide CNIC number of Unregistered person in the invoice. Similar statute has been added U/S.19A of Federal Excise Act, Sec.216A to ITO and Sec.156A of Customs Act.

    Moreover 3 percent further tax is also charged on sales to unregistered buyers even if the CNIC number is provided, which is totally unjust and tantamount to penalizing the registered persons who have to bear the burden of 3 percent further tax.

    The chamber said that rather than generating more revenue, this provision has resulted in proliferation of undocumented cash transactions.

    With hardly 45000 registered entities in Sales Tax Regime, it is very hard to find a registered buyer. This has affected the entire supply chain including manufacturers, importers and traders in Documented Sector and has led to greater advantage for smugglers and undocumented sectors as they do not have to face any such condition. Many registered person are now forced to issue flying invoices to registered persons to overcome CNIC condition and avoid 3 percent Further Tax.

    The chamber recommended that requirement of CNIC should not be mandatory till the time that number of registered persons in Sales Tax regime has substantially increased.

    Providing CNIC number should be optional and may be treated at par with STRN if provided in the Sales Tax Return.

    Further Tax on supplies to unregistered buyer should not be charged if CNIC number is provided in Sales Tax Return.

    In case CNIC number of unregistered buyer of Raw Materials is not provided, VAT may be charged at 1.7 percent on sellers of Raw Material.

    Giving rationale, the chamber said that it will discourage cash economy and encourage documentation by placing the trust in registered persons.

    Discourage Fake and Flying invoices which are issued to avoid 3 percent further tax.

    Enhance business transactions through banking channels and promote growth.

  • Deposits of Islamic banks grow by 28pc to Rs3.39 trillion

    Deposits of Islamic banks grow by 28pc to Rs3.39 trillion

    KARACHI: Deposits of Islamic banking institutions have increased by 28 percent to Rs3.39 trillion for the year ended December 31, 2020, the State Bank of Pakistan (SBP) said on Wednesday.

    The deposits of the Islamic banks were at Rs2.65 trillion by year ended December 31, 2019.

    The market share of Islamic banks in overall banking industry has increased to 18.3 percent by year ended December 31, 2020 as compared with 16.6 percent in the preceding year.

    Assets of the Islamic banks also surged by 30 percent to Rs4.27 trillion for the year ended December 31, 2020 as compared with Rs3.28 trillion in the preceding year. Whereas the share of Islamic banks in terms of assets increased to 17 percent by year December 31, 2020 as compared with 14.9 percent a year ago.

    The SBP said that during the quarter under review (October-December 2020), the asset base of Islamic Banking Industry (IBI) grew by 12.1 percent (Rs. 461 billion) and reached Rs4,269 billion.

    Similarly, the deposits of Islamic banking industry depicted a quarterly growth of 11.7 percent (Rs. 355 billion) and were recorded at Rs. 3,389 billion.

    ‘Assets’ of IBI witnessed YoY growth of 30 percent, which is the highest growth in asset base since December 2012, whereas ‘deposits’ also registered YoY growth of 27.8 percent, the highest growth since December 2015.

    The growth witnessed in the Islamic banking industry shows a promising transition to the new decade even amidst COVID-19 pandemic.

    In terms of market share, IBI achieved a significant mark of 17.0 percent and 18.3 percent in assets and deposits respectively, of overall banking industry by end December 2020. Moreover, profit before tax of IBI stood at Rs. 88.4 billion at the end of the December 2020.

  • What is provisional assessment of taxable income?

    What is provisional assessment of taxable income?

    A provisional assessment is calculation of tax due on a person who has failed to file income tax return for a tax year. A commissioner of Inland Revenue of Federal Board of Revenue (FBR) has been empowered to make provisional assessment of such person under Income Tax Ordinance, 2001.

    According to Tenth Schedule of Income Tax Ordinance, 200, the Provisional assessment is:

    (1) Where for a tax year person’s tax has been collected or deducted in accordance with rule 1 and the person fails to file return of income for that tax year within the due date provided in section 118 or as extended by the Board, the Commissioner shall notwithstanding anything contained in sub-sections (3) and (4) of section 114, within sixty days of the due date provided in section 118 or as extended by the Board make a provisional assessment of the taxable income of the person and issue a provisional assessment order specifying the taxable income assessed and tax due thereon.

    (2) In making the provisional assessment under sub-rule (1), the Commissioner shall impute taxable income on the amount of tax deducted or collected under rule 1 by treating the imputed income as concealed income for the purposes of clause (d) of sub-section (1) of section 111:

    Provided that the provision of section 111 shall be applicable on unexplained income, asset or expenditure in excess of imputed income treated as concealed income under this rule.”

    “Explanation.- For the removal of doubt it is clarified that the imputable income so calculated or concealed income so determined shall not absolve the person so assessed, from requirement of filing of wealth statement under sub-section (1) of section 116, the nature and source of amounts subject to deduction or collection of tax under section 111, section of audit under section 177 or 214C or subsequent amendment of assessment as provided in rule 8 and all the provisions of the Ordinance shall apply.”

  • Metro Pakistan integrates point of sale with FBR

    Metro Pakistan integrates point of sale with FBR

    KARACHI: Metro Pakistan, a leading chain of stores, has integrated its sales with the Federal Board of Revenue (FBR) for real-time monitoring of transactions.

    A statement said on Tuesday said that METRO Pakistan in collaboration with the FBR, has completed integration of all its Point of Sales (POS) with the latest Electronic Device System (EDS) introduced by the FBR.

    The state-of-the-art system will allow the small retailers, medium retailers, and large tier-1 retailers to report and record their sales in real-time for taxation purposes and will ensure the sales tax paid by the customers at the POS counter and the GST at the cash counter will be deposited in the system.

    The inauguration ceremony for the new system was held at METRO Store Islamabad with a live demonstration.

    Dr. Waqar Masood Khan, the Special Assistant to Prime Minister on Revenue, was the Chief Guest, whereas Dr. Philipp Deichmann, Deputy Head of Mission, Embassy of Federal Republic of Germany in Pakistan, graced the occasion as the Guest of Honor, along with number of other of distinguished guests from the business community.

    Speaking at the ceremony, Marek Minkiewicz, Managing Director METRO said: “METRO Pakistan is a prime example of foreign investment and fully respects the laws of the land, maintains its global high standards for social responsibility, and cooperates with the Government to the extent possible.

    “METRO Pakistan supports and strengthens the documented economy and is an important exchequer collector.

    “It is one of the largest tax collector in shape of Sales Tax and Income Tax in the Wholesale/Retail sector, from its Customers and Suppliers, and depositing the same in Government treasury. On average METRO Pakistan is collecting Rs.8.1billion per annum”.

    Elaborating further, Asim Israr, Director Finance METRO added “After implementation of this integration at all tiers, there would be no hurdles left for the growth of wholesale and retail sector to flourish and also minimize any need for interaction between the taxpayer and tax-departments”.

    He also thanked the FBR team lead by Director General Retail Sajidullah Siddique for their guidance, support and cooperation in successful implementation of the project.

    Expressing his views at the occasion, the Chief Guest Dr. Waqar Masood Khan said: “I am extremely pleased that METRO and FBR have put in a lot of effort to implement current system and have worked for the betterment of the business and country.

    I am hopeful that once all tiers will be covered by the government, the business community will enjoy a new viable, tax compliant integrated business model, something that will serve as a benchmark for our country in the future”.

    Guest of Honour Dr. Philipp Deichmann, said: “I am impressed with the automation drive being introduced in tax system to facilitate the taxpayers and increase revenue. Pakistan’s economy is improving, however, the country need to focus on cohesive economic policies, improve tax regime to widen tax base and streamline lengthy litigation procedures to promote ease of doing business and attract more investment”.

    The ceremony was followed by live demonstration session for the attendees, including METRO staff, Customers, Retailers, and businessmen present.

  • Weekly ATL shows 60,000 taxpayers pay surcharge to get active status

    Weekly ATL shows 60,000 taxpayers pay surcharge to get active status

    ISLAMABAD: Around 60,000 taxpayers paid surcharge for including their names in Active Taxpayers List (ATL) for tax year 2020 during the week ended March 21, 2021.

    According to weekly updated ATL -2020 issued on March 22, 2021 by the Federal Board of Revenue (FBR), the number of active taxpayers increased to 2.43 million on the basis of return filed / surcharge payment for appearance on the ATL.

    The number of active taxpayers was 2.37 million in the preceding week.

    The FBR issued the ATL for the tax year 2020 on March 01, 2020 and the total number of active taxpayers on the list was 2.17 million.

    The appearance of taxpayers’ name on the ATL guarantees exemption from withholding tax on various transactions and reduction of withholding tax rate.

    The FBR includes names of only those taxpayers, who file their annual returns within due date or it was extended by commissioner appeals on the basis of request filed by the taxpayers.

    However, late filers can also enlist their names on the ATL after payment of surcharge.

    The payment of surcharge is Rs1,000 for individuals, Rs10,000 for Association of Persons and Rs20,000 is for corporate entities.

  • SBP amends regulations to encourage investment in REITs

    SBP amends regulations to encourage investment in REITs

    KARACHI: State Bank of Pakistan (SBP) on Monday amended prudential regulations to encourage enhanced participation and investment of banks and development financial institutions in the Real Estate Investment Trusts (REITs).

    The SBP in a statement said that in line with the government initiative for the development of housing and construction sector, the State Bank of Pakistan (SBP) has been taking various regulatory steps to enhance banks/DFIs participation through their financing in the development of these sectors.

    In order to boost activities in these sectors further, the SBP has now made changes to certain provisions of existing Prudential Regulations for Corporate & Commercial Banking to encourage enhanced participation and investment of banks/DFIs in the REITs.

    REITs are asset management companies that own or finance income-producing real estate across a range of property sectors. These asset management companies raise funding from general public and institutions by floating various kinds of funds. REITs deploy funds by investing in real estate properties thereby enhancing the investment in housing and construction sector to contribute in economic growth and development.

    The units of listed REITs, are tradable on stock exchanges and offer a number of benefits to investors.

    The changes in SBP regulations would enable banks/DFIs to make higher investments in REITs to the tune of 15 percent of their equity as against existing limit of 10 percent of equity. This move will not only bring more capital towards REITs but would also enable banks/DFIs to diversify their investments.

    In addition, SBP has also relaxed restriction, in existing regulations, on seeking financing against shares of listed group companies. It will enable investors in raising liquidity for further investment in new business opportunities and ventures leading to greater economic activity.

    The change in regulation would also benefit the capital market by encouraging sponsors of companies to consider listing on the stock exchanges.

    This will promote documentation of the economy, transparency, and good corporate governance practices as well.

  • Minimum penalty Rs10,000 for failure in updating taxpayer profile

    Minimum penalty Rs10,000 for failure in updating taxpayer profile

    ISLAMABAD: A minimum penalty of Rs10,000 has been prescribed for one day after deadline for updating taxpayer profile under Section 114A of the Income Tax Ordinance, 2001.

    The updating profile by a taxpayer has been mandatory through Finance Act, 2020. The last date for updating the profile is March 31, 2021.

    According to Section 182 of Income Tax Ordinance, 2001 any person who is required to furnish or update a taxpayer’s profile but fails to furnish or update within due date then such a person shall pay a penalty of Rs2,500 for each day of default from the due date subject to a minimum penalty of Rs10,000.

    According to the Section 114A:

    Taxpayer’s profile.-(1) Subject to this Ordinance, the following persons shall furnish a profile, namely:-

    (a) every person applying for registration under section 181;

    (b) every person deriving income chargeable to tax under the head, “Income from business”;

    (c) every person whose income is subject to final taxation;

    (d) any non-profit organization as defined in clause (36) of section 2;

    (e) any trust or welfare institution; or

    (f) any other person prescribed by the Board.

    (2) A taxpayer’s profile-

    (a)shall be in the prescribed form and shall be accompanied by such annexures, statements or documents as may be prescribed;

    (b) shall fully state, in the specified form and manner, the relevant particulars of –

    (i) bank accounts;

    (ii) utility connections;

    (iii) business premises including all manufacturing, storage or retail outlets operated or leased by the taxpayer;

    (iv) types of businesses; and

    (v) such other information as may be prescribed;

    (c) shall be signed by the person being an individual, or the person’s representative where section 172 applies; and

    (d) shall be filed electronically on the web prescribed by the Board.

    (3) A taxpayer’s profile shall be furnished,-

    (a) on or before the 31st day of December, 2020 in case of a person registered under section 181 before the 30th day of September, 2020; and

    (b) within ninety days registration in case of a person not registered under section 181 before the 30th day of September, 2020.

    (4) A taxpayer’s profile shall be updated within ninety days of change in any of the relevant particulars of information as mentioned in clause (b) of sub-section (2).

    Through Circular No. 08 of 2020, the FBR extended the date of furnishing of taxpayer’s profile from December 31, 2020 to March 31, 2021.

  • KSE-100 index gains 506 points

    KSE-100 index gains 506 points

    KARACHI: The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) gained 506 points on Monday owing to improved sentiments in oil stocks and circular debt issue.

    The Index closed at 45,407 points as against last Friday’s closing of 44,901 points, showing an increase of 506 points.

    Analysts at Arif Habib Limited said that the market went down earlier in the session by 165 points that saw across the board mild selling pressure.

    Short roll-over week and an outstanding amount of Rs. 38.8B at the start of the week caused some jitters. However, a reversal in energy chain stocks (E&P, Refinery, O&GMCs, Power) saw a rebound in the Index.

    Anticipation of resolution of gas related circular debt helped energy chain to recover primarily. Among major contributors, OGDC, PPL and HASCOL hit upper circuit during the session, whereas PSO, HUBC also contributed to the positivity.

    Similarly, Refinery sector stocks also performed well today. Among scrips, BYCO topped the volumes with 68.6 million shares, followed by PRL (40.8 million) and HASCOL (38.5 million).

    Sectors contributing to the performance include E&P (+236 points), O&GMCs (+88 points), Tech (+78 points), Power (+44 points) and Fertilizer (+43 points).

    Volumes declined from 484.6 million shares to 440.9 million shares (-9 percent DoD). Average traded value however increased by 1 percent to reach US$ 141.7 million as against US$ 140 million.

    Stocks that contributed significantly to the volumes include BYCO, PRL, HASCOL, TRG and ASL, which formed 45 percent of total volumes.

    Stocks that contributed positively to the index include OGDC (+111 points), PPL (+101 points), TRG (+44 points), PSO (+44 points) and HUBC (+41 points). Stocks that contributed negatively include AICL (-12 points), MCB (-11 points), BAFL (-10 points), PIOC (-10 points) and NBP (-10 points).

  • Rupee gains 12 paisas on surplus current account

    Rupee gains 12 paisas on surplus current account

    KARACHI: The Pak Rupee gained 12 paisas against the dollar on Monday as current account remained surplus during first eight months of the current fiscal year.

    The rupee ended Rs155.85 to the dollar from last Friday’s closing of Rs155.97 in the interbank foreign exchange market.

    Currency dealers said that positive sentiments prevailed as current account remained in surplus during the first eight months of the current fiscal year.

    The balance of payment has posted a current account surplus of $881 million during first eight months (July – February) of 2020/2021 as compared with a deficit of $2.74 billion in the corresponding months of the last fiscal year, State Bank of Pakistan (SBP) said on Sunday.

    According to balance of payment data, trade deficit ballooned to $16.08 billion during first eight months of the current fiscal year as compared with the deficit of $13.16 billion in the same months of the last fiscal year.