Pkrevenue.com

Author: Mrs. Anjum Shahnawaz

  • Rupee falls by eight paisas on higher import payment demand

    Rupee falls by eight paisas on higher import payment demand

    KARACHI: The Pak Rupee fell by eight paisas against the dollar on Tuesday owing to bank holiday a day ahead that may create pressure on import payment demand.

    The rupee ended Rs152.83 to the dollar from previous day’s closing of Rs152.75 in the interbank foreign exchange market.

    Currency experts said that the rupee witnessed a decline due to higher dollar demand for import and corporate payment as banks likely close on Wednesday due to Zakat deduction on the first day of Ramazan ul Mubarak.

    The currency experts said that the rupee may continue to gain value in coming days owing to substantial increase in inflows of workers remittances and export receipts.

  • Abolishing withholding tax, reducing sales tax rate on telecom services recommended

    Abolishing withholding tax, reducing sales tax rate on telecom services recommended

    KARACHI: Federal Board of Revenue (FBR) has been urged to abolish withholding tax rate at 12 percent on telecom services to promote the accessibility of internet/data services to the low-income group.

    Similarly, Federal Excise Duty (FED) is charged at 17 percent on telecom services which is on higher side as compared to other sectors, and general rate.

    Provincial authorities levy a much lower rate of sales tax on other services. Since sales tax is a consumption tax (on usage), the decrease in sales tax rate will result in increased usage of telecom services and consequently drive tax collection upwards.

    There should be single sales tax rate across all jurisdiction to remove the anomalies and undue hardships being faced by telecom sector in terms of compliances in different jurisdictions, thus, to provide ease of doing business.

    These recommendations have been sent by Overseas Investors Chamber of Commerce and Industry (OICCI) to the Federal Board of Revenue (FBR) for the budget 2021/2022.

    The OICCI further recommended that since the insertion of 9th Schedule in Sales Tax Act, 1990 effective 1st July 2014, the matter is in litigation. This tax should be abolished, ab initio, by accepting the decision of Lahore High Court as the resolution of the matter will result in additional upside on the corporate tax side for the exchequer and eliminate the undue litigations.

    On the issue of advance tax on Auction/ Renewal of telecom licenses at 10 percent under section 236A of Income Tax Ordinance, 2001, the OICCI recommended that this tax should be abolished being irrational and burdensome on CMOs keeping in view the financial/ tax position.

    The chamber said that as large utility providers, Cellular Mobile Operators’ (CMO) are subject to deduction/collection of withholding of income tax on large number of transactions, which increases the cost and complexity of tax compliance and an additional administrative burden for the telecom sector and negatively impacts the overall business environment.

    It is recommended:

    i. Exemption should be given to the telecom sector from deduction or collection of all types of withholding taxes, like banking and oil sector. There will be no loss of revenue to the exchequer as the tax collection mechanism will be simplified in terms of real time payment of advance tax Under Section 147 on quarterly basis.

    Furthermore, this measure will also make the tax claims and its verification mechanism more transparent with minimum operational hassles as maintaining the thousands of records especially for advance tax on utility bills and imports is itself a very cumbersome procedure.

    ii. Amendments need to be made in the section 147 for the calculation of tax liability. Currently the calculation of tax liability is based on the last assessed position and turnover of the year. The assessed position should not be used as a basis of calculation of tax liability until and unless an independent forum (i.e. At least Tribunal) has also confirmed the assessed position.

    The OICCI recommended to reduce the custom duty rates for batteries (8507.6000) to 5 percent and to abolish additional custom duty and Regulatory duty, as these batteries are used with solar and power systems and are core asset for telecom infrastructure services provider. Reduction in duties will further encourage alternate energy resources for Telecom sector e.g. Solar etc.

    On the issue of custom duty and Regulatory duty on import of telecom equipment, it is recommended to restore SRO 575, reduce Custom duty to 5 percent and abolish the Additional Custom duty and Regulatory duty as the core assets needs to be imported for provisioning of telecom services.

    The OICCI demanded exemption from advance tax on electricity for Telecom Tower Infrastructure Companies. The chamber said that currently taxpayers can obtain exemption certificate for non-deduction of tax on electricity bills under section 235(3) of ITO 2001 if their income is exempt under the law or by discharging their advance tax liability for the year. Such exemption is not available to telecom service providers as their tax liability is minimum under section 153(3) of the ITO, 2001.

    Enabling provision may be inserted in section 235 of the ITO, 2001 to empower the Commissioner to issue exemption certificate to Service Providers under minimum tax regime for non-deduction of advance tax on electricity bills.

  • 367,159 taxpayers pay surcharge to enroll on ATL-2020

    367,159 taxpayers pay surcharge to enroll on ATL-2020

    ISLAMABAD: Around 367,159 taxpayers have paid surcharge for appearance in the Active Taxpayers List (ATL) for availing exempt or reduced rates of withholding tax on various transactions.

    According to weekly updated ATL for tax year 2020 issued on Monday the number of active taxpayers increased to 2,545,622 on the basis of income tax return filed within due date and after payment of surcharge after due date by April 11, 2021.

    The Federal Board of Revenue (FBR) issued the new ATL for tax year 2020 on March 01, 2021 which carried 2,178,463 names of taxpayers, who were entitled to avail reduced or exempt rates of withholding tax on various transactions.

    The filing of income tax returns is mandatory for all the taxpayers who have taxable income or specified under Section 114 of Income Tax Ordinance, 2001.

    As per statute the compliance of mandatory return filing was not enough to avail the reduced rate facility. According to Section 182A of Income Tax Ordinance, 2001 the persons who fail to file annual return of income by due date or extended by commissioner Inland Revenue then their names would not be included in the active taxpayers list for the year for which return was not filed.

    However, the persons would be included in the taxpayers list on filing return after the due date, if they pay surcharge at: Rs20,000 in case of  a company; Rs10,000 in case of an association of persons; and Rs1,000 in case of an individual.

  • Bank timings during Ramazan-ul-Mubarak

    Bank timings during Ramazan-ul-Mubarak

    KARACHI: The State Bank of Pakistan (SBP) on Monday issued bank office and business hours during Ramazan-ul-Mubarak 1442 A. H..

    The SBP said that the SBP will observe the following office hours during the month of Ramazan-ul-Mubarak, which will also be followed by all bank, Development Financial Institutions and Microfinance Banks.

    The bank office timings shall be 10:00 am to 4:00 pm (with prayer break from 2:00 pm to 2:15 pm) during Monday to Thursday.

    On Fridays the bank office shall be from 10:00 am to 1:00 pm (without break).

    The banking hours for public dealings shall be:

    The banks shall observe banking hours from Monday to Thursday between 10:00am to 1:30 pm (without break). The banking hours on Friday shall be from 10:00 am to 1:00 pm (without break).

     However, except Friday, banks / MFBs may observe extended business (banking) hours for public dealing from 10:00 a.m. to 3:00 p.m. (with 15 minutes prayer break) at their branches situated in major cities / business centers / commercial markets & hubs / ports etc.

  • Taxpayers not to worry on system generated past six years audit notices: CCIR

    Taxpayers not to worry on system generated past six years audit notices: CCIR

    KARACHI: Taxpayers should not worry on audit notices of past six years as most of those were system generated and Federal Board of Revenue (FBR) is trying to resolve the issue, a top FBR officials said on Monday.

    While discussing tax issues at Karachi Chamber of Commerce and Industry (KCCI), Dr. Aftab Imam, Chief Commissioner Inland Revenue (CCIR) of Corporate Tax Office (CTO) Karachi explained the issues pertaining to audit notices.

    He said that FBR was well-aware of this issue and it has been observed that most of them were system generated notices and the business community should not worry as FBR was trying its best to resolve this issue.

    “There is no need to re-submit those documents again at the FBR which have already been submitted for audit and only the missing documents should be provided with a covering letter in which it should be clearly mentioned that the following relevant documents have already been provided while the missing documents are being sent,” he added.

    He also assured to analyze the issue of higher turnover tax on yarn traders as compared to the profit margin and look into the possibility of restoring it back to 0.1 percent from 1.5 percent in the next budget.

    The Chief Commissioner CTO mentioned that FBR was seriously working towards creating ease for the business community as the economy would only flourish when the businesses flourish that would automatically improve the tax revenue for the country. “Hence, we want to facilitate the business community and keeping in view FBR’s approach, most of the issues being faced today would be resolved in the next one-an-a-half year as we are very keen to create a tax-friendly environment”, he added.

    He further sought business community’s assistance in identifying those millions of individuals who have been doing businesses of up to billions of rupees but they remain out of the tax net which was the basic reason for the exorbitant tax rates being suffered by the existing taxpayers. “The unregistered individuals have to be taken to task which would reduce the burden on existing taxpayers through reduction in tax rates”, he added.

    Earlier, President KCCI M. Shariq Vohra, while welcoming Chief Commissioner CTO, appreciated that dedicated efforts and prompt response by Chief Commissioner CTO towards amicably resolving the FBR-related taxation issues being faced by business community. “We hope that the FBR would incorporate maximum number of recommendations given by KCCI in its budget proposals which have been recommended in the larger interest of the country”, he said, adding that it has always been KCCI approach to highlight the general issues which are not faced by a few individuals only but by the majority of stakeholders from a particular sector. “Our proposals for upcoming Budget for FY 2021-22 carry pivotal importance and will have a positive impact on business and investment climate, ease of doing business and overall growth of the economy.”

    He was of the opinion that taxpayers face immense hardships in getting petty issues resolved because of the unnecessary hindrances being creates by FBR officials which not only fetches a bad image for the entire department but also discourages new individuals to come into the tax net which was a very issue that requires immediate attention.

    Shariq Vohra pointed out that many members of the business community have been receiving bulk audit notices nowadays in which huge number of documents for six years old cases of 2014 were being demanded which was not making any sense at all and it appears like an attempt to harass the business community. “The FBR, instead of intensifying the hardships for existing taxpayers, must take practical steps to somehow bring more and more people into the tax net which was in the larger interest of the country as it would not only improve the tax revenue but would also bring down the tax rates that would certainly go in favor of the economy”, he added.

    Former Senior Vice President KCCI Ibrahim Kasumbi, in his remarks, particularly mentioned that the furniture industry comprising workshops, employing artisans and manual labor, has been receiving notices from tax authorities and field officers in many parts of Pakistan and they were being compelled to get registered as Tier 1 retailers which was unjust and not practicable for this trade. Hence, FBR must stop harassing shopkeepers, showroom and workshop owners in the name of registration in Tier-1 and the employment of hundreds of thousands skilled workers artisans and laborers has to be protected while this important industry of traditional hand-crafted furniture has to be preserved.

    He further stated that consumption of black tea in Pakistan was 240,000 tons, but the imports through legal channels was hardly 100,000 tons due to high rates of customs duty, sales tax, regulatory duty (RD) and withholding tax (WHT). The remaining requirement was being fulfilled by smuggling, Afghan Transit Trade, and imports under various exemptions/concessions granted to Provincially Administered Tribal Areas (PATA) and Azad Kashmir. Hence, rates of customs duty, sales tax, RD & WHT have to be rationalized to prevent smuggling and massive leakage of revenue, he added.

  • Equity market falls by 208 points on imposing lockdown proposal

    Equity market falls by 208 points on imposing lockdown proposal

    KARACHI: The equity market witnessed a decline of 208 points on Monday after possibility of imposition of lockdown in the light of NCOC proposal, analysts said.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 44,978 points as against last Friday’s closing of 45,186 points showing a decline of 208 points.

    Analysts at Arif Habib Limited said that Market took toll from possibility of imposition of lock down in the light of NCOC proposal, although a firm decision is yet to be taken.

    Selling pressure was evident across the board with the exception of few scrips, including TRG, GGL, MCB and FFC, which somewhat supported the index. Overall the index lost 428 points during the session and closed the session -208 points.

    Refinery sector, which has lately coincided with technology stocks also went down following weak investor sentiment. Among scrips, WTL topped the volumes with 73.7 million shares followed by TRG (42.1 million) and GGL (38.8 million).

    Sectors contributing to the performance include O&GMCs (-36 points), Banks (-32 points), Pharma (-26 points), Chemical (-23 points) and Cement (-23 points).

    Volumes declined from 688 million shares to 504 million shares (-27 percent DoD). Average traded value also declined by 21 percent to reach US$ 130.7 million as against US$ 165.9 million.

    Stocks that contributed significantly to the volumes include WTL, TRG, GGL, TELE and BYCO, which formed 42 percent of total volumes.

    Stocks that contributed positively to the index include TRG (+98 points), FFC (+24 points), MCB (+19 points), EFERT (+12 points) and LUCK (+6 points). Stocks that contributed negatively include ENGRO (-44 points), PSO (-25 points), OGDC (-22 points), SEARL (-21 points) and UBL (-16 points).

  • SBP governor highlights measures to boost debt, capital markets

    SBP governor highlights measures to boost debt, capital markets

    KARACHI: Dr. Reza Baqir, Governor, State Bank of Pakistan (SBP) has highlighted measures taken by the central bank to boost the debt and capital markets of the country.

    He was addressing at the Gong Ceremony to mark the beginning of a new chapter of cooperation between SBP and Pakistan Stock Exchange (PSX) on multiple initiatives.

    SBP and PSX have recently been working closely to improve and widen the access of capital market participants to government debt securities; facilitate investments by non-residents in the stock exchange; remove bottlenecks hindering companies from leveraging against shares of their group companies; and, developing information sharing arrangements between banks and capital markets.

    Speaking on the occasion, Governor SBP, Dr. Reza Baqir said he was pleased to visit PSX for this Gong ceremony as it marked the commitment of SBP and PSX to work together for the deepening of debt and capital markets in Pakistan and improving financial intermediation.  He made three important announcements in this regard. 

    First, he said that SBP has revised the Rules governing appointment of primary dealers for the Government’s debt securities. This will expand the list of institutions eligible to work as primary dealers, including Security Depositories and Clearing institutions.  This measure is aimed at widening the investor base of government securities, improving liquidity, enhancing transparency and promoting market development. In addition, SBP has relaxed the selection and performance criteria for development finance institutions (DFIs), investment banks and brokerage houses to encourage them to become part of the primary dealer system, which is currently dominated by banks. Hence, among other privileges offered to primary dealers, a larger and more diverse group of institutions will now have direct access to primary auctions.

    He said that while the government debt market in Pakistan is well developed and liquid, participation of capital market clients has historically been limited and SBP wants to encourage wider ownership of Government securities among retail investors. The Governor SBP noted that the revised primary dealer Rules will cater to the needs of a diverse group of investors, including capital market clients, corporates and individuals, and will attract a new clientele to the government securities market. Governor Baqir shared that this measure has been taken after detailed discussions with stakeholders and a comprehensive review of international best practices.

    Second, Governor Baqir said that SBP has made changes in its prudential regulations to facilitate the sponsors, shareholders and companies in raising more financing against the security of shares of their group companies. He highlighted that this amendment will help sponsors and companies in raising liquidity for further investment in new business opportunities and ventures, in turn leading to greater economic activity. This regulatory change would also benefit the capital markets by encouraging sponsors of companies to consider listing on the stock exchanges. As a result, it will also promote documentation of the economy, transparency, and good corporate governance practices.

    Third, Dr. Baqir, apprised the audience that SBP and PSX are jointly working on expanding the scope of KYC information sharing arrangements between banks and Central Depository Company of Pakistan (CDC) or National Clearing Company of Pakistan Limited (NCCPL) for existing bank account holders. He was delighted to reveal that the tangible progress has been made and was hopeful that this important initiative will be successfully rolled out by the end of the next month. He further added that such arrangements will facilitate capital market players in mobilizing domestic resources and channeling them effectively to productive uses.

    The Governor SBP was warmly welcomed by the Chairman of the Board, PSX, Mr. Sulaiman S. Mehdi; Board Members of PSX; MD & CEO of PSX, Mr. Farrukh Khan; and senior management of PSX. Also present at the Gong Ceremony were senior members of the Market, Bank Presidents and Treasury Heads, along with senior management of SBP.

    Welcoming the SBP Governor to PSX, the MD PSX, Farrukh Khan, said that he was confident that the visit of Governor Reza Baqir to Pakistan Stock Exchange will mark the beginning of a new collaborative journey dedicated to greater coordination between PSX as the frontline regulator of the capital market and SBP as the regulator for the banking industry in the country. This greater coordination would help to promote and foster an environment of increased activity in terms of online initiatives, the recently launched Roshan Digital Accounts for Overseas Pakistanis, and Government Debt Securities, amongst other segments. He further stated that the journey of added cooperation and between PSX and SBP will benefit all stakeholders of the capital market, the banking industry and the economy of Pakistan. He expressed confidence that SBP and PSX will together be able to lay a pathway for facilitating greater online participation in terms of account opening and activity by brokers and investors, as well as for increasing the number of investors investing in different asset classesin the capital market of Pakistan.

  • Rupee gains 19 paisas against dollar

    Rupee gains 19 paisas against dollar

    KARACHI: The Pak Rupee gained 19 paisas to close Rs152.75 against the dollar on Monday owing to lower demand for import payment.

    The rupee maintained gaining momentum against the dollar. The rupee was closed last Friday at Rs152.94 to the dollar in the interbank foreign exchange market.

    Currency experts said that due to high number of cases reported daily the importers were caution in placing orders to their foreign suppliers.

    The rupee also posted an strengthened due to strong growth in inflows of workers’ remittances.

    The inflow of workers’ remittances has registered 26 percent growth to $21.47 billion during first nine months (July – March) 2020/2021, State Bank of Pakistan (SBP) said on Monday.

    The inflow of remittances was $17 billion during the same period of the last fiscal year.

    The SBP said that workers’ remittances extended their unprecedented streak of above $2 billion for the 10th consecutive month in March 2021.

    Remittances rose to $2.7 billion in March 2021, 20 percent higher than last month and 43 percent higher than March 2020.

    Cumulatively during July-Mar FY 21, remittances have risen to $21.5 billion, up by 26 percent over the same period of FY20.

  • Bank holiday for Zakat deduction

    Bank holiday for Zakat deduction

    KARACHI: Banks shall remain closed on the first day of Ramaza-ul-Mubarak 1442 A. H. for deduction of Zakat.

    The Stat Bank of Pakistan (SBP) in a notification issued on Monday said that SBP will remain closed for public dealing on 1st Ramadan-ul-Mubarak, 1442 A.H., which shall be observed as “Bank Holiday” for the purpose of deduction of Zakat.

    All banks / DFIs / MFBs shall, therefore, remain closed for public dealing on 1st Ramadan-ul-Mubarak, 1442 A.H. However, all employees of the banks / DFIs / MFBs will attend to their official assignments (in-office or work-from-home, as designated under the current COVID-19 situation) on Bank Holiday treating it as a normal working day (except for public dealing).

  • SECP warns Sindh Bank against false trading

    SECP warns Sindh Bank against false trading

    KARACHI: Securities and Exchange Commission of Pakistan (SECP) has identified false trading by Sindh Bank Limited (SBL) and warned the bank against such activities in future.

    The SECP said that with reference to correspondence exchanged between SECP and the bank regarding various trades carried out by SBL in ready market during the period from January 2020 till January 2021 in the shares of several companies.

    “Upon detailed review of trading data, it was observed that large quantum of trades carried out by SBL during the aforesaid period in ready market was matched with the proprietary accounts of brokerage houses through with it was trading.

    “In the said transactions, SBL first sold and then on the next day bought those shares back of approximately same quantity and at either the same rate or slightly higher rate, wherein, counterparty on buy and sell trades was proprietary account of the same brokerage house.”

    The SECP said that the aforementioned pattern of trading as explained above may lead to false trading which is not in the interest of investors trading in the securities market. Therefore, representatives of SBL were called for a meeting to explain the rationale for carrying out such trades in ready market, wherein, they explained that such transactions were called out only for the purpose of realization of gain/loss in the securities held by the SBL.

    The pattern of trading adopted by the SBL may be detrimental for a fair and transparent trading in ready market where trading volumes in listed companies are generated based upon genuine demand and supply mechanism.

    The SECP prohibited the bank from engaging in the said pattern of trading in the ready market or any other such arrangements which may affect the integrity of stock market.

    The SECP also warned all securities brokers of facilitating such transactions in the ready market.