Pkrevenue.com

Author: Mrs. Anjum Shahnawaz

  • Rupee ends down by 11 paisas on rising import bill

    Rupee ends down by 11 paisas on rising import bill

    KARACHI: The Pak Rupee fell by 11 paisas against the dollar on Monday owing to rise in trade deficit and demand from corporate buyers.

    The rupee ended Rs153.66 to the dollar from last Friday’s closing of Rs153.55 in the interbank foreign exchange market.

    Currency experts said that the market was under pressure due to significant rise in import bill during the month of March 2021.

    The import bill has recorded an unprecedented growth of 70 percent in March 2021 as compared with the same month of the last year, according to data released by Pakistan Bureau of Statistics (PBS).

    The country spent $5.63 billion on the imports during March 2021 as compared with $3.31 billion in the same month of the last year.

    The experts said that due to quarter ending on March 31, 2021 the corporate buyers were also seen active in purchasing dollars for repatriating profit and dividends to their parent companies abroad.

  • Import bill sharply grows by 70pc in March

    Import bill sharply grows by 70pc in March

    ISLAMABAD: The import bill has recorded an unprecedented growth of 70 percent in March 2021 as compared with the same month of the last year, according to data released by Pakistan Bureau of Statistics (PBS).

    The country spent $5.63 billion on the imports during March 2021 as compared with $3.31 billion in the same month of the last year.

    Experts attributed the phenomenal rise in import bill during March 2021 due to significant decline in foreign trade in the same month of the last year because of restrictions imposed after coronavirus spread.

    In March 2020 the government put a complete lockdown throughout the country in order to prevent spread of COVID-19.

    Similarly in the month of March 2021, the exports recorded a sharp increase of 30.44 percent to $2.36 billion as compared with $1.81 billion in the same month of the last year.

    Pakistan’s trade deficit has widened by 20 percent in first nine months (July – March) 2020/2021 owing to surge in import bill after ease in coronavirus related restrictions.

    The trade deficit ballooned to $20.83 billion during first nine months of the current fiscal year as compared with $17.35 billion in the corresponding period of the last fiscal year.

    The import bill for the period of July – March 2020/2021 increased to $39.51 billion as compared with $34.79 billion in the corresponding period of the last fiscal year, showing a rise of 13.57 percent.

    On the other hand exports also increased by 7.12 percent to $18.68 billion during the first nine months of the current fiscal year as compared with $17.44 billion in the corresponding period of the last fiscal year.

  • FBR officials given access to declarations filed under amnesty scheme

    FBR officials given access to declarations filed under amnesty scheme

    ISLAMABAD: The senior officials of the Federal Board of Revenue (FBR) have been authorized to access declarations of undisclosed income and assets under amnesty scheme of year 2019.

    The FBR issued SRO 369(I)/2021 to notify Assets Declaration Rules, 2021 dated March 31, 2021. Under rule 15 access has been authorized to declarations under the act i.e. Assets Declaration Act, 2019.

    According to the rule 15: Member Information Technology and Member IR (Operations) are authorized by the FBR to access the declarations under Section 14 of the Act, on their own or when a request by the concerned chief commissioner IR, supported with reasons, is forwarded to any of the aforementioned Members for provision of a copy of the declaration.

    Rule 8 of the notified SRO explained about treatment of asset, income or expenditure in a declaration. According to it the amount of asset, income or expenditure in a valid declaration for and upto tax year 2018 shall not be included in a taxable income of the declarant for any tax year under the Income Tax Ordinance, 2001.

    The FBR explained: “For removal of doubt it is clarified that any assets, income or expenditure that can be plausibly traced as sourced in assets or income declared in a valid deduction shall not be called into question.”

    Rule 9 has explained about the proceedings under the Income Tax Ordinance, 2001 in respect of the information received other than under Common Reporting Standards (CRS).

    Sub Rule 1 stated that subject to sub-rule (2), no proceedings under any provisions of the Income Tax Ordinance, 2001 shall be initiated on the basis of any information relating to any asset, income or expenditure as the 30th day of June 2018 or any prior period, if the information relates to a declarant under the Asset Declaration Act, 2019 and the declarant files an irrevocable written statement along with documentary evidence to the effect that the source of the asset, income or expenditure in the received information has been the assets, income or expenditure declared under the Act. The declarant shall file such a statement on a notice under Section 176 of the Income Tax Ordinance, 2001 along with the related documentary evidence.

    Sub-Rule 2 of Rule 9 stated that the nature and source of asset, income or expenditure shall not be treated as explained and the Commissioner Inland Revenue or his delegate shall be entitled to proceed under Section 111 of the Income Tax Ordinance, 2001, on the basis of definite information acquired from any source other than a valid declaration itself, in following cases:

    (a) where the value of asset, income or expenditure, as at the 30th day of June 2018 or before as per the definite information is in excess of value as per declaration; and

    (b) where the source of asset, income or expenditure relates to a person other than the declarant.

    Sub-Rule 3 of Rule 9 stated that where an action under Section 111 of the Income Tax Ordinance, 2001 as undertaken in accordance with the sub-rule (2) results in invalidation of the declaration then such an action cannot be initiated without prior approval, for reasons to be recorded in writing, of the chief commissioner inland revenue as defined in clause (11B) of the Section 2 of the Income Tax Ordinance, 2001.

    Rule 10 explained declaration filed and the information received under CRS. According to sub-rule 1 of the Rule 10, where a foreign asset or income is reported to the FBR under CRS, then prior to any action under any provision of the Income Tax Ordinance, 2001, the FBR shall ensure compliance of the condition under the protocol for CRS including exchange of information by the person whose information has been received. On completion of that process, following procedure shall be followed:

    (a) the commissioner inland revenue of the concerned person or delegate of the commissioner shall issue a notice under section 176 of the Income Tax Ordinance, 2001;

    (b) the notice referred in clause (a) of this sub-rule shall enquire as to whether or not such asset, income or expenditure has been declared under the Voluntary Declaration of Domestic Assets Act, 2018 and the Foreign Assets (Declaration and Repatriation) Act, 2018 or Asset Declaration Act, 2019;

    (c) if the taxpayer informs the commissioner Inland Revenue or his delegate that the asset, income or expenditure, as reported under the CRS has been declared in a declaration, the commissioner Inland Revenue or his delegate shall require the taxpayer to provide a copy of the declaration; and

    (d) the taxpayer on receipt of such notice under section 176 of the Income Tax Ordinance, 2001 shall:

    (i) provide a copy of his declaration where such asset, income or expenditure, as the case may be, has been declared; and

    (ii) provide a copy of the declaration of another person, being the beneficial owner, where the asset, income or expenditure referred to in the CRS has been declared.

    Sub-Rule 2 of the Rule 10 stated that subject to the provision of Section 11 of the Asset Declaration Act, 2019, in case the information received under CRS as referred above are in agreement then a confirmation in writing shall be issued by the Commissioner Inland Revenue or his delegate that the asset, income or expenditure to the extent referred to in the letter has been declared under the respective declaration law.

    Through Rule 11, the FBR explained the beneficial ownership. The sub-rule 01 of Rule 11 stated that in case of matter relating to legal or beneficial ownership of an asset, income or expenditure, the claim of beneficial ownership shall not be questioned unless there is definite information that the asset was created out of sources of a person other than the person claiming the beneficial ownership.

    The sub-rule (2) of the Rule 11 stated where in the case of a foreign trust the source of contribution to the trust is claimed by any person other than settler, beneficiary or the trustees, the person so claiming shall be entitled to declare his contribution under the Asset Declaration Act, 2019. Such declaration shall not be called in question merely on account that such person is not the settler, beneficiary or trustee of the trust.

    Provided that where the asset, income or expenditure is reported under CRS in the name of settler, beneficiary of the trust or any person, proceedings shall be initiated against such person in the absence of a declaration by such settler, beneficiary or other persons;

    Provided further that in such a case any claim, by a third person as contributor to the asset, income or expenditure, shall only be considered if supported with documentary evidence.

    Through Rule 12, the FBR also explained declaration made by relatives of holder of public office. Sub-rule 1 of the Rule 12 stated that the status of a person as to the holder of public office or otherwise and the period during which a person remained holder of public office shall not be questioned or challenged by the commissioner Inland Revenue or his delegate if the same is confirmed by the relevant office.

    Sub-rule 2 of the Rule 12 stated that no declaration by a person entitled to file a declaration under the Asset Declaration Act, 2019 shall b questioned only for the reason that the declarant is a relative other than spouse and dependent children of the declarant of a person being a holder of public office unless it is confirmed through a definite information that the asset, income or expenditure have been created out of the undisclosed sources of a holder of public office.

  • SBP revises instructions for financing wheat procurement

    SBP revises instructions for financing wheat procurement

    KARACHI: The State Bank of Pakistan (SBP) has issued notification to revise instructions regarding bank financing for wheat procurement by the private sector.

    The SBP issued circular No. 02 of 2021 for amending the instructions issued on March 19, 2021 for financing wheat procurement by the private sector.

    Following amendments have been notified by the SBP:

    I. For private sector participation in the wheat procurement season 2021, banks are required to strictly fulfill the following minimum conditions for extending financing to eligible borrowers (licensed and functional flour mills duly evidenced by some documentation or licensed wheat traders registered with concerned authority/department);

    a. Fresh financing for procurement of wheat shall start from commencement of wheat procurement season 2021 in respective provinces. Banks will provide financing to eligible borrowers for the procurement of indigenous wheat for the harvest season of 2021 (April 01-June 30, 2021). The financing facility would be extended to the eligible borrowers for procurement of indigenous and imported wheat from July 01, 2021 subject to other conditions mentioned in this circular.

    b. Banks may provide financing facility to functional flour mills for purchase of indigenous wheat from their authorized representative and respective Food Department against supply of wheat by them. Quantum of such loan shall not be more than the value of wheat to be supplied by the respective Food Department or actual purchase from wheat traders, commensurate to the milling capacity of each mill. Banks will also monitor that existing stock of wheat purchased by the concerned functional flour mill, has been grinded and that the by-products of wheat (financed against bank loan) have also been released to the market gradually to repay the loans so obtained.

    c. Banks will ensure that the subject financing will be used only for intended purposes. However, there is no restriction on banks for extending financing to flour mills for purpose other than procurement of wheat. Banks may provide financing to flour mills for general requirements like overhead expenses, however, banks will ensure that such financing is not used for procurement of wheat or to acquire wheat stocks/by-products of wheat.

    d. Financing to private sector for procurement of wheat shall be provided against pledge of fresh wheat stock only and hypothecation / charge of moveable or immovable property would not be acceptable as collateral for such financing. Moreover, banks will ensure that no revaluation of the pledged stock is considered for release of any differential financing amount to the borrowers against stock of wheat already pledged with the banks.

    e. Banks are also allowed to provide financing facilities for wheat procurement by the seed processing plants duly evidenced by the testing certificates issued by the Federal Seed Certification and Registration Department, in line with their lending policies and the capacity/production plans of the seed processing plants ensuring that such stock of wheat will be used for processing purposes.

    f. These loans will be fully settled on or before 31st March 2022, positively.

    g. In order to curb the possibility of hoarding, banks shall:

    i. require client(s) to disclose their storage location and verify the same.

    ii. strictly monitor the wheat stock held by the client vide periodical and random inspections of wheat pledged with the bank as well as the gradual release of wheat stock to generate cash for the purpose of repayment of bank loan. SBP may acquire stock reports from banks to verify their authenticity/genuineness as and when desired.

    iii. be under obligation to immediately recall the advances allowed to the private sector in case of hoarding of wheat.

    iv. ensure that no financing is allowed to client for retirement of loans availed from other banks.

    v. ensure that their clients are in strict compliance with the guidelines of respective government (Federal/Provincial) for release of wheat stock and are not involved in any other activity which may cause speculation of wheat/flour price in market.

    h. The lending shall be in compliance with applicable laws, Prudential Regulations and other instructions of SBP issued from time to time.

    II. Banks will submit a monthly statement in respect of financing to private sector for wheat procurement to this department as per attached format (Annexure-A) within ten working days from the close of the relevant month.

    III. Any violation of the above instructions will attract administrative and/or penal action under the provisions of BCO, 1962 and other relevant laws.

  • FTO proposes initiating criminal prosecution against smugglers

    FTO proposes initiating criminal prosecution against smugglers

    ISLAMABAD: Federal Tax Ombudsman (FTO) has recommended that tax authorities should initiate criminal prosecutions against persons involved in smuggling or selling non-duty paid goods.

    In its proposals for budget 2021/2022, the FTO recommended measures on the issues of smuggling, misdeclarations, under-invoicing and non-transparent auctions.

    In order to effectively check the smuggling, it was recommended that criminal prosecution should be initiated against the persons/owners of the showrooms involved in business of Non-Duty Paid (NDP) vehicles, fuel pumps of smuggled oil and storage godowns of other smuggled items, from whom the NDP goods were recovered as provided in the Customs Act, 1969 read with the Prevention of Smuggling Act, 1977.

    Installation of scanners on the ports was recommended to be given top priority. It was emphasized that if government invested herself in this project, it will raise the potential of higher revenue and more effective check on misdeclaration of description or quantity of imported goods.

    So far two scanners have been added at Karachi Ports in addition to one already installed there. Two scanners have also been installed at Jamrud and Torkham, Peshawar.

    It was recommended to provide a mechanism in law for cross-matching of value declared on export documents of exporting station to import documents at importing station.

    Federal Board of Revenue (FBR) was asked to prescribe Model Auction Rules for auction through electronic means and prepare/operationalize an auction module in the WeBOC system to bring transparency and efficiency in the auctions.

    According to FBR, under the WeBOC-Glo initiative (an enhanced version of WeBOC), an electronic auction module has been developed and deployed in the system. This module envisages online registration of bidders who can bid for all auctionable goods displayed on website by the Customs authorities. Pilot is being run at Karachi Port (South Asia Port Terminal only).

    In view of constant complaints about delayed clearance at the border stations, generators should be provided on priority for speedy passengers/goods clearances and maintenance of IT and infrastructure support.

  • List of exemptions from total income withdrawn through ordinance

    List of exemptions from total income withdrawn through ordinance

    KARACHI: officials in the Federal Board of Revenue (FBR) have said that through Tax Laws (Second Amendment) Ordinance, 2021 various clauses of Second Schedule of Income Tax Ordinance, 2001 have been deleted that have allowed tax exemptions from total income.

    (more…)
  • Minimum penalty of Rs10,000 fixed for defaulting withholding statement

    Minimum penalty of Rs10,000 fixed for defaulting withholding statement

    KARACHI: A minimum penalty of Rs10,000 has been fixed for defaulting withholding statement where no tax is required to be deposited.

    Official at the Federal Board of Revenue (FBR) said that the amendment has been brought into Section 182 of Income Tax Ordinance, 2001 through Tax Laws (Second Amendment) Ordinance, 2021.

    Chartered Accountants said that prior to the amendment following penalties are prescribed for non-filing of statements under sections 165, 165A or 165B within due date:

    a) Rs. 5,000 where the person has deposited the tax withheld within due date and the statement is filed within 90 days;

    b) In all other cases, Rs. 2,500 for each day of default with a minimum penalty of Rs. 10,000.

    However, a new proviso has been inserted whereby minimum penalty has been prescribed at Rs. 10,000 in cases where there is no tax withholding to be deposited in a particular period.

  • Weekly Review: market may witness range bound trading

    Weekly Review: market may witness range bound trading

    KARACHI: The stock market likely to trade in range bound during the next week owing to strengthening of rupee value and improved foreign exchange reserves.

    Analysts at Arif Habib Limited believed the market may portray a range-bound behavior next week. While consolidating macroeconomic fundamentals led by strengthening PKR/USD parity and building up of FOREX reserves pose upside risks, we highlight the ongoing third wave of COVID-19 to be a major risk to the investors’ confidence.

    The upcoming results season can attract bulls particularly amongst cyclical sectors.

    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 17.1x and while offering DY of around 7.1 percent versus around 2.5 percent offered by the region.

    This week saw bears return to the forefront as the market sentiment was in severe pressure. Changes in the cabinet including the Finance Ministry, announcement by ECC and subsequent rejection of the decision by the cabinet to resume trade with India, and the ongoing third wave of COVID-19 all contributed to the pessimism in the market.

    Failure to meet the deadline for the first tranche payment to IPPs further added to the overall pessimism. This week also saw successful issuance of the USD denominated Eurobonds in international markets that raised USD 2.5 billion.

     The market closed at 44,301 points, shedding 1,221 points WoW.

    Sector-wise negative contributions came from i) Technology & Communication (341 points), ii) Commercial Banks (164 points), iii) Oil & Gas Exploration Companies (147 points), iv) Cement (144 points) and v) Power Generation and Distribution (117 points).

    Meanwhile, sectors that contributed positively include i) Fertilizer (91 points) and ii) Automobile Assembler (24 points). Scrip-wise negative contributors were TRG (328 points), HUBC (71 points), LUCK (61 points), PPL (58 points) and PSO (51 points). Whereas, positive contributors included ENGRO (120 points), FCCL (22 points) and SRVI (20 points).

    Foreign selling continued this week clocking-in at USD 4.9 million compared to a net sell of USD 0.1 million last week. Selling was witnessed in Technology and Communication (USD 6.0 million) and Power Gen. (USD 1.4 million).

     On the domestic front, major buying was reported by Insurance Companies (USD 6.8 million) and Individuals (USD 5.4 million). Average volumes arrived at 377 million shares (down by 18 percent WoW) while average value traded settled at USD 133 million (down by 16 percent WoW).

  • FBR chairman inaugurates head office of Pakistan Single Window

    FBR chairman inaugurates head office of Pakistan Single Window

    ISLAMABAD: Muhammad Javed Ghani, Chiarman, Federal Board of Revenue (FBR) on Friday inaugurated the head office of Pakistan Single Window (PSW) Company.

     On the occasion, Chairman FBR lauded efforts of Pakistan Customs to roll out Pakistan Singe Window (PSW) System almost a year before its deadline of June, 2022 set under World Trade Organization’s Trade Facilitation Agreement. He also appreciated Customs for reducing the project cost from initial estimates of USD 163 million to USD 67 million through indigenous development effort.

    The Prime Minister had tasked Customs to complete this highly transformational project for reducing time, cost and complication while ensuring better compliances with cross border trade regulations. To ensure that this new system is timely implemented and sustainably maintained, the PSW Company has been operationalized by FBR.

    The PSW Company is now enabling the Government of Pakistan to maintain complete ownership of this mission critical system of strategic national importance as it would handle entire cross border trade, related logistics and financial transactions.

    Member Customs Operation S.M Tariq Huda stated on the occasion that Customs Administration was leveraging its expertise in automation for PSW to support a wide array of other public and private sector entities involved in regulation of imports, exports & transit trade. The ongoing digitization of related public sector entities under this project will substantially improve their efficiency.

    PSW is instrumental for Pakistan to become a preferred route for international transit and transshipment besides it will help integrate upcoming national, regional and global single window systems. PSW will boost exports, help attract FDI and enable better integration into global value chains. It will also serve as the Trade Information Portal of Pakistan.

  • Penalty amount for late return filing reduced up to 75 percent

    Penalty amount for late return filing reduced up to 75 percent

    KARACHI: Penalty amount for late return filing has been reduced up to 75 percent in order to encourage people to make compliance of mandatory filing of declaration of income.

    Sources in the Federal Board of Revenue (FBR) said that the reduction in penalty amount has been made part of the Income Tax Ordinance, 2001 and amendments have been introduced through Tax Laws (Second Amendment) Ordinance, 2021.

    They said that the penalty amount will be reduced by 75 percent in case tax return is filed within one month after the due date for filing income tax return.

    According to a commentary on Tax Laws (Second Amendment) Ordinance, 2021 released by PwC A. F. Ferguson & Co. the law prescribes penalty for non-filing of return of income within due date as under:

    a) 0.1 per cent of tax payable for the tax year under consideration for each day of default, subject to minimum penalty of Rs. 40,000 and maximum penalty up to 50 per cent of the tax payable for the tax year under consideration;

    b) In case, 75 per cent of the income is from salary, and the same is less than Rs. 5 million, minimum penalty is Rs. 5,000

    However, two new provisos have been added whereby:

    a) Minimum penalty has been prescribed at Rs. 5,000 if taxable income for the year is up to Rs. 800,000; and

    b) Amount of penalty is reduced by:

     75 per cent if the return of income is filed within one month of the due date;

     50 per cent if the return of income is filed within two months of the due date;

     25 per cent if the return of income is filed within three months of the due date.

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