Pkrevenue.com

Author: Mrs. Anjum Shahnawaz

  • What is ‘start up’ under income tax ordinance?

    What is ‘start up’ under income tax ordinance?

    Income Tax Ordinance, 2001 has defined the meaning of ‘start up’ for the purpose of levying income tax.

    The Income Tax Ordinance, 2001 updated up to June 30, 2020 issued by the Federal Board of Revenue (FBR), defined ‘startup’ as:

     (i) a business of a resident individual, AOP or a company that commenced on or after first day of July, 2012 and the person is engaged in or intends to offer technology driven products or services to any sector of the economy provided that the person is registered with and duly certified by the Pakistan Software Export Board (PSEB) and has turnover of less than one hundred million in each of the last five tax years; or

    (ii) any business of a person or class of persons, subject to the conditions as the Federal Government may, by notification in the official Gazette, specify.

  • Small company defined by income tax ordinance

    Small company defined by income tax ordinance

    Income Tax Ordinance, 2001 has defined the meaning of ‘small company for the purpose of levying income tax.

    The Income Tax Ordinance, 2001 updated up to June 30, 2020 issued by the Federal Board of Revenue (FBR), explained ‘small company as a company registered on or after the first day of July, 2005, under the Companies Ordinance, 1984 (XLVII) of 1984, which,—

    (i) has paid up capital plus undistributed reserves not exceeding fifty million rupees;

    (ia) has employees not exceeding two hundred and fifty any time during the year;

    (ii) has annual turnover not exceeding two hundred and fifty million rupees; and

    (iii) is not formed by the splitting up or the reconstitution of company already in existence.

  • Finance ministry hopes achieving annual fiscal targets

    Finance ministry hopes achieving annual fiscal targets

    ISLAMABAD: The finance ministry is hopeful of achieving annual fiscal targets as half year (July – December) 2020/2021 fiscal position indicates that it will remain on track in the remaining half.

    The ministry of finance on Monday issued Mid-year Budget Review Report for Fiscal Year 2020/2021. The finance division said that the fiscal consolidation measures taken by the government had resulted in financial discipline, higher revenues and controlled expenditures.

    “The same strategy will be followed during the remaining period of the current fiscal year to achieve the fiscal sustainability,” it added.

    The continuity in fiscal consolidation, stable exchange rate, improved current account and better financial management, present a promising economic outlook, the finance division said.

    It said that the borrowing operations remained quite successful and in-line with the Medium-Term Debt Management Strategy (MTDS FY20 — FY23) of the Government. Government is following the policy of zero borrowing from SBP since July 2019 and is maintaining a cash buffer with SBP for meeting the contingencies/ obligations.

    Following are the key highlights:

    Similar to last year, domestic borrowing was made entirely from the financial markets during first half of current fiscal year. No borrowing was made from SBP. In fact, an amount of Rs. 285 billion was repaid to SBP during first half of ongoing fiscal year.

    All borrowings needed to finance the fiscal deficit were made through longer-term debt while Government retired a portion of short-term debt (T-Bills) by around Rs. 579 billion during this period.

    The government introduced various new instruments during first half of the current fiscal year to further develop the government securities market, attract more diversified investor base and to provide more flexibility and options to the investors as well as to the government.

    — 3, 5 and 10-year floating rate PIBs with quarterly coupon payment frequency are being issued since October 2020.

    — the government has started issuance of 5-year Sukuk with fixed rate rental payments since July 2020.

    — The government also introduced 2-year floating rate PIBs in November 2020 with quarterly coupon payment frequency and fortnightly interest rate resetting. Existing Floating Rate PIBs carry interest rate reset of 6-month while interest rate reset in this instrument in only two weeks.

    Similar to conventional bond, the government introduced re-opening mechanism in Sukuk auctions in July 2020 to increase liquidity of the Sukuk issue and lower costs for the government.

    Considering the encouraging participation and demand from the market in the recent auctions of 15 and 20-year PIBs, the government has decided to issue 30-year PIBs with effect from January 2021.

    In order to enhance participation and competition in primary and secondary markets for government debt, the government banned all institutional investors in National Savings Schemes from July 2020; and

    Most of the external debt was raised from multilateral and bilateral sources on concessional terms (low cost and longer tenor).

  • Inland Revenue officer suspended

    Inland Revenue officer suspended

    ISLAMABAD: Federal Board of Revenue (FBR) on Monday suspended a BS-18 officer of Inland Revenue Service (IRS) for four months with immediate effect.

    A notification said that the FBR while exercising powers conferred under Rule 5 of the Civil Servants (Efficiency & Discipline) Rules, 2020, placed Muhammad Jamshed Khan (IRS/BS-18), presently posted as deputy commissioner, Regional Tax Office, Rawalpindi under suspension for a period of 120 days with immediate effect until further orders.

  • Member IR Operations receives complaints himself to eradicate corruption

    Member IR Operations receives complaints himself to eradicate corruption

    ISLAMABAD: Member Inland Revenue (Operations) will directly receive complaints against corruption in order to provide secure channel of lodging complaints and in this regard SOP has been devised for handling of complaints.

    The Circular No. 10 of 2021 – Operations issued on Monday, stated that in order to allay the fears of business community and citizen taxpayers, a convenient, and protected mechanism of filing complaints against corruption is being devised whereby all complaints would be received by Member IR Operation himself on an especially dedicated cell phone +92-0345-5555507; the cell phone would be in his own possession, exclusively.

    “The complaints would be opened, acknowledged, and treated as per law in a highly confidential manner.”

    The identity of the complainants would be immediately masked and encoded to safeguard them against any undue consequences.

    The standard operating procedure (SOP) for lodging and handling of complaints against field functionaries is as under:

    i. Complaints would be lodged through text message at cell No.. +92-345-5555507 – on Whatsapp, preferably.

    ii. In Whatsapp text option, the complainant would identify himself by writing his name, address, CNIC the case particular and his cell phone number.

    iii. The complainant would write the name(s) of the official(s) against whom the complaint is directed along with his/their designation, place of posting, and any other particulars, if available.

    iv. The complaint must be supported by some evidence such as audio or video recording, text message exchange with the FBR functionary or any other documents, which could be attached with the text message, or subsequently sent by hard mail. If no such evidence is readily available, and affidavit on a legal paper, clearly spelling out the allegation and the person against whom the allegations are leveled would suffice.

    v. Upon receipt of the complaint, a code number would be allotted to each complainant and his back-end identity data would be hidden beyond the access of field officers. This code number would help a complainant track progress on his complaint and the outcomes on it.

    vi. Depending on the nature of the complaint and the evidence provided, the matter would be taken to logical consequence in the shortest possible time.

    vii. Non-specific, unsupported or generalized complaints may not be processed.

    The FBR said that taxpayers could not lodge complaints of corruption, rent-seeking and unethical conduct against any FBR functionary without any fear of reaction or revenge. However, in order to maintain the integrity of the system and achieve its intended objectives, the complainants would not level generalized allegations, and instead, file solid complaints, duly supported by evidence, and affidavits against the delinquent functionaries so that the malaise of corruption could be eliminated from the revenue functions of the state.

  • Eurobonds, Sukuks granted income tax exemption

    Eurobonds, Sukuks granted income tax exemption

    ISLAMABAD: Federal Board of Revenue (FBR) on Monday granted income tax exemption on profits derived by foreign nationals on yield of Eurobonds and International Sukuk issued by the government of Pakistan.

    In this regard the FBR issued two notifications to make changes in Income Tax Ordinance, 2001.

    The FBR issued SRO 268(I)/2021 and SRO 269 (I)/2021.

    The FBR granted the exemption while exercising powers available under the Second Schedule of the Ordinance. Under the Schedule the government has authority to grant tax exemption of the income derived by foreign nationals of companies.

    According to the notifications, the government granted the exemption to the profit on debt income of an agency of a foreign government, a foreign national company, firm or association of a person or any other non-resident person, on Eurobonds and International Sukuks issued under the government’s medium term note program.

  • Stock market ends down by 272 points on selling pressure

    Stock market ends down by 272 points on selling pressure

    KARACHI: The stock market ended down by 272 points on Monday as selling pressure witnessed during the day.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 45,593 points as against last Friday’s closing of 45,865 points, showing a decline of 272 points.

    Analysts at Arif Habib Limited said that the market saw a major draw down today by losing 772 points during the session.

    Initially, the index gained 144 points, however, across the board selling pressure brought the index down. Supreme Court’s decision on Senate Election was viewed against the back drop of Govt.’s plea and concerned investors to keep the liquidity intact rather than hold on to positions.

    TRG announced financial results today, which saw profit booking that brought the stock below LDCP. Among the few stocks that traded positive include STCL, MUGHAL, ATRL, NRL. Last half an hour saw brisk buying with index closing -255 points (unadjusted). Among scrips, ANL topped the volumes with 31.7 million shares, followed by TRG (24.6 million) and UNITY (21.1 million).

    Sectors contributing to the performance include Banks (-103 points), Textile (-27 points), Pharma (-26 points), Power (-23 points), Technology (-19 points) and Chemical (+22 points).

    Volumes declined from 479.9 million shares to 368.3 million shares (-23 percent DoD). Average traded value also declined by 29 percent to reach US$ 116.4 million as against US$ 162.8 million.

    Stocks that contributed significantly to the volumes include ANL, TRG, UNITY, HUMNL and BYCO, which formed 32 percent of total volumes.

    Stocks that contributed positively to the index include EPCL (+18 points), COLG (+12 points), PAKT (+9 points), LUCK (+8 points) and ANL (+6 points). Stocks that contributed negatively include UBL (-39 points), HBL (-32 points), BAHL (-18 points), PSO (-13 points) and MARI (-12 points).

  • Rupee makes 6 paisas gain against dollar

    Rupee makes 6 paisas gain against dollar

    KARACHI: The Pak Rupee gained six paisas against the dollar on Monday owing to better inflows of the foreign exchange, dealers said.

    The rupee ended at Rs158.04 to the dollar from last Friday’s closing of Rs158.10 in the interbank foreign exchange market.

    It was the sixth straight trading day when the rupee maintained its recovery against the greenback. The exchange rate was at Rs159.10 on February 19, 2021. However, since then the local currency recovered Re1.06 against the greenback in the interbank foreign exchange market.

    Currency experts said that the rupee may make more gains in coming days owing to improved inflows of workers’ remittances and export receipts.

  • Headline inflation increases by 8.7pc in February

    Headline inflation increases by 8.7pc in February

    ISLAMABAD: The headline inflation i.e. Consumer Price Index (CPI) increased by 8.7 percent in February 2021 on year on year basis, Pakistan Bureau of Statistics (PBS) said on Monday.

    CPI inflation General, increased by 8.7 percent on year-on-year basis in February 2021 as compared to an increase of 5.7 percent in the previous month and 12.4 percent in February 2020.

    On month-on-month basis, it increased by 1.8 percent in February 2021 as compared to a decrease of 0.2 percent in the previous month and a decrease of 1.0 percent in February 2020.

    CPI inflation Urban, increased by 8.6 percent on year-on-year basis in February 2021 as compared to an increase of 5.0 percent in the previous month and 11.2 percent in February 2020.

    On month-on-month basis, it decreased by 2.3 percent in February 2021 as compared to a decrease of 0.2 percent in the previous month and a decrease of 1.1 percent in February 2020.

    CPI inflation Rural, increased by 8.8 percent on year-on-year basis in February 2021 as compared to an increase of 6.6 percent in the previous month and 14.2 percent in February 2020. On month-on-month basis, it increased by 1.1 percent in February 2021 as compared to a decrease of 0.3 percent in the previous month and a decrease of 1.0 percent in February 2020.

    The Sensitive Price Indicatory (SPI) inflation on YoY increased by 11.9 percent in February 2021 as compared to an increase of 7.7 percent a month earlier and an increase of 14.5 percent in February 2020. On MoM basis, it increased by 3.1 percent in February 2021 as compared to a decrease of 0.8 percent a month earlier and a decrease of 0.8 percent in February 2020.

    Wholesale Price Index (WPI) inflation on YoY basis increased by 9.5 percent in February 2021 as compared to an increase of 6.4 percent a month earlier and an increase of 12.7 percent in February 2020. WPI inflation on MoM basis increased by 2.2 percent in February 2021 as compared to an increase of 2.5 percent a month earlier and a decrease of 0.7 percent in corresponding month i.e. February 2020.

  • FBR issues 2.1 million notices for non-filing, misdeclaring assets

    FBR issues 2.1 million notices for non-filing, misdeclaring assets

    ISLAMABAD: The tax authorities have issued 2.1 million notices to individuals and companies for non-compliance in annual return filing and to those who misdeclared assets in their annual returns of income, a statement issued by Federal Board of Revenue (FBR) said on Sunday.

    These notices were sent to defaulters by February 28, 2021. The FBR issued notices around 1.4 million by January 31, 2021. It means during the month of February 2021 the revenue body issued another 700,000 notices to defaulters.

    FBR is taking such action to broaden the tax base in the country. Early signs suggest such efforts are bearing fruits. As on February 28, 2021, the number of income tax returns filed was 2.63 million for tax year 2020 as compared with 2.43 million last year, showing an increase of 8 percent.

    The FBR said that the tax return with return, however, increased by 60 percent to Rs49.6 billion up to February 28, 2021 as compared with Rs31 billion by the same date of the last year.

    The FBR said that the income tax return for tax year 2020 had been increased despite the last date was not extended beyond December 08, 2020. Meanwhile the last date for filing income tax returns for tax year 2019 was extended up to February 25, 2020.

    The exercise is eliciting encouraging response. However, those who are not complying would be pursued diligently until compliance is achieved.

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