Pkrevenue.com

Author: Mrs. Anjum Shahnawaz

  • 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.

  • Abolishing tax credit for new industrial setup proposed

    Abolishing tax credit for new industrial setup proposed

    ISLAMABAD: Federal Board of Revenue (FBR) has proposed to withdraw tax credit available for establishment of new industrial establishment as the facility was misused by existing industrial units.

    The investors have tax credit under Section 65D of Income Tax Ordinance, 2001 for five years.

    However, many misuses of exemption/concession claims under section 65D of the Income Tax Ordinance, 2001 by industrial undertakings had been detected in recent years, where an existing industrial undertaking took the guise of a new industrial undertaking to claim tax credit.

    The sources said that an amount of Rs5.57 billion was granted as tax concession during tax year 2020 for newly established industrial undertakings. However, the net impact of the tax credit is Rs15 billion every year.

    They said that the FBR had discovered that some ghee manufacturers were availing this credit by splitting up their existing industrial units with a newer one.

    Further, investigation revealed that the production of those ghee manufacturers were remained stagnant or growth with the pace of inflationary growth despite declaring to set up new units.

    The FBR on the directives of the federal government had started cleaning up exemptions and concessions granted under Income Tax Ordinance, 2001 to make the taxation system equitable.

    In a recent high level meeting chaired by the Prime Minister Imran Khan, the FBR proposed withdrawal of many provisions of the ordinance related to exemption and concession.

    The FBR proposed to omit the tax credit provision available to newly established industrial undertakings that is already expiring on June 30, 2021.

    The tax credit available under this provision is for five years from the date of setting up the new industrial unit. The sources said that those who claimed the tax credit or set up a new unit by June 30, 2021 would be able to avail the concessions for next five years.

    The provision for the grant of tax credit was introduced through the Finance Act, 2011 for next five years. However, it was extended to June 30, 2019 and then further extended up to June 30, 2021.

  • Overview of banking payment system in Pakistan

    Overview of banking payment system in Pakistan

    KARACHI: The State Bank of Pakistan (SBP) recently issued key information about payment system of banking system in the country.

    Following is the snapshot of payment system in Pakistan:

    Snapshot details as on December 31, 2020

    Total Population in Pakistan: 208.31 million

    Currency in Circulation (in million PKR) 6,543,806

    Number of Banks’ Accounts: 5 59,910,511

    Payment Systems Infrastructure as on December 31, 2020

    Number of Banks 44 and (Branches) (16,304)

    Commercial/ Specialized Banks Branches15,096

    Microfinance (Branches) 1,208

    Number of Real Time Online Branches (RTOBs): 16,165

    Number of banks having ATM machines: 35

    Number of banks having open-looped POS machines: 5

    Number of banks having closed-looped POS machines: 4

    Number of banks providing Internet Banking services: 27

    Number of Banks providing Mobile Phone Banking services: 27

    Number of Banks providing Call Center Banking services: 23

    Total Number of PRISM System Participants: 50

    Total number of ATMs Interoperable Switches: 1

    Total number of Cash & Cheque Deposits Machines (CDMs): 225

    Total number of Cash Deposits Machines with Cash Withdrawal facility: 20

    Multipurpose ATMs (With Cash & Cheque Deposit & Cash Withdrawal):  15

  • Key proposals to withdraw tax exemptions

    Key proposals to withdraw tax exemptions

    ISLAMABAD: The government is going to withdraw various exemptions allowed under Income Tax Ordinance, 2001.

    The exemption may be withdrawn through Income Tax (Second Amendment) Ordinance, 2021, the sources said on March 21, 2021.

    Following are the highlights of the proposed law:

    It is proposed to omit power of Federal Board of Revenue (FBR) to declare any sector or industry as industrial under taking under Section 2 Clause (29C) of Income Tax Ordinance. 2001.

    Under Section 23A of the Income Tax Ordinance, 2001 it is proposed to omit first year allowance equal to 90 percent of the cost of plant and machinery to mobile phone manufacturers and other industrial undertakings located in underdeveloped areas.

    Under Section 61 of the Income Tax Ordinance, 2001 it is proposed to enhance the scope of tax credit for contribution to non-profit and other organizations as direct deduction of such expense is being proposed to be done away with by omitting clause 61 of part I of the second schedule.

    Under Section 64C of the Income Tax Ordinance, 2001, it is proposed to omit tax credit available to persons employing fresh graduates. It was available maximum up to 5 percent of the tax liability.

    Under Section 65C of Income Tax Ordinance, 2001 it is proposed to omit tax credit to companies equal to 20 percent of tax payable for first two years and 10 percent for next two years  of enlistment at stock exchange.

    Section 65D of Income Tax Ordinance, 2001, it is proposed to omit tax credit available to newly established industrial undertakings.

    Under Section 65F of Income Tax Ordinance, 2001, it is proposed that the exemptions available to persons engaged in coal mining in Sindh, IT exports and startups to be replaced with tax credit.

    Under section 65G of Income Tax Ordinance, 2001, the exemptions available to greenfield industrial undertakings and industries engaged in manufacture of plant, machinery, equipment and items with dedicated use (no multiple uses) for generation of renewable energy have been proposed to be replaced with tax credit on the basis of  investment made in plant machinery, building, computer, hardware and software.

    Under Section 100C of Income Tax Ordinance, 2001 law related to tax credit available to charitable organizations has been re-drafted to make it simpler & easier besides streamlining the regime with other provisions. No substantial change.

    Under Section 152 of Income Tax Ordinance, 2001, technical correction in sub-section (1E) to synchronize with other sub-sections

  • Duty, tax exemption on tea export grossly misused: PTA

    Duty, tax exemption on tea export grossly misused: PTA

    KARACHI: Pakistan Tea Association (PTA) on Saturday pointed out gross misuse of duty and tax exemption granted on tea re-export by importers of tea as raw material.

    The office bearers of the association pointed out the SRO 450 which is meant for re export of tea after value addition, the importers who have exemption of this particular SRO, this is observed they are misusing this exemption and selling teas to various cities across country without any documents.

    Though the teas imported meant for re-export, these teas are imported at zero rated duties and taxes ,this is noticed these teas are not even going to specific warehouses and cities, these malpractices causing huge loss to revenue and discouraging the importers who are paying full duties, they added.

    PTA office bearers Muhammad Aman Paracha, Chairman and Zeeshan Maqsood, Sr. Vice Chairman and Convener, FPCCI Standing Committee on Tea Trade on the occasion expressed their views that tea is common men drink and shall be treated essential and common men drink rather than luxury, tea is the only traditional product being consumed by elite class & poor people.

    Revised duties and taxes are suggested for the upcoming federal budget 2021/2022: “Custom Duty 5 percent, sales tax 7 percent, withholding tax 2 percent and additional customs duty at 0 percent.”

    Chairman said that the tea is a raw imported from various countries blended and processed and available to the end users. Therefore, this shall be treated as raw material rather giving incentives to selected importers.

    Besides, tea importers are also paying 30 percent value addition at port stage as a retail/end user tax on the basis of minimum retail price.

    In light of above it is requested that fool proof system shall be adopted by the relevant authorities of Federal Board of Revenue (FBR) and shall be strictly monitored, whether teas are going to their respective registered cities/areas? And re exported as per directions in this specific SRO.

    PTA representatives showed fear if the options/exemptions highlighted above will be continued than legitimate business will come to halt & everyone will try to get such exemptions, this could be serious threat to state revenue & revenue loss will start escalating.

    Further few importers successfully obtained various tax exemptions for PATA/FATA & Azad Kashmir etc which is also being misused, this is observed that teas imported under said exemptions are also going to other cities rather than to specific areas, this must be monitored strictly as well.

  • FPCCI expresses concerns over falling foreign direct investment

    FPCCI expresses concerns over falling foreign direct investment

    KARACHI: Federation of Pakistan Chamber of Commerce and Industry (FPCCI) has expressed concerns over falling foreign direct investment (FDI) despite incentives granted to foreign investors.

    (more…)
  • Weekly Review: market to trade in green on unchanged policy rate

    Weekly Review: market to trade in green on unchanged policy rate

    KARACHI: The share market likely to trade in green during the next week owing to unchanged policy rate.

    Analysts at Arif Habib Limited said that the market likely to trade in green due to: central bank keeping policy rate unchanged, which is positive for the stock market; and encouraging SBP projections as monetary policy committee noted that the current account deficit is expected to remain below 1 percent of GDP for FY21 while forecasting 3 percent GDP growth for FY21.

    Further, appreciation of PKR/USD parity may also impact positively.

    However, any surprise increase in domestic COVID-19 infection ratio may dampen investor’s sentiments.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 6.8x (2021) compared to Asia Pac regional average of 12.2x while offering a dividend yield of around 6.8 percent versus 2.8 percent offered by the region.

    This week trading commenced on a positive note continuing the trend from last Friday due to

    i) Government and their allies winning the seat of senate chairman and deputy chairman,

    ii) Pakistan Democratic Movement postponing their long march which was expected to start from last week of March,

    iii) Large Scale Manufacturing increasing by 7.85 percent in 7MFY21, and

    iv) Continuous appreciation of Rupee against USD.

    However, later in the week bears took charge and negative sentiments were fueled by

    i) Anticipation of possible rate hike in the monetary policy statement,

    ii) Rising cases of coronavirus as infection ratio surged to 8.0 percent, and

    iii) Drop in international oil prices resulting in selling across heavy-weight E&P scrips.

    The KSE-100 index closed at 44,901 points, up by 1,113 points or 2.54 percent WoW.

    Contribution to the upside was led by i) Technology and Communication (296 points), ii) Commercial Banks (214 points), iii) Cements (107 points), iv) Oil and Gas Marketing Companies (89 points), and v) Refinery (61 points). Scrip-wise major gainers were TRG (227 points), HBL (140 points), SYS (66 points), UBL (64.01 points), and PSO (60 points).

    Whereas, scrip-wise major losers were OGDC (41 points), ENGRO (28 points), BAHL (26 points), MARI (10 points) and PMPK (9 points).

    Foreigners accumulated stocks worth of USD 3.04 million compared to a net buy of USD 3.64 million last week. Major buying was witnessed in Commercial Banks (USD 6.46 million) and Cement (USD 1.52 million).

    On the local front, selling was reported by Banks (USD 11.21 million) followed by Companies (USD 8.18 million). That said, average daily volumes and traded value for the outgoing week were up by 11 percent and 4 percent to 483 million shares and USD 144 million, respectively.