Pkrevenue.com

Author: Mrs. Anjum Shahnawaz

  • What is tax fraud?

    What is tax fraud?

    Sales Tax Act, 1990 has defined ‘tax fraud’ as doing of any act knowingly without lawful excuse.

    The Sales Tax Act, 1990 [updated up to June 30, 2020 issued by the Federal Board of Revenue (FBR)] explained ‘tax fraud’ as:

    “Tax fraud” means knowingly, dishonestly or fraudulently and without any lawful excuse (burden of proof of which excuse shall be upon the accused) –

    (i) doing of any act or causing to do any act; or

    (ii) omitting to take any action or causing the omission to take any action, including the making of taxable supplies without getting registration under this Act; or

    (iii) falsifying or causing falsification the sales tax invoices,

    in contravention of duties or obligations imposed under this Act or rules or instructions issued thereunder with the intention of understating the tax liability or underpaying the tax liability for two consecutive tax periods or overstating the entitlement to tax credit or tax refund to cause loss of tax.

  • Sales Tax Act defines ‘supply’

    Sales Tax Act defines ‘supply’

    Sales Tax Act, 1990 has explained the word ‘supply’ for the purpose of imposition and collection of tax.

    The Sales Tax Act, 1990 [updated up to June 30, 2020 issued by the Federal Board of Revenue (FBR)] has defined the word ‘supply’ as:

    “Supply” means a sale or other transfer of the right to dispose of goods as owner, including such sale or transfer under a hire purchase agreement, and also includes –

    (a) putting to private, business or non-business use of goods produced or manufactured in the course of taxable activity for purposes other than those of making a taxable supply;

    (b) auction or disposal of goods to satisfy a debt owed by a person;

    (c) possession of taxable goods held immediately before a person ceases to be a registered person; and

    (d) in case of manufacture of goods belonging to another person, the transfer or delivery of such goods to the owner or to a person nominated by him:

    Provided that the Board, with the approval of the Federal Minister-in-charge, may, by notification in the official Gazette, specify such other transactions which shall or shall not constitute supply;

    The law also explained “supply chain” as the series of transactions between buyers and sellers from the stage of first purchase or import to the stage of final supply.

  • What is sales tax?

    What is sales tax?

    Sales Tax Act, 1990 has explained the meaning of sales tax imposed on supply of goods.

    The Sales Tax Act, 1990 [updated up to June 30, 2020 issued by the Federal Board of Revenue (FBR)] has explained the following:

     “sales tax” means – –

    (a) the tax, additional tax, or default surcharge levied under this Act;

    (b) a fine, penalty or fee imposed or charged under this Act; and

    (c) any other sum payable under the provisions of this Act or the rules made thereunder;

     “sales tax account” means an account representing the double entry recording of sales tax transactions in the books of account.

  • Banking system witnesses Rs790 billion withdrawal in January

    Banking system witnesses Rs790 billion withdrawal in January

    KARACHI: A withdrawal of Rs790 billion has been seen from the banking system during January 2021 owing to higher demand following acceleration in the economy on ease in coronavirus related restrictions, experts said.

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  • Tax waiver of Rs64.2 billion avail by only 37 enterprises

    Tax waiver of Rs64.2 billion avail by only 37 enterprises

    ISLAMABAD: An amount of Rs64.2 billion has been granted as waiver to only 37 enterprises, including the State Bank of Pakistan (SBP), Dr. Ikramul Haq, Advocate Supreme Court said on Monday.

    He was addressing a webinar hosted by Pakistan Institute of Development Economics on the topic of ‘Impact of SROs on Pakistan Economy’.

    Further highlighting the cost of tax exemption, Dr. Ikram said that the Supreme Court of Pakistan’s Diamer-Bhasha Mohmand Dam Fund donations had cost Rs2.13 billion as tax expenditure under income tax.

    “Total cost of exemption on perquisites, benefits and allowances received by judges of Supreme Court of Pakistan and High Court is estimated at Rs 283 million. Value of tax-free superior judicial allowance was at Rs526.507 million for in-service judges and for the retired judges it was Rs605.280 million,” according to presentation of Dr. Ikramul Haq.

    While criticizing the issuance of SROs, he said that the SROs, other than for rule making or clarification or guidance, are in utter violation of the supreme law of the land and binding judgments or Supreme Court under Article 189 of the Constitution.

    “Even rule-making power should be subjected to approval by Parliament as is the case in many countries,” he added.

    The impact of SROs on the economy, Dr. Ikramul Haq said a typical shock follows a cumulative drop of real GDP per capita of 5.8 percent over the court of 10 years.

    “This means about 0.171 percent – 0.885 percent of real GDP per capita growth is lost every year due to SRO exemptions,” he added.

    Taxation that includes reduction or enhancement of rates or giving exemptions, waivers and concessions by SROs is a flagrant violation of the Constitution.  “Blame lies solely with legislators that have delegated (rather abdicated) their constitutional obligation,” he added.

    He further added: “Delegation of power to executive to issue SROs is violation of Article 77 read with Article 162 as any Bill that imposes or varies a tax or duty, the whole or part of the net proceeds whereof is assigned to any province, cannot be even tabled in Parliament without the prior approval of the President.”

    He pointed out that a report of World Trade Organisation (WTO), Trade Policy Review of Pakistan (March 24 & 26, 2015) highlighted that about 4,500 SROs were issued leading to a revenue loss of Rs 650 billion.

    Exemptions/concessions given through SROs were of Rs. 5500 billion from 2008 to 2013 alone, as admitted by the Chairman FBR before the Senate Standing Committee on Finance & Revenue on May 13, 2014.

    Reduction of duties and tax concessions for those possessing enormous money power by Executive by using its executive authority available in the form of SROs, has created innumerable tax distortions in tax system.

  • SECP’s total company registration increases to 134,797

    SECP’s total company registration increases to 134,797

    ISLAMABAD – The company registration by the Securities and Exchange Commission of Pakistan (SECP) recorded a significant milestone in January 2021 with the registration of 2,201 new companies, bringing the total number of registered entities in the country to 134,797, according to an official statement released on Monday.

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  • Sugar mills monitoring: ECC approves Rs350 million for VAS purchase

    Sugar mills monitoring: ECC approves Rs350 million for VAS purchase

    ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet on Monday approved Rs350 million for procurement of Video Analytics System (VAS) to monitor production of sugar mills.

    Federal Minister for Finance and Revenue, Dr. Abdul Hafeez Shaikh, chaired the meeting of the ECC.

    The Federal Board of Revenue (FBR) presented a summary regarding procurement of VAS for proper monitoring of the production and sale of sugar in compliance with the directive of the prime minister.

    “The ECC approved an allocation of Rs350 million as a Technical Supplementary Grant for installation of the most optimal VAS solution at the sugar mills’ premises during the current crushing season as requested by the FBR,” a statement said.

    Federal Minister for Planning, Development and Special Initiatives Asad Umar, Federal Minister for Energy Omar Ayub Khan, Adviser to the PM on Institutional Reforms and Austerity Dr. Ishrat Hussain, SAPM on Revenue Dr. Waqar Masood, SAPM on Power Tabish Gauhar, Governor State Bank Reza Baqir, Chairman FBR and Chairman Board of Investment participated in the meeting.

    Secretary, Ministry of Energy briefed the ECC about the detailed report by the Implementation Committee regarding conversion of MOUs into Agreements with IPPs to devise a payment mechanism for clearing outstanding payables.

     The Implementation Committee has agreed the payment mechanism with the 46 IPPs to clear the outstanding dues as on 30th November, 2020.

    The ECC commended the efforts made by the Implementation Committee and acknowledged the input of all concerned including Federal Minister for Energy, Federal Minister for Planning, SAPM on Power, Finance Division, Chairman Federal Land Commission, SAPM on Revenue, Governor SBP etc in working out a viable payment mechanism with the IPPs which will eventually save approximately Rs836 billion for the government over the average life of the projects.

    The ECC approved the report of the Implementation Committee with a direction to present the same before Cabinet for final approval.

  • Pakistan’s trade deficit widens by 8.27 percent to $14.96 billion in July – January

    Pakistan’s trade deficit widens by 8.27 percent to $14.96 billion in July – January

    ISLAMABAD: Pakistan’s trade deficit has surged by 8.27 percent to $14.96 billion during the first seven months (July – January) of the 2020/2021 fiscal year, propelled by an uptick in import bills following improved economic activities.

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  • Share market ends down by 184 points amid profit booking

    Share market ends down by 184 points amid profit booking

    KARACHI: The share market witnessed a decline of 184 points on Monday as profit booking was seen across the board.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 46,721 points as against 46,906 points showing a decline of 184 points.

    Analysts at Arif Habib Limited said that the market saw selling pressure at the beginning of the week, which was also observed in the last trading session when Index crossed 47,000 level.

    Profit booking was observed across the board, especially in Banks, E&P, Cement and Fertilizer sectors that kept any increase in index in check.

    The Index swayed positively by 168 points earlier in the session, however, ended the session -184 points.

    Conclusion of IPPs agreeing with the Government on power tariff as well resolution of circular debt helped Power, Refinery and O&GMCs sectors to contribute positively to the Index.

    Similarly, Tech stocks performed well today with TRG closing upper circuit. Among scrips, WTL topped the volumes with 52.9 million shares, followed by TELE (35.6 million) and TRG (33.1 million).  

    Sectors contributing to the performance include Fertilizer (-101 points), Cement (-53 points), Banks (-53 points), Chemical (-27 points) and Inv Banks (-22 points).

    Volumes declined from 440.2 million shares to 428.6 million shares (-3 percent DoD). Average traded value also declined by 16 percent to reach US$ 139.0 million as against US$ 165.5 million.

    Stocks that contributed significantly to the volumes include WTL, TELE, TRG, HASCOL and PRL, which formed 39 percent of total volumes.

    Stocks that contributed positively to the index include TRG (+91 points), POL (+29 points), MARI (+16 points), SYS (+9 points) and OGDC (+8 points). Stocks that contributed negatively include ENGRO (-44 points), FFC (-26 points), HBL (-22 points), DAWH (-20 points) and EFERT (-19 points).

  • FBR issues draft rules for enrollment in Pakistan Single Window

    FBR issues draft rules for enrollment in Pakistan Single Window

    ISLAMABAD: Federal Board of Revenue (FBR) on Monday notified draft rules for enrollment in Pakistan Single Window (PSW) for the facilitation of trade and business.

    The FBR issued SRO 164(I)/2021 to notify draft amendments in Customs Rules, 2001.

    The revenue body invited feedback from the stakeholders within 15 days for finalization of the proposed rules.

    According to the draft rules:

    “431A. Enrollment in Pakistan Single Window (PSW).- (1) Subject to electronic verification, the subscribers who are required to be enrolled in the Customs Computerized System by electronic means through the Pakistan Single Window (PSW) interface shall, for obtaining unique user identifier (HID), follow the process outlined hereinafter, namely:-

    (a) the subscriber shall provide the following particulars through the electronic interface of PSW:-

    National Tax Number (NTN), Free Tax Number (FTN) and Sales Tax Registration Number (STRN);

    in case of a company Securities and Exchange Commission of Pakistan (SECP)’s Registration Number or Computer-Generated Unique Identification Number (CUIN);

    Subscriber identification module (SIM) card number or by such other name registered in the name of the subscriber;

    Biometric verification from the National Database and Registration Authority’s e-Sahulat centers;

    Email address of the subscriber as appearing in IRIS; and digital bank account number duly authorized by State Bank of Pakistan.

    (b) the PSW interface shall through electronic means verify the particulars listed above which may include NTN, CUIN, and SIM card and Bank account number etc. from the concerned authorities and issue One Time Password (OTP) via registered email and SIM card number;

    (c) subscription fee shall be charged by the PSW through digital means as per clause (a) of rule 426; (d) the PSW system shall by electronic means issue UID to the eligible subscribers fulfilling the requirements as per clauses (a), (b) and (c) ;

    (e) the UID of the subscriber shall remain valid and active for a period of two years or as may be determined, however, a notice not less than fifteen days before the inactivation of the UID shall be given to the subscriber before deactivating his UID, whether through electronic or manual means. The Collector of Customs having jurisdiction may however, immediately deactivate  the UID of a subscriber for reasons to be recorded in writing;

    A subscriber whose UID got deactivated through lapse of time or persistent not use of not less than two years, shall reapply for subscription in the same manner as a new subscriber applies for UID which shall inter alia include payment of subscription fee afresh;

    The subscriber having a valid and active UID shall be entitled to avail all the privileges made available in the Subscription Module of the PSW;

    Customs agents as licensed under section 207 of the Act shall be allowed to tie onetime goods declaration in respect of persons having a valid Computerized National Identity Card Number after approval from an officer not below the rank of an Assistant Collector having jurisdiction and provision of the particulars listed in clause (a)-above; and

    Any subscribers, not appearing on the Active Taxpayers List of either Income Tax or Sales Tax, shall be allowed issuance of UID, however, during the time of their inactive status they shall not be allowed any exemptions or concessions etc., as the case may be.

    (2) The subscriber shall be responsible for the authenticity of the information provided, security of his password, data shared or retrieved from the PSW, ethical use of the system and any failure to exercise due care in the use of PSW or compromising its digital systems or conniving with any person who intend to get unauthorized access to the PSW, shall be liable to penal action under the law for the time being in force. No subscriber shall assign, sublet or allow any person to use his biometric verification, NTN, password, SIM card number or any other particulars under any circumstances whatsoever and such subscriber shall be responsible for using any of his digital particulars for the purposes of subscription only to extent relevant to the PSW interface.

    (3) In order to facilitate, educate or assist the subscribers of PSW, the Model Customs Collectorates listed below shall designate an officer not below the rank of an Assistant Collector as Assistant Collector (Facilitation) namely: –

    Model Customs Collectorate of Appraisement and Facilitation (East-Karachi)/Quetta/Lahore/Peshawar/Faisalabad;

    Model Customs Collectorate Gwadar/Hyderabad/Sialkot/Islamabad/Gilgit: Baltistan; and

    Model Customs Collectorate of Enforcement and Compliance, Multan.

    (4) This rule shall apply to all the subscribers of the Customs Computerized System through the PSW interface till such time and to such categories of subscribers as the Board may determine.”