Pkrevenue.com

Author: Mrs. Anjum Shahnawaz

  • SBP allows housing loan on personal guarantee

    SBP allows housing loan on personal guarantee

    KARACHI: The State Bank of Pakistan (SBP) on Monday eased condition for availing loan for housing loan by allowing personal guarantee.


    The SBP said that currently applicants face difficulties in obtaining housing finance, especially for low cost housing, as banks are reluctant to take the risk of the house not being completed or documentation completion.


    The completion of housing unit and mortgage creation takes time. In order to address this issue for applicants and banks, the SBP has allowed acceptance of a third party guarantee for this period up to a maximum of one year. 


    With the aim to facilitate the banks in extending low cost housing finance, SBP has allowed them to accept personal guarantee of third party until the housing unit is completed and the mortgage is perfected.


    The guarantee will remain valid for a maximum period of one year. This step will help promote home ownership of potential borrowers wishing to avail housing finance under Government Markup Subsidy Scheme issued by State Bank of Pakistan on October 12, 2020. 


    Third party guarantee will cover the period from the disbursement of loan to the time when construction is completed and risk coverage becomes available by Pakistan Mortgage Refinance Company. Acceptance of third party personal guarantee will provide additional comfort to banks for extending low cost housing finance, an area in which banks have keen interest for its business potential.


    It is expected that with this move, banks will increase their efforts to ensure that the benefits of the markup subsidy scheme reach marginalized segments of the society who currently do not own a house.

  • Withholding tax up to Rs200,000 imposed on sale of new car within 90 days

    Withholding tax up to Rs200,000 imposed on sale of new car within 90 days

    ISLAMABAD: The Federal Board of Revenue (FBR) has imposed up to Rs200,000 as withholding tax on sale of motor cars within 90 days of first registration, sources said on Monday.

    The withholding tax has been imposed till June 30, 2021. The revenue generation measure has been taken in order to discourage the trend of ‘on money’.

    Following withholding income tax rates have been imposed on motor vehicles:

    01. Tax rate at Rs50,000 has been imposed on sale of up to 1000CC motor vehicles.

    02. Tax rate at Rs100,000 has been imposed on sale of motor vehicles between 1000CC and 2000CC.

    03. Tax rate up to Rs200,000 has been imposed on motor vehicles with engine capacity of 2000CC and above.

    In order to apply the rates an amendment to Section 231B of Income Tax Ordinance, 2001 has been made.

    Following is the text of the amendment:

    “Every motor vehicle registration authority of Excise and Taxation Department shall collect advance tax from the buyers of locally manufactured motor vehicles who subsequently sell it within ninety days of delivery of such vehicle whether prior to or after registration.”

    The FBR said that no collection of the withholding tax under the new amendment would be made after June 30, 2021.

  • Workers remittances grow by 24 percent in seven months

    Workers remittances grow by 24 percent in seven months

    KARACHI: The remittances sent by the overseas Pakistani workers posted 24 percent growth during the first seven months of the current fiscal year as the inflows of remittances exceeded over $2 billion for eight consecutive months, State Bank of Pakistan (SBP) said on Monday.

    The overseas Pakistani workers have sent $16.47 billion during July – January of fiscal year 2020/2021 as compared with $13.28 billion in the corresponding period of the last fiscal year.

    The SBP said that workers’ remittances had exceeded $2 billion for the eighth consecutive months in January 2021.

    The inflows of workers remittances posted growth of 19.50 percent to $2.27 billion in January 2021 as compared with $1.9 billion in the same month of the last year. However, remittances were lower from the December 2020 level of $2.4 billion.

    A large part of workers’ remittances during July-January 2020/2021 was sourced from Saudi Arabia ($4.5 billion), United Arab Emirates ($3.4 billion), United Kingdom ($2.2 billion) and United States ($1.4 billion).

    This sustained increase in workers’ remittances largely reflects growing use of banking channels that is attributed to continuous efforts by the government and SBP to attract inflows through official channels, limited cross border travel amid the second wave of COVID-19 and flexible exchange rate regime.

  • Illicit cigarettes worth Rs549 million confiscated in seven months

    Illicit cigarettes worth Rs549 million confiscated in seven months

    ISLAMABAD: Pakistan Customs has confiscated non-duty paid cigarettes worth Rs549 million during first seven months of the current fiscal year, a statement said on Sunday.

    A spokesman of Federal Board of Revenue (FBR) said that over 7.1 million sticks of illegal cigarettes had been confiscated during the period under review.

    The spokesman said that the FBR had issued instructions to field formation of Inland Revenue and Pakistan Customs to accelerate their efforts against smuggled and non-duty paid cigarettes.

    The FBR chairman issued instructions to both the field formations in this regard.

    In the anti-smuggling efforts to prevent movement of illegal cigarettes the Intelligence and Investigation of Inland Revenue had conducted 65 operations. In these operations, the IR authorities confiscated 44.827 million sticks of cigarettes worth Rs95.51 million. Out of these amount the authorities had recovered Rs2.2 million and remaining amount was in litigation before the court.

    The FBR chairman had directed the tax authorities to expand the anti-smuggling operation across the country.

    The customs authorities have been issued special instructions for enhancing vigilance at sea ports, air ports and dry ports to prevent smuggling of illicit cigarettes.

    The spokesman said that the customs authorities had recovered huge quantity of non-duty paid cigarettes on the basis of information.

    The spokesman further said that in order to avoid misuse auction process, the FBR had imposed complete ban on auction of confiscated cigarettes.

  • Stamp duty collection falls by 24 percent in first half

    Stamp duty collection falls by 24 percent in first half

    The revenue collection from stamp duty fell sharply by 24 percent during first half of the current fiscal year owing to significant decline in revenue reported by the province of Punjab, according to a report issued by the federal finance ministry.

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  • Foreign source of income defined by ITO 2001

    Foreign source of income defined by ITO 2001

    Income Tax Ordinance, 2001 has defined the meaning of ‘foreign source of income’ derived by Pakistani individual by working or giving services abroad.

    Income Tax Ordinance, 2001 updated up to June 30, 2020 issued by the Federal Board of Revenue (FBR) stated that an amount shall be foreign-source income to the extent to which it is not Pakistan-source income.  

    The Ordinance further explained as:

    Any foreign-source salary received by a resident individual shall be exempt from tax if the individual has paid foreign income tax in respect of the salary.

    A resident individual shall be treated as having paid foreign income tax in respect of foreign-source salary if tax has been withheld from the salary by the individual’s employer and paid to the revenue authority of the foreign country in which the employment was exercised.

    It explains:

    Where a resident taxpayer derives foreign source income chargeable to tax under this Ordinance in respect of which the taxpayer has paid foreign income tax, the taxpayer shall be allowed a tax credit of an amount equal to the lesser of –

    (a) the foreign income tax paid; or

    (b) the Pakistan tax payable in respect of the income.

    (2) For the purposes of clause (b) of sub-section (1), the Pakistan tax payable in respect of foreign source income derived by a taxpayer in a tax year shall be computed by applying the average rate of Pakistan income tax applicable to the taxpayer for the year against the taxpayer’s net foreign-source income for the year.

    (3) Where, in a tax year, a taxpayer has foreign income under more than one head of income, this section shall apply separately to each head of income.

    (4) For the purposes of sub-section (3), income derived by a taxpayer from carrying on a speculation business shall be treated as a separate head of income.

    (5) The tax credit allowed under this section shall be applied in accordance with sub-section (3) of section 4.

    (6) Any tax credit or part of a tax credit allowed under this section for a tax year that is not credited under sub-section (3) of section 4 shall not be refunded, carried back to the preceding tax year, or carried forward to the following tax year.

    (7) A credit shall be allowed under this section only if the foreign income tax is paid within two years after the end of the tax year in which the foreign income to which the tax relates was derived by the resident taxpayer.

    (8) In this section,—

    “average rate of Pakistan income tax” in relation to a taxpayer for a tax year, means the percentage that the Pakistani income tax (before allowance of the tax credit under this section) is of the taxable income of the taxpayer for the year;

    “foreign income tax” includes a foreign withholding tax; and

    “net foreign-source income” in relation to a taxpayer for a tax year, means the total foreign-source income of the taxpayer charged to tax in the year, as reduced by any deductions allowed to the taxpayer under this Ordinance for the year that –

    (a) relate exclusively to the derivation of the foreign-source income; and

    (b) are reasonably related to the derivation of foreign-source income in accordance with sub-section (1) of section 67 and any rules made for the purposes of that section.

  • ITO 2001 explains ‘fee for technical services’

    ITO 2001 explains ‘fee for technical services’

    Income Tax Ordinance, 2001 has explained the meaning of ‘fee for technical services’ rendered by non-resident persons to users in Pakistan.

    The Income Tax Ordinance, 2001 updated up to June 30, 2020 issued by the Federal Board of Revenue (FBR) explained the fee for offshore digital services as:

    “Fee for technical services” means any consideration, whether periodical or lump sum, for the rendering of any managerial, technical or consultancy services including the services of technical or other personnel, but does not include —

    (a) consideration for services rendered in relation to a construction, assembly or like project undertaken by the recipient; or

    (b) consideration which would be income of the recipient chargeable under the head “salary”.

    It also explained the following:

    ”Fee for offshore digital services” means any consideration for providing  or rendering services by a non-resident person for online advertising including digital advertising space, designing, creating, hosting or maintenance of websites, digital or cyber space for websites, advertising, e-mails, online computing, blogs, online content and online data, providing any facility or service for uploading, storing or distribution of digital content including digital text, digital audio or digital video, online collection or processing of data related to users in Pakistan, any facility for online sale of goods or services or any other online facility.

  • Fast moving consumer goods explained

    Fast moving consumer goods explained

    Income Tax Ordinance, 2001 has explained the meaning of ‘fast moving consumer goods’ for calculation and imposition of income tax.

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

    “Fast moving consumer goods” means consumer goods which are supplied in retail marketing as per daily demand of a consumer excluding durable goods.

    The income tax applied under Section 153 shall be:

    In the case of supplies made by the distributer of fast moving consumer goods,─

    (i) in case of a company, 2 percent of the gross amount payable; and

    (ii) in any other case, 2.5 percent of the gross amount payable.

  • ITO 2001 defines employee, employer

    ITO 2001 defines employee, employer

    Income Tax Ordinance (ITO), 2001 has explained the meaning of employee and employer for calculation and imposition of income tax.

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

    “Employee” means any individual engaged in employment;

    “Employer” means any person who engages and remunerates an employee;

    “Employment” includes –

    (a) a directorship or any other office involved in the management of a company;

    (b) a position entitling the holder to a fixed or ascertainable remuneration; or

    (c) the holding or acting in any public office.

  • Electronic record defined by ITO 2001

    Electronic record defined by ITO 2001

    Income Tax Ordinance (ITO), 2001 has defined ‘electronic record’ as electronic resources or information in electronic form.

    The Income Tax Ordinance, 2001 – updated up to June 30, 2020 issued by the Federal Board of Revenue (FBR) – explained the following:

    “Electronic record” includes the contents of communications, transactions and procedures under this Ordinance, including attachments, annexes, enclosures, accounts, returns, statements, certificates, applications, forms, receipts, acknowledgements, notices, orders, judgments, approvals, notifications, circulars, rulings, documents and any other information associated with such communications, transactions and procedures, created, sent, forwarded, replied to, transmitted, distributed, broadcast, stored, held, copied, downloaded, displayed, viewed, read, or printed, by one or several electronic resources and any other information in electronic form;

     “Electronic resource” includes telecommunication systems, transmission devices, electronic video or audio equipment, encoding or decoding equipment, input, output or connecting devices, data processing or storage systems, computer systems, servers, networks and related computer programs, applications and software including databases, data warehouses and web portals as may be prescribed by the Board from time to time, for the purpose of creating electronic record;

     “Telecommunication system” includes a system for the conveyance, through the agency of electric, magnetic, electro-magnetic, electro-chemical or electro-mechanical energy, of speech, music and other sounds, visual images and signals serving for the impartation of any matter otherwise than in the form of sounds or visual images and also includes real time online sharing of any matter in manner and mode as may be prescribed by the Board from time to time.