Pkrevenue.com

Author: Mrs. Anjum Shahnawaz

  • FBR updates withholding tax rates for electricity consumers

    FBR updates withholding tax rates for electricity consumers

    ISLAMABAD: Federal Board of Revenue (FBR) has updated withholding tax rate on the amount paid for electricity bills by commercial, industrial and domestic consumers.

    The FBR issued withholding tax card 2020-2021 (updated up to June 30, 2020) incorporating amendment made to Income Tax Ordinance, 2001 through Finance Act, 2020.

    Under Section 235 of Income Tax Ordinance, 2001 person preparing electricity bill shall collect withholding tax from commercial and Industrial consumers of electricity along with payment of electricity consumption charges.

    The withholding tax rates for gross amount of Electricity Bill of Commercial and Industrial consumer:

    Does not exceed Rs. 400: Rs. 0

    Exceeds Rs. 400 but does not exceed Rs. 600: Rs. 80

    Exceeds Rs. 600 but does not exceed Rs. 800: Rs. 100

    Exceeds Rs. 800 but does not exceed Rs. 1000: Rs. 160

    Exceeds Rs. 1000 but does not exceed Rs. 1500: Rs. 300

    Exceeds Rs. 1500 but does not exceed Rs. 3000: Rs. 350

    Exceeds Rs. 3000 but does not exceed Rs. 4,500: Rs. 450

    Exceeds Rs. 4500 but does not exceed Rs. 6000: Rs. 500

    Exceeds Rs. 6000 but does not exceed Rs. 10000: Rs. 650

    Exceeds Rs. 10000 but does not exceed Rs. 15000: Rs. 1000

    Exceeds Rs. 15000 but does not exceed Rs. 20000: Rs. 1500

    Exceeds Rs. 20000: (i) at the rate of 12 percent for commercial consumers; and (ii) at the rate of 5 percent for industrial consumers

    (i) Adjustable In case of company.

    (ii) In case of other than company tax collected on Rs, 360000 amount of annual bill will be minimum tax.

    (iii) in case other than company tax collected on amount over and above Rs 30000/- of monthly bill will be adjustable

    (i) Minimum tax for CNG Stations (Ref S.234A) (3).

    Under Section 235A of the Ordinance, person preparing electricity bill shall collect withholding tax from domestic consumers along with payment of electricity consumption charges.

    Withholding tax rate on domestic consumers:

    (i) if the amount of monthly bill is Rs,75,000/- or more: 7.5 percent

    (ii) if the amount of monthly bill is less than Rs, 75,000: 0 percent

    The tax deducted from billed amount for domestic consumers shall be adjustable.

  • Weekly Review: Market likely stay on improved economic indicators

    Weekly Review: Market likely stay on improved economic indicators

    KARACHI: The stock market likely to stay positive during next week owing to improved economic indicators, analysts said.

    The analysts at Arif Habib Limited said that the market to remain green especially cyclical sectors including Cement, Steel, Textile and Automobile amid notable improvement in macros including quick recovery in exports, reduction in trade deficit, stable Pak Rupee, drastic increase in industrial outputs (majority companies operating at maximum capacity) and lower inflation expectation.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 7.3x (2021) compared to Asia Pac regional average of 13.7x while offering a dividend yield of ~6.2 percent versus ~2.6 percent offered by the region.

    This week trading commenced on a negative note due to profit taking which resulted in selling pressure in Cement, Steel, Automobile, and E&P sector.

    On Tuesday however, a rebound was witnessed at the index attributable to increase in international oil prices and prospects of consensus between Independent Power Producers and the Government of Pakistan.

    On the other hand, increase in fertilizer prices also increased activity in the fertilizer sector. However, honorable Supreme Court of Pakistan announced its reserved verdict on GIDC today whereby industries are required to pay Rs457 billion which once again brought pressure on industries (Fertilizer, Cement, Steel, Chemicals and Textiles).

    With that said, the KSE-100 index closed at 40,291 points, up by 261 points or 0.65 percent WoW (eighth consecutive positive week after January 2017).

    Contribution to the upside was led by i) Power Generation and Distribution (261 points), ii) Oil and Gas Exploration Companies (97 points), iii) Oil and Gas Marketing Companies (92 points), iv) Commercial Banks (86 points), and v) Textile Composite (29 points).

    Scrip wise major gainers were HUBC (213 points), PPL (56 points), UBL (56 points), KAPCO (39 points), and SNGP (36 points). Whereas, scrip wise major losers were DAWH (55 points), ENGRO (49 points) MCB (31 points), EFERT (25 points) and FFC (23 points).

    Foreign buying continued this week clocking-in at USD 8.7 million compared to a net buy of USD 3.7 million last week. Buying was witnessed in Cement (USD 4.3 million) and Fertilizer (USD 2.7 million). On the domestic front, major selling was reported by Banks/DFI (USD 10.7 million) and Insurance Companies (USD 5.4 million). That said, average daily volumes and traded value for the outgoing week were down by 9 percent and 14 percent to 581 million shares and USD 125 million, respectively.

  • FBR explains amendments to federal excise law

    FBR explains amendments to federal excise law

    ISLAMABAD: Federal Board of Revenue (FBR) has issued explanation to amendment made to Federal Excise Act, 2005 through Finance Act, 2020.

    The FBR through Circular No. 01 of 2020 dated August 06, 2020 explained the following amendments:

    01. ENLARGING THE SCOPE OF SEIZURE AND CONFISCATION OF THE NONDUTY PAID ITEMS SUBJECT TO FED

    In view of increasing trend of non-duty paid products and illicit manufacturing of excisable items and products, all products subject to Federal Excise Duty have now been made liable to seizure in case FED is not paid. Previously, the scope of such seizure was limited to cigarette and beverages sectors only.

    Now, if any product which is subject to FED is seized on account of non-duty payment, that will also be subject to confiscation. Necessary amendments in sections 26 and 27 of 2005 Act have been made accordingly.

    02. BOARD TO KEEP THE PARAMETERS OF AUDIT SELECTION CONFIDENTIAL

    The provisions relating to confidentiality of parameters of audit selection were inserted in the income tax and sales tax statutes in earlier Finance Acts, but the same were missing in the 2005 Act. As a part of the Board’s drive for harmonization of various tax statutes, section 42B has been inserted in the 2005 Act.

    03. OMISSION OF THE CONDITION OF AUDIT TO BE CONDUCTED ONCE IN THREE YEARS

    The provisions relating to condition that audit cannot be conducted more than once in three years were omitted in other statutes, hence for the purpose of harmonization the same has also been omitted from the 2005 Act.

    04. INCREASE IN THE RATE OF FED ON IMPORTED CIGARETTES AND OTHER SIMILAR PRODUCTS AND ELECTRONIC CIGARETTES

    (i) FED on imported cigarettes, cheroots, cigarillos, cigars of tobacco and tobacco substitutes were fixed at 65% of the retail price.

    However, there was no clear distinction between the locally produced cigarettes and the imported ones. To resolve the matter Sr. No. 8 has been substituted and imported cigarettes have been separated from the rest of the categories like Cigars, cheroots, Cigrillos of tobacco or tobacco substitutes. The duty on imported cigarettes has been substituted as 65% of the retail price or the rate of duty as prescribed at Sr. No. 9, of the First Schedule, whichever is higher.

    (ii) At the same time, a separate Sr. No. 8b has been inserted for the rest of the categories like Cigars, cheroots, cigarillos and cigarettes, of tobacco and tobacco substitutes with duty defined as 65% of the retail price or ten thousand rupees per kg whichever is higher.

    (iii) However, there was no duty prescribed for the E-liquids for which the rate has now been notified at Rs.10 per ml. A new Sr. No. 8a has been inserted for this purpose. Thus by charging FED on these liquids, the e-cigarettes or machines have been subjected to FED.

    05. REDUCTION IN THE RATE OF DUTY ON CEMENT

    The rate of FED on Cement has been reduced from Rs. 2 per kg to Rs 1.50 per kg. It is applicable on both import and local supply.

    06. LEVY OF FED IN THE CASE OF 4×4 DOUBLE CABIN PICK UP

    FED structure is already in place for both local and imported motor cars and SUVs excluding auto rickshaw falling under the PCI heading 87.03 i.e primarily passenger transport. However, double cabin pick up vehicles were still outside the ambit of FED despite being primarily used as passenger transport in the country. Keeping in view its usage as a passenger transport vehicle in Pakistan, it has now been brought in the ambit of FED @ 7.5% ad valorem in case of locally manufactured vehicles and @25% in the case of imported ones. However, the locally manufactured vehicles which have been booked on or before the 30th June 2020 will not be subject to FED, subject to the conditions as specified by the Board separately.

    07. INCREASE IN THE RATE OF FED ON FILTER RODS

    Filter rod is basic input material for cigarette manufacturing. Previously, rate of FED on filter rods was Rs 0.75 per filter rod. To enhance the effect of monitoring and discourage tobacco consumption, duty on filter rods has been enhanced to Re. 1 per filter rod.

  • Withholding tax rates for brokerage, commission updated

    Withholding tax rates for brokerage, commission updated

    ISLAMABAD: Federal Board of Revenue (FBR) has updated withholding tax rates for brokerage and commission income for tax year 2021.

    The FBR issued withholding tax card 2020-2021 incorporating amendment to Income Tax Ordinance, 2001 made through Finance Act, 2020.

    Under Section 233 of Income Tax Ordinance, 2001 federal government, provincial government, local authority, company, association of persons (AOP) are required to collect/deduct withholding tax at the time the brokerage or commission is actually paid.

    The deducted amount shall be minimum tax.

    The withholding tax rates for brokerage and commission shall be:

    In case of:

    (i) advertising agents shall pay 10 percent and persons not on the Active Taxpayers List (ATL) shall be 20 percent.

    (ii) life insurance agents where commission received is less than Rs0.5 million per annum the tax rate shall be 8 percent and for persons not appearing on the ATL the tax shall be 16 percent.

    (iii) the persons not covered in 1 & 2 the tax rate shall be 12 percent and for persons not appearing on the ATL the tax shall be 24 percent.

    Under Section 233AA of the ordinance the members stock exchange (margin financier & lenders) trading finance shall pay withholding tax.

    The National Clearing Company of Pakistan Limited (NCCPL) will collect withholding tax at 10 percent of the mark-up or interest from the members stock exchange (margin financier & lenders) trading finance at the time of mark-up / interest is paid.

    The tax is adjustable against total tax liability.

  • FBR asks taxpayers to update profile to avoid penalty

    FBR asks taxpayers to update profile to avoid penalty

    ISLAMABAD: Federal Board of Revenue (FBR) has asked taxpayers to update their profile with necessary information by December 31, 2020 in order to avoid fine and penalty.

    The FBR in a statement on Thursday said that complexity of return forms was an embodiment of the complexity of tax law. “Nevertheless, there is a dire need to simplify return forms without compromising on data required to verify accuracy of the declared version,” it added.

    Instead of endeavoring to obtain all the relevant information in the income tax return, a new section has been introduced under which taxpayers profile may be prescribed in order to capture data relevant to the taxpayer.

    Persons who are already registered before September 30, 2020 and are deriving business income or incomes subject to final taxation, trusts, welfare institutions, non-profit organizations and such other persons prescribed by the board are required to submit updated profit by December 31, 2020.

    Persons who obtain their registration after September 30, 2020 will require to furnish such profile within 90 days of registration. In case of any change in particulars of information, such persons shall update their profile within 90 days of the change in particulars.

    The profile contains information relevant to income regarding bank accounts, utility connections, business premises including all manufacturing, storage or retail outlets operated or leased by the taxpayer, types of businesses etc.

    Moreover, if a person fails to submit updated profile within the due date or time period as extended by the FBR under Section 214A of Income Tax Ordinance, 2001, such person shall not be included in the Active Taxpayers List for the latest tax year ending prior to the aforesaid due date or extended date.

    However, upon filing or updating the profile, such persons shall be allowed to be placed on the active taxpayers list upon payment of surcharge which will be Rs20,000 in the case of a company, Rs10,000 in the case of Association of Persons (AOP) and Rs1,000 in the case of an individual.

    Further, a penalty for non-filing or not updating the profile is also proposed at the rate of Rs2500 for each day of default subject to a minimum penalty of Rs10,000.

  • Duty drawback payment to be made on FIFO basis

    Duty drawback payment to be made on FIFO basis

    ISLAMABAD: Federal Board of Revenue (FBR) has said that payment of duty drawback will be paid on First-in First-out (FIFO) basis taking into account the date of filing of claim.

    The FBR on Thursday issued SRO 714(I)/2020 to issue rules for processing duty drawback claims.

    The FBR said that comprehensive audit of duty drawback payments would be carried out by the Directorate General of Post Clearance Audit 9pcA) of the FBR.

    Any recovery detected by the PCA may be deducted from the next duty drawback claim of the exporter besides initiating recovery proceedings under the recovery rules.

    According to the rules a consolidated discrepancy report would be sent by the Collectorate to State Bank of Pakistan (SBP) on monthly basis. “The SBP shall also send a scroll of all the duty drawback payments made to the exporters,” the FBR added.

    For calculation amount of customs duties paid at the time of import, past six months import data may be used taking the average quantity or value of each class or description of the materials, including packing materials, from which a particular class or description of goods is ordinarily produced or manufactured. Average exchange rates of the same period may be taken into consideration.

    The average amount of customs duties paid on imported materials used in the manufacture of components, intermediate of semi-finished products which are exported as such or further used for manufacture of goods shall be taken into account for the purpose of calculation of duty drawback.

    The average amount of customs duties paid at the effective rate on the imported input materials shall be calculated for the last six months import data.

    The average freight on board (FOB) value of each class or description of the goods exported during the last six months may be taken into consideration for the class or description of goods for which export drawback rates are being determined.

    The FBR said that the duty drawback as may be admissible shall be part of the process of assessment of cargo for export and the amount so admissible to the exporter shall be computed and processed by Customs Computerized System on sale proceeds amount repatriated into the country and Form-E settlement from the commercial bank.

  • New mechanism of case settlement introduced for taxpayers facilitation: FBR

    New mechanism of case settlement introduced for taxpayers facilitation: FBR

    ISLAMABAD: Federal Board of Revenue (FBR) on Thursday said that a new mechanism of settlement of cases has been introduced to facilitate taxpayers. The FBR said that before Finance Act, 2020, a taxpayer aggrieved with an assessment order could file an appeal before the appellate authority and the same time could also avail alternate dispute resolution mechanism.

    (more…)
  • Foreign exchange reserves eases to $19.518 billion

    Foreign exchange reserves eases to $19.518 billion

    KARACHI: The liquid foreign exchange reserves of the country have declined by $45 million to $19.518 billion by week ended August 07, 2020, State Bank of Pakistan (SBP) said on Thursday.

    The foreign exchange reserves of the country were at $19.563 billion by week ended July 30, 2020.

    The official reserves of the SBP slipped by $73 million to $12.469 billion by week ended August 07, 2020 as compared with $12.542 billion a week ago.

    The central bank attributed the decline in foreign exchange reserves to scheduled payment of external debt.

    However, the foreign exchange reserves held by commercial banks increased by $28 million to $7.049 billion by week ended August 07, 2020 as compared with $7.021 billion a week ago.

  • Tax incentive package: over 4,800 projects of construction industry to get registration

    Tax incentive package: over 4,800 projects of construction industry to get registration

    ISLAMABAD: Federal Board of Revenue (FBR) on Thursday said that it had received overwhelming response to construction industry package and over 4,800 projects have prepared drafts to get registration in the IRIS system.

    (more…)
  • Stock market ends down by 182 points on profit taking, GIDC decision

    Stock market ends down by 182 points on profit taking, GIDC decision

    KARACHI: The stock market fell by 182 points on Thursday owing to profit taking and the decision of the apex court regarding payment of Gas Infrastructure Development Cess (GIDC).

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 40,291 points as against the previous day’s closing of 40,473 points showing a decline of 182 points.

    Analysts at Arif Habib Limited said that the market opened on a positive note on the opening bell with +70 points and 2.8 million shares.

    The index tumbled afterwards as Supreme Court announced the decision on GIDC, which required industries to pay Rs. 457 billion on account of GIDC over a period of 2 years. Investors took it as cue to book profits, which brought the index down by 575 points during the session.

    E&P, O&GMCs and Tech stocks largely remained unharmed, among which TRG and UNITY hit upper circuits. Fertilizer, Cement and Banking sector stocks remained under pressure throughout the session.

    Vanaspati sector led the volumes with 110 million shares, courtesy of UNITY (including the trading volume of its Right Shares).

    This was followed by Technology (81.1 million) and O&GMCs (72.8 million). Among scrips, UNITY led the volumes with 60.1 million, followed by HASCOL (50.6 million) and UNITYR2 (50.6 million).

    Sectors contributing to the performance include Fertilizer (-201 points), Inv Banks (-27 points), Banks (-19 points), Textile (-19 points), Technology (+31 points), O&GMcs (+29 points), Power (+22 points) and E&P (+18 points).

    Volumes declined from 591.3 million shares as against 556.1 million shares (-6 percent DoD). Average traded value also declined by 14 percent to reach US$ 115.2 million as against US$ 133.7 million.

    Stocks that contributed significantly to the volumes include UNITY, HASCOL, UNITYR2, WTL and TRG, which formed 41 percent of total volumes.

    Stocks that contributed positively to the index include TRG (+37 points), HUBC (+22 points), BAHL (+20 points), SNGP (+15 points) and HASCOL (+13 points). Stocks that contributed negatively include FFC (-114 points), ENGRO (-44 points), MCB (-27 points), EFERT (-26 points) and DAWH (-24 points).