KARACHI: Federal Board of Revenue (FBR) has been proposed to abolish further sales tax in case taxpayers fulfil condition of Computerized National Identity Card (CNIC).
(more…)Author: Mrs. Anjum Shahnawaz
-
Stock market falls by 141 points after Eid holidays
KARACHI: The stock market fell by 141 points after Eid Holidays on Thursday as international crude prices slipped, dealers said.
The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 33,695 points as against 33,836 points showing a decline of 141 points.
Analysts Arif Habib Limited said that the market opened on a negative today and maintained the negative trajectory, realizing a loss of 238 points during the session and closing -141 points.
International crude prices slipped overnight to trade near US$31.5/bbl, which was approx. 4 percent down from the level KSE100 saw on last Thursday, before the market closed for long weekend (due to Eid).
Besides, Cement and Banking sectors remained under pressure throughout the session for want of a clear positive trigger.
Off-board scrips, TRG, UNITY, PAEL, HUMNL remained in the limelight in addition to Pharma sector (primarily SEARL and GLAXO), which has consistently shown performance on the back of Covid-19 cures.
Technology sector led the volumes with 36.9 million shares, followed by O&GMCs (28.8 million) and Vanaspati (21.2 million). Among scrips, TRG topped the index with 24.7 million shares, followed by HASCOL (24.4 million) and UNITY (21.1 million).
Sectors contributing to the performance include Banks (-76 points), E&P (-56 points), Fertilizer (-22 points), Chemical (-16 points), Power (-14 points), Pharma (+31 points) and Technology (+21 points).
Volumes declined further from 147.2 million shares to 194.6 million shares (+32 percent DoD). Average traded value also increased by 25 percent to reach US$ 45.1 million as against US$ 36.4 million.
Stocks that contributed significantly to the volumes include TRG, HASCOL, UNITY, PAEL and MLCF, which formed 48 percent of total volumes.
Stocks that contributed positively to the index include SEARL (+21 points), TRG (+19 points), GLAXO (+11 points), MARI (+9 points) and KAPCO (+7 points). Stocks that contributed negatively include OGDC (-27 points), UBL (-27 points), PPL (-26 points), HBL (-24 points), and HUBC (-18 points).
-
Mandatory training courses for promotions to be completed through tele-teaching
ISLAMABAD: The mandatory training courses for promotion of government officers including from Federal Board of Revenue (FBR) will be held online considering COVID-19 pandemic, a notification said.
In this regard National School of Public Policy (NSPP) informed that all the courses of NSPP i.e. 112th National Management Course (NMC), 27th Senior Management Courses (SMC) and 29th Mid-Career Management Course (NCMC) have been redesigned keeping in view the prevailing health emergency on account of of COVID-19.
“Remaining training activities will be completed through remote tele-teaching mode by using Zoom/Skype and e-portal of respective courses,” it said.
“These essentially comprise of Simulation Exercise, Case Studies, Analysis Papers, Topical Discussions and Research Papers particularly related to the foreign study tour of the respective country assigned to different participants of NMC.”
The notification said that the courses had been rescheduled by reducing the duration of three weeks of NMC, five weeks of SMC and three weeks of MCMC respectively subject to the slight modifications by the respective NIMs made keeping in view the activities completed before the suspension of the courses.
The participants have been asked to join the 112th NMC, 27th SMC and 29th MCMC respectively with effect from June 01, 2020 through e-portal of the respective unit.
-
Rupee falls against dollar as market resumes after long holidays
KARACHI: The Pak Rupee fell by Rs1.07 against dollar on Thursday as trading resumed after long holidays due to Eid-ul-Fitr.
The rupee closed at Rs161.99 to the dollar from previous closing of Rs160.92 on May 21, 2020 in interbank foreign exchange market.
Currency experts said that the deterioration in rupee value was due to higher demand for import and corporate payments. They said that rupee was under pressure due to settlement of import payments after long holidays.
Further, they said that after ease in lockdown the demand was increasing and importers started purchasing dollars for future buying.
The currency experts said that fall in exports and remittances also put pressure on the local currency.
Overseas Pakistani workers sent home $1.790 billion in April, compared with $1.894 billion in previous month.
Pakistan received $18.781 billion in remittances in July-April FY2020, compared with $17.801 billion in the same period last year.
However, the experts said that the local currency recovered on the back of improved economic indicators.
-
Insurance should be excluded from taxable services
KARACHI: The provincial tax authorities have been urged to exclude insurance from taxable services in order to provide incentives to insurance industry.
Overseas Investors Chamber of Commerce and Industry (OICCI) in its proposals for budget 2020/2021 submitted to Sindh Revenue Board (SRB), said that each year, the life/health insurance companies have been approaching the SRB for an exemption, which is granted annually.
The last exemption for life insurance was valid only till June 30, 2019, whereas exemption for Corporate Health Insurance is valid till June 30, 2020 and has not yet been renewed.
The life and health insurance industry is based largely in the province of Sindh, where, the medical sector itself is exempt from SST.
Accordingly, subjecting the corporate health insurance to SST is making it uncompetitive, in Sindh, by adding on to the cost of health insurance.
Discussions are still ongoing with the Chairman SRB, and the Chairperson, Sindh Board of Investment, for exemption on the same.
The OICCI recommended that both, life insurance and health insurance, which do not fall within the scope of definition of service, should be permanently included in the list of exempted services by incorporating the same under table of exempted services specified in SRB’s notification no. SRB 3-4/7/2013 dated June 18, 2013, as per the following:
01. 9813.15: Life Insurance
02. 9813.16: Health insurance, rendered to both, individuals and corporates.
It may be mentioned that in Sindh these are taxable services.
A life insurance/ health policy is not a service. It is an underwriter’s promise to pay to the policy holder ‘in the future’, a specified sum of money, ‘either on occurrence of an identified event or on maturity of the policy’.
Such tax is highly discriminatory as entire health sector itself remains exempt and is not taxed.
This creates a deterrence for insurance business, as a person obtaining insurance would be paying additional 13 percent as well as cost of insurance, compared to directly obtaining health services, where he does not have to pay this tax.
This is clearly discriminatory and in violation of Article 25 of the Constitution of Pakistan.
The assertion that insurance is not a service, has also been legally upheld in USA and the Court there has ruled that life insurance policies are not “services”.
The KP Revenue Authority has exempted life insurance from the purview of taxable services. Uniformity across the country is essential for ease of doing business.
-
Banks timing revised
KARACHI: State Bank of Pakistan (SBP) on Wednesday issued revised banks timing from May 27, 2020 after Ramazan ul Mubarak.
In a notification sent to president and chief executives of all banks, development finance institutions and microfinance banks, the SBP said that the central bank will observe the following office timings till further orders:
Monday to Thursday: 10:00 a.m. to 4:30 p.m. (with prayer / lunch break from 1:30 p.m. to 2:00 p.m.)
Friday: 10:00 a.m. to 1:00 p.m.
Banks / DFIs / MFBs are accordingly advised to ensure compliance of the above-mentioned timings in letter and spirit, the SBP said.
-
Massive increase in penalty amount on the cards for violating tax laws
Tax authorities are considering a significant increase in monetary penalties for violations of general provisions of income tax laws. According to sources within the Federal Board of Revenue (FBR), the Large Taxpayers Unit (LTU) Karachi has submitted proposals for the budget 2020/2021, suggesting an increase in fines and penalties from the current Rs5,000 to Rs50,000.
(more…) -
KCCI wants end lockdown, deploy army for SOP enforcement
KARACHI: Karachi Chamber of Commerce and Industry (KCCI) on Wednesday urged the government to lift lockdown completely and allow all type of businesses to restart their activities.
Siraj Kassam Teli, Chairman Businessmen Group (BMG) and former KCCI president in a statement also advised the government to deploy troops from the army whose presence and patrolling at various commercial markets would ensure strict adherence to the Standard Operating Procedures (SOPs) devised to contain further spread of coronavirus pandemic.
Teli said that Pakistan’s economy was already in deep crises and the country cannot afford further damages hence, it was really critical to restart all businesses with normal timings and get back to routine life in presence of the virus.
“On one hand, we have to contain coronavirus pandemic but on the other, we also have to save the already ailing economy therefore, the patriotic and disciplined troops from armed forces must be given the task to ensure across the board implementation of SOPs, which has to be done on top priority in order to save the economy from plunging into further crises,” he said, adding that reopening of businesses under army’s supervision would help in protecting the businesses from complete collapse and save the masses from unemployment, poverty and starvation.
Chairman BMG, while referring to numerous measures adopted by the Federal and Provincial governments since the imposition of lockdown from March 23, said that the federal government and all provincial governments strived really hard to deal with COVID-19 pandemic and they all deserve to be appreciated but unfortunately, the number of people affected by coronavirus continues to rise all over the country as the public and also the members of the business community have been largely ignoring the SOPs due to lack of discipline.
“Pakistan army is well-known for its discipline all around the world hence, it is high time that the army must come forward to rescue the country, teach discipline to the masses and get the SOPs enforced all the time which is the only way to save our beloved motherland from further disaster,” he added.
He stressed that the coronavirus pandemic is not going anywhere and we have to live with it and continue our businesses in a disciplined manner.
“We cannot live in the lockdown forever so we have to exhibit the Discipline which is the first step on the road to success.”
He cautioned that if the lockdown is not suspended immediately, many businesses, which remain completely suspended since last more than two months, would shut down forever that would lead to creating a chaotic situation as the people would find no other option but to come out on streets to protest due to rising unemployment and poverty.
-
Sindh proposed to exempt sales tax on export of services
KARACHI: Sindh Revenue Board (SRB) has been proposed to exempt sales tax on export of services.
Overseas Investors Chamber of Commerce and Industry (OICCI) in its proposals for budget 2020/2021 presented to SRB, said that as per the Fifth Schedule to the Sales Tax Act 1990, exports made by a registered person are zero-rated.
“Presently, there is no concept of zero-rating in Provincial Sales Tax Acts,” it said.
Resultantly, the companies providing services to foreign companies and bringing foreign exchange in Pakistan need to pay sales tax from their own account.
The OICCI recommended that a separate schedule should be inserted in Provincial Sales Taxes Act for zero rating. “All services provided to foreign companies outside Pakistan which result in inflow of foreign exchange and export of all taxable services should be exempt from Sind Sales Tax.”
Giving rationale to the proposals, the OICCI said that this will result in harmonization of tax laws in Pakistan and would ensure convenient compliance with tax laws through uniform systems across the country and would also contribute towards the economic development of the Country.
The OICCI highlighted another issue that all pharmaceutical products are exempt from Sales Tax.
Consequently any sales tax paid by pharmaceutical industry on goods or services purchased, can neither be passed on to the consumer nor can be claimed as input, and has to be absorbed by the manufacturers in their costs.
It is resulting in increasing the cost of doing business and is also against the philosophy of sales tax which is supposed to be borne by the consumer.
Therefore, it is recommended that services received by pharmaceutical industry should be zero rated.Since pharmaceuticals prices are controlled, sales tax paid on inputs can neither be added to the selling price nor separately charged.
-
Withholding sales tax should be exempted on services rendered to registered persons
KARACHI: Sindh Revenue Board (SRB) has been proposed to exempt sales tax withholding in case a registered person renders services to another registered person.
Withholding of sales tax from registered sales tax persons with Sindh Revenue Board (SRB), does not provide any benefit and only creates hardships for genuine taxpayers of reconciliations and delay in adjustments, said Overseas Investors Chamber of Commerce and Industry (OICCI) in its budget proposals for 2020/2021 submitted to the SRB.
It further said that similar to federal sales tax law, exemption should be given if payment being made to sales tax registered person against withholding sales tax.
Withholding tax rules are applicable on active taxpayers also.
The OICCI recommended:
i. Withholding should be exempted from deduction of Sales Tax at applicable rate against the payments to the Sales tax registered persons with SRB, in line with Federal Laws.
ii. The rate of withholding sales tax against the invoices of unregistered persons should be reduced to 5% in line with the FBR’s Withholding Sales Tax regime as applicable under SRO.660 (I)/2007.
iii. Withholding tax rules should not applicable on active taxpayers.
Giving rationale to the proposals, the OICCI said that the withholding agents are unnecessarily burdened with deduction of sales tax which is not claimable as input tax and is thus resulting in increasing their cost of doing business.
Similar matters have already been decided by the courts in case of sales tax withholding rules of FBR and PRA. The ultimate objective of the taxpayer is that indirect tax should not increase its cost of doing business. Moreover these enforcement measures have negative bearing on the regulated sector only.
The purpose of withholding tax deduction is to ensure that non-active & nonregistered taxpayers can be detected. Compliance burden of businesses can be reduced for businesses by exemption deduction at source for active taxpayers.
PRA allows similar provision [Sindh Sale Tax Special Procedures (Withholding Tax) Rules, 2014 read with notification SRB-3-4/14/2014].