Pkrevenue.com

Author: Mrs. Anjum Shahnawaz

FBR chairman to hold e-Katcheri for taxpayers

ISLAMABAD: Javaid Ghani, Chairman, Federal Board of Revenue (FBR) will listen to problems faced by taxpayers through e-Katcheri on Friday August 21, 2020.

The chairman will be available for taxpayers through telephone number # 051-111772772 between 10:00AM to 11:00AM on Friday August 21, 2020..

The program has been launched in compliance with the directive of the prime minister to conduct e-Khuli Katcheri to stay in contact with the public by all available means and provide them accessible platform to raise their issues for timely resolution.

The taxpayers facilitation wing of the FBR recently circulated about the program directing that e-Katcheri would be conducted by every tier of FBR in the second week of every month on regular basis.

The FBR directed all the tax offices to ensure that all proceedings of the e-Katcheri are property recorded and tasks should be assigned to concerned officers accordingly.

The tax offices have also been directed to submit performance report on the outcome of the meeting with public.

In the wake of COVID-19, the tax authorities shall conduct one e-Katcheri at all tiers of FBR in the second week of every month. In the backdrop of COVID-19, only e-Katcheris shall be conducted for the time being until normalcy of the situation.

August 17, 2020
Rupee ends down by 24 paisas against dollar

KARACHI: The Pak Rupee ended down by 24 paisas against dollar on Monday owing to higher demand for import and corporate payments as market opened after long holidays.

The rupee ended Rs168.17 to the dollar as against the closing of August 13, 2020 at Rs167.93 in interbank foreign exchange market.

Currency experts said that the market was opened after three holidays and it resulted in higher demand for import and corporate payments.

The market was remained closed on August 14, 2020 on account of Independence Day and further two days closure due to weekly holidays.

The experts said that the local unit likely to rebound in coming days on back of improved inflows of workers’ remittances and export receipts.

The inflow of workers’ remittances hit monthly record high of $2.77 billion in July 2020.

In July, workers’ remittances rose to US $ 2.768 billion. “This is the highest ever level of remittances in a single month in Pakistan,” according to State Bank of Pakistan (SBP).

In terms of growth, remittances increased by 36.5 percent over July 2019 (y/y) and 12.2 percent over June 2020 (m/m). Given the impact of Covid-19 globally, this increase in worker’s remittances is encouraging.

August 17, 2020
Remittances hit monthly record high: SBP

KARACHI: The inflow of workers’ remittances hit monthly record high of $2.77 billion in July 2020, State Bank of Pakistan (SBP) said on Monday.

In July, workers’ remittances rose to US $ 2.768 billion. “This is the highest ever level of remittances in a single month in Pakistan,” the SBP said.

In terms of growth, remittances increased by 36.5 percent over July 2019 (y/y) and 12.2 percent over June 2020 (m/m). Given the impact of Covid-19 globally, this increase in worker’s remittances is encouraging.

In July, sizeable amounts of workers’ remittances were received from Saudi Arabia (US $ 821.6 million), UAE (US $ 538.2 million), UK (US $ 393.9 million) and USA (US $ 250.6 million).

The growth rate in remittances compared to the same month in the previous year is around twice as high as the Eid-ul-Adha related seasonality typically experienced over the last decade.

Several factors have likely supported the growth in remittances to date, including orderly exchange rate conditions and policy steps taken by the State Bank and the Federal Government under the Pakistan Remittance Initiative. These steps include reducing the threshold for eligible transactions from USD 200 to USD 100 under the Reimbursement of Telegraphic Transfer (TT) Charges Scheme, an increased push towards adoption of digital channels, and targeted marketing campaigns to promote formal channels for sending remittances.

To improve data quality and better capture the source country of the remitter, the compilation methodology for ‘country wise’ workers’ remittances has been strengthened from this month. Therefore, country-by-country trends will be available on a consistent basis from August 2020 onwards.

Importantly, the new data collection method does not affect the reporting of the level of remittances arriving into Pakistan.

Importantly, the revised country shares under the improved data do not necessarily imply that remittances from one country have increased over another. Instead they demonstrate that the source country of remittances is being recorded more accurately now.

August 17, 2020
Withholding tax rates updated for telephone subscribers

ISLAMABAD: Federal Board of Revenue (FBR) has updated withholding tax rates for tax year 2021 to be paid by telephone subscribers for using phone services.

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 236 of Income Tax Ordinance, 2001 person preparing telephone / Internet bill or issuing / selling prepared card for mobile phones / Internet shall deduct/collect withholding tax from telephone subscribers, Internet subscriber, purchaser of Internet Prepaid Cards, telephone subscriber and purchaser of prepaid telephone cards along with payment of telephone bill or at the time of issuance of or sales of prepared cards.

The withholding tax rates shall be:

(a) Telephone subscribers and internet

Monthly bill up to Rs, 1000: Nil

Bill exceeding 1,000: 10 percent

(b) in the case of subscriber of internet, mobile telephone and pre-paid internet or telephone card the withholding tax rate shall be 12.5 percent of the amount of bill or sales price of internet pre-paid card or prepaid telephone card or sale of units through any electronic medium or whatever form.

The collected/deducted withholding tax shall be adjustable against total payable tax liability.

August 16, 2020
Tax to GDP ratio slips to 11.4 percent in FY20

ISLAMABAD: Tax to GDP ratio has slipped to 11.4 percent in fiscal year FY20 (2019/2020) when compared with 11.6 percent in the preceding fiscal year, according to statistics released by the finance ministry.

The size of Gross Domestic Product (GDP) has been measured at Rs41,727 billion in fiscal year 2019/2020 as compared with Rs38,559 billion in the preceding fiscal year.

The total tax collection was recorded at Rs4,747 billion during the fiscal year under review as compared with Rs4,473 billion in the preceding fiscal year.

The tax contribution of the federal government was recorded at Rs4,334 billion and contribution of the provincial government was Rs413 billion during fiscal year 2019/2020.

Whereas, the tax contribution of the federal government was at Rs4,061.62 billion and the contribution of the provincial governments was Rs402 billion in the fiscal year 2018/2019.

The collection of the Federal Board of Revenue (FBR) was at Rs3,998 billion in the fiscal year 2019/2020 as against Rs3,829 billion in the preceding fiscal year.

However, the FBR’s revenue collection to the GDP fell to Rs9.58 percent in fiscal year 2019/2020 as against 9.93 percent in the preceding fiscal year.

The collection of direct taxes was recorded at Rs1,524 billion in fiscal year 2019/2020 as compared with Rs1,445.6 billion in the preceding fiscal year.

Out of the total direct taxes, the collection of property tax was at Rs9.65 billion as compared with Rs7.02 billion.

The collection of tax on goods and services increased to Rs1,855 billion in fiscal year 2019/2020 as compared with Rs1707 billion in the preceding fiscal year.

The collection of other taxes recorded increase to Rs732.58 billion in fiscal year 2019/2020 as compared with Rs627.65 billion in the preceding fiscal year.

The duty/tax collection on the international trade recorded decline to Rs626.38 billion in fiscal year 2019/2020 as compared with Rs685 billion in the preceding fiscal year.

August 16, 2020
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.

August 15, 2020
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.

August 15, 2020
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.

August 15, 2020
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.

August 14, 2020
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.
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August 14, 2020