KARACHI: The stock market increased by 299 points on Monday after making recovery of intra-day losses.
(more…)Author: Mrs. Anjum Shahnawaz
-
Senate committee rejects taxpayers profiling, real-time access to information
ISLAMABAD: The Standing Committee on Finance, Revenue and Economic Affairs, in a meeting, has rejected new clauses of taxpayers profiling and real-time access to information.
The committee strongly rejected the amendments to the taxpayers profile, appeal to appellate tribunal, offences and penalties and power to enter and search premises.
Clauses related to real time access to Information and databases have been disapproved as well, said a statement.
The standing committee meeting was held last week took up the Finance Bill 2020, containing the Annual Budget statement presented in the House on 12 June, 2020. Review of the Income Tax Ordinance, 2001 and Federal, Excise Provisions of Finance Bill, 2020 was completed.
Amendments recommended by the Committee in the Public Finance Management Act 2019 were carried out and shared with the Committee.
Chaired by Senator Farooq Hamid Naek, the meeting was attended by Senator Mohsin Aziz, Senator Zeeshan Khanzada, Senator Musadik Masood Malik, Senator Mian Muhammad Ateeq Sheikh, Senator Senator Talha Mehmood, Senator Ayesha Raza Farooq, and senior officers from the Ministry for Finance, Revenue and Economic Affairs, Ministry of Commerce and Federal Board Revenue.
The Committee deliberated over Restriction on deduction of profit on debt payable to associated enterprises. Agreements for the avoidance of double taxation and prevention of fiscal evasion were discussed as well.
Special concessions have been awarded to items that are essential during COVID 19 Pandemic.
The Committee appreciated the measures taken by the FBR to deal with vast consequences of the Pandemic. Omission of collection of advance tax from dealers, commission agents and arhatis etc., by market committees was welcomed.
This is an important measure to promote agriculture in the country.
Advance tax on education related expenses has been omitted as well.
In an attempt to discourage the use of caffeinated drinks FED has been increased from 13 percent to 25 percent.
Imported cigarettes, cheroots, cigarillos, cigars of tobacco and tobacco substitutes have been subjected to FED at 100 percent.
-
Rupee gains five paisas against dollar
KARACHI: The rupee gained by five paisas against dollar on Monday after some improvement in foreign exchange reserves was seen in the latest data.
The rupee ended Rs166.59 to the dollar from last Friday’s closing of Rs166.64 in interbank foreign exchange market.
The foreign exchange reserves of the country have increased by $70 million to $16.775 billion by week ended June 12, 2020.
The foreign exchange reserves were at $16.705 billion by week ended on June 05, 2020.
The foreign exchange reserves held by the central bank increased by $11 million to $10.107 billion by week ended June 12, 2020 as compared with $10.096 billion a week ago.
Currency experts said that the local currency was under pressure during the last week owing to repayment of external debt.
-
CGT on shares disposal to be collected on June 29
KARACHI: National Clearing Company Pakistan Limited (NCCPL) on Monday said that Gain Tax (CGT) for the month of May 2020 will be collected on June 29, 2020.
In a statement the NCCPL said that the aggregate amount of CGT arising on disposal of shares at Pakistan Stock Exchange for the period May 01, 2020 to May 31, 2020, would be collected on Monday June 29, 2020 through respective settling banks of the clearing members.
All Clearing Members are hereby requested to ensure requisite amount in their respective settling bank’s account. Necessary details and reports for the said period have already been made available in the CGT System.
Further, the aggregate amount of CGT arising on trading of future commodity contracts at Pakistan Mercantile Exchange for the period May 01, 2020 to May 31, 2020, would also be collected from the Pakistan Mercantile Exchange on Monday June 29, 2020.
Necessary details and reports for the said period have already been made available.
Moreover, the aggregate amount of CGT arising on redemption of units of open end mutual funds have also been finalized for the period May 01, 2020 to May 31, 2020. Necessary details and reports have already been made available in the CGT System.
The NCCPL asked the clearing members and Pakistan Mercantile Exchange to verify the investor wise details of capital gain or loss and tax thereon, if any, through reports/downloads.
It further said that in case of none or partial collection of CGT, necessary action would be taken in accordance with the Rules and NCCPL Regulations.
-
Tax slabs for salaried person for tax year 2020/2021
KARACHI: Following are the tax slabs for salaried persons to be applicable during tax year 2021 (2020/2021).
1. Where taxable income does not exceed Rs. 600,000: the tax rate shall be zero percent
2. Where taxable income exceeds Rs. 600,000 but does not exceed Rs. 1,200,000: the tax rate shall be 5 percent of the amount exceeding Rs. 600,000
3. Where taxable income exceeds Rs. 1,200,000 but does not exceed Rs. 1,800,000: the tax rate shall be Rs. 30,000 plus 10 percent of the amount exceeding Rs. 1,200,000
4. Where taxable income exceeds Rs. 1,800,000 but does not exceed Rs. 2,500,000: the tax rate shall be Rs. 90,000 plus 15 percent of the amount exceeding Rs. 1,800,000
5. Where taxable income exceeds Rs.2,500,000 but does not exceed Rs. 3,500,000: the tax rate shall be Rs. 195,000 plus 17.5 percent of the amount exceeding Rs. 2,500,000
6. Where taxable income exceeds Rs. 3,500,000 but does not exceed Rs. 5,000,000: the tax rate shall be Rs. 370,000 plus 20 percent of the amount exceeding Rs. 3,500,000
7. Where taxable income exceeds Rs. 5,000,000 but does not exceeds Rs. 8,000,000: the tax rate shall be Rs. 670,000 plus 22.5 percent of the amount exceeding Rs. 5,000,000
8. Where taxable income exceeds Rs. 8,000,000 but does not exceeds Rs. 12,000,000: the tax rate shall be Rs. 1,345,000 plus 25 percent of the amount exceeding Rs. 8,000,000
9. Where taxable income exceeds Rs. 12,000,000 but does not exceeds Rs. 30,000,000: the tax rate shall be Rs. 2,345,000 plus 27.5 percent of the amount exceeding Rs. 12,000,000
10. Where taxable income exceeds Rs. 30,000,000 but does not exceeds Rs. 50,000,000: the tax rate shall be Rs. 7,295,000 plus 30 percent of the amount exceeding Rs. 30,000,000
11. Where taxable income exceeds Rs. 50,000,000 but does not exceeds Rs. 75,000,000: the tax rate shall be Rs. 13,295,000 plus 32.5 percent of the amount exceeding Rs. 50,000,000
12. Where taxable income exceeds Rs. 75,000,000: the tax rate shall be Rs. 21,420,000 plus 35 percent of the amount exceeding Rs. 75,000,000
-
Amendments to taxability on payments for goods, services and contracts
KARACHI: The Finance Bill 2020 has proposed changes to taxability on payments made for goods, services and contracts.
According to explanation to amendments made to Section 153 of Income Tax Ordinance, 2001 through Finance Bill 2020 by BDO Pakistan Audit Consultancy and Tax Advisory Firm:
(1a): The bill seeks to include toll manufacturing to be treated as sale of good for the purpose of withholding under this subsection. This inclusion clarifies the taxability of this segment and it will be minimum tax.
(3): The bill seeks to treat taxes withheld at source as minimum tax on payment of goods, services and execution of contracts.
(4): The tax deducted at source is adjustable for the Company being manufacturer and the Public Listed Company registered on stock exchange. This inclusion will result in expansion of tax collection by the board.
The Bill seeks that the Commissioner shall respond to application for the issuance of exemption certificate related to withholding of taxes against goods, services and execution of contracts to facilitate the public listed companies registered in stock exchange, within fifteen days.
Where not responded, the IRIS may issue exemption certificate provided that the advance tax under section 147 was paid by the taxpayer.
The Commissioner retains the power to revoke the automatically issued certificate by IRIS on the basis of reasons to be recorded in writing after providing an opportunity of being heard.
(7) The Bill has sought following amendments in the requirement of the prescribed person defined as withholding agent.
Existing Description:
Individuals and association of person having turnover of fifty million rupees
Proposed Description:
Individuals and association of person having turnover of one hundred million rupees. Persons registered under Sales Tax Act, 1990 only are now required to meet turnover of one hundred million rupees or more in any preceding tax years to qualify as withholding agent.
-
Finance Bill proposes significance amendments to income tax at import stage
KARACHI: The Finance Bill 2020 has proposed significant amendments related to income tax at import stage in Section 148 of Income Tax Ordinance, 2001 as it was described by BDO Pakistan Audit Consultancy and Tax Advisory Firm.
Following are the changes proposed by the Finance Bill, 2020 in Section 148:
148(1): The bill seeks to add expression “in respect of goods classified in Parts I to III of the Twelfth Schedule” in sub-section (1) of the Section 148. The tax advisory firm interprets that earlier rates of advance tax at import stage were classified in the First Schedule now a separate Twelfth Schedule is constituted which specifies goods wise rates.
148(1): The bill seeks to add a new proviso to initiate that the Board [Federal Board of Revenue] may, through a notification in the official Gazette, add a good in any Part or reclassify a good from one Part to another of the Twelfth Schedule. The firm commented that Board [FBR] reserves powers to enter any good in the Twelfth Schedule.
148(7): The Finance Bill seeks to insert the expression “goods on which tax is required to be collected under this section at the rate of 1 percent or 2 percent by an industrial undertaking for its own use” to make tax adjustable. The firm commented that tax at the rate of 1 percent or 2 percent paid by an industrial undertaking for import of goods for its own use shall become adjustable tax.
148(7): The bill seeks to omit the hyphen and clauses “(a), (c), (d). The tax advisory firm commented that the omission results in withdrawal of exemption from advance tax at import stage provided to motor vehicles in CBU condition by manufacturer of motor vehicles and large import houses.
148(8) & 148(8A): The bill seeks to omit sub-section (8) and (8A) of section 148. The firm commented that this will result in end of minimum tax regime for edible oil, packing material and plastic raw material and ships breakers and now tax paid at import stage can be claimed as adjustable tax if industrial undertaking criteria are fulfilled.
148(9): The bill seeks to amend the term “value of goods” by linking it with retail price under the Third Schedule of the Sales Tax Act, 1990, and other than Third Schedule items. The firm commented that for the purpose of collection of advance income tax at import stage, value of goods has been aligned with the enabling provision of the Sales Tax Act 1990, which specifies the value for the purpose of sale tax at import stage.
148A: Tax on local purchase of cooking oil or vegetable ghee by certain persons. The firm commented that earlier this section resulted in manufacture of vegetable ghee or cooking oil to pay 2 percent final tax on local purchase of locally produced edible oil. The Bill seeks to omit this section, which would result such manufacturer and taxing real net income of the taxpayers.
-
10pc tax payment mandatory for filing appeal before tribunal
KARACHI: Taxpayers shall require to pay 10 percent of tax demand while filing an appeal before Appellate Tribunal challenging the order of commissioner appeals.
Deloitte Yousuf Adil, Chartered Accountants, said that a new requirement is proposed in the Finance Bill 2020 for filing of appeal before the Appellate Tribunal for challenging the order of Commissioner Appeals.
Proof of payment by the taxpayer of ten percent of the amount of tax upheld by the Commissioner Appeals is required to be submitted along with the appeal documents.
The chartered accountants said that currently, no such payment requirement exists for filing of appeal before the appellate tribunal. No appeal shall be admitted unless 10 percent of amount upheld by the Commissioner Appeals is deposited.
The proposed amendment is against the principle of natural justice and would create cash flow problems for the tax payers considering the illegal tax demands that are generally created through assessment proceedings and are mostly upheld at Commissioner Appeal’s level.
The business community also criticized the proposed change. Overseas Investors Chamber of Commerce and Industry (OICCI) said that the Finance Bill 2020-2021 proposes payment of 10 percent of the tax demand before filing an appeal before the Tribunal.
Currently the provisions of the ITO 2001 allows an appeal to be filed with the Appellate Tribunal Inland Revenue (ATIR) without payment of demand created by the tax officer(s) even if the same is confirmed by Commissioner of Income Tax – Appeals (CIR-A).
This inherent right of appeal is now proposed to be subjected to a mandatory payment of 10 percent of tax demand upheld by the CIR-A.
The proposed amendment will create hardship and cash flow problems for the taxpayer, as in case of exorbitant tax demands 10 percent thereof could be a very significant amount and may impede the exercise of right to appeal by the taxpayer which is a principle of natural justice and fundamental right.
It will also lead to unnecessary litigation since the appellant will approach the Courts by bypassing the forum of ATIR for the stay of recovery, after the CIR-A order confirming the amount of demand.
The proposal is also against decisions of superior courts which have held that recovery of tax demand cannot be forced until the order has been scrutinized by at least one independent forum i.e. ATIR.
-
Car imports fall by 61pc in eleven months
KARACHI: The import of used and old cars witnessed sharp decline of 61 percent during first eleven months (July-May) of current fiscal year due to condition of payment of duty and taxes through foreign exchange imposed by the government.
The import of used and old cars in Completely Built Unit (CBU) condition fell by 61 percent to $84.2 million during July –May 2019/2020 as compared with $216.5 million in the corresponding period of the last year, according data released by Pakistan Bureau of Statistics (PBS).
The commercial import of used or old cars is not allowed under prevailing laws of the country. However, in order to facilitate expatriate Pakistanis the government allows incentives to bring cars into the country.
The Federal Board of Revenue (FBR) has allowed Pakistani nationals residing abroad including dual nationals can import old and used vehicles into Pakistan under these schemes: Personal Baggage; Gift Scheme; and Transfer of Residence.
The cars not older than three years and other vehicles not older than five years can be imported under these schemes, the FBR said.
In the past these schemes were grossly misused and bulk of imported cars brought into the country.
However, the ministry of commerce in February 2019 amended Import Policy Order, 2016 and made it mandatory for clearance of cars through foreign exchange, which should be certified by banks.
Since then the clearance of the cars has come to a standstill. Customs authorities said that a large number of imported cars were at the port but importer had failed to make payment as per procedure prescribed by the ministry of commerce.
However, later in a meeting of Economic Coordination Committee (ECC) decided to allow payment for duty and taxes for customs clearance of imported cars through local resources with condition that if foreign exchange becomes short due to currency fluctuations or change in duty and tax rates.
The overall import of CBU vehicles during first eleven months of current fiscal year fell 48 percent. The import of heavy vehicles including buses and trucks has declined by 27 percent. While import of CBU motorcycles fell by 71 percent.
On the other hand the import of cars as Completely Knocked Down (CKD) condition also fell by 40 percent to $440 million during July – May 2019 as compared with $736 million in the same period of the last fiscal year.
Market sources said that massive depreciation in the local currency during past couple of years had increased the cost of local car manufacturers.
Further, the rates of locally assembled cars for end consumers also jumped up sharply.
These factors have reduced the productions of locally manufactured cars and subsequently reduced the import of cars in CKD condition.
The overall import of vehicles in CKD fell by 40 percent to $675 million during first eleven months of 2019/2020 as compared with $1.128 billion in the corresponding period of the last fiscal year.
-
Tax credit limit reduced by 50pc on charitable donations
ISLAMABAD: The limit of tax credit has been reduced by 50 percent on amount paid in cash or in kind to charitable donations, sources in Federal Board of Revenue (FBR) said.
The sources said that under the existing provisions of the last a person is entitled to tax credit on account of charitable donation paid in cash or in kind.
Currently such credit is allowed to the extent of lesser of: total amount donated in the year, including fair market value of any property given; or where the person:
(i) an individual or association of person, 30 percent of the taxable income of the person the year; or
(ii) a company, 20 percent of the taxable income of the person the year.
Deloitte Yousuf Adil, Chartered Accountants, said that the Finance Bill 2020 proposed to reduce the limit of credit by 50 percent in case of donations made to an associate as under:
(a) Total amount donated in the year, including fair market value of any property given; or
(b) Where the person:
(i) an individual or association of person, 15 percent of the taxable income of the person for the year; or
(ii) a company, 10 percent of the taxable income of the person for the year.