Pkrevenue.com

Author: Mrs. Anjum Shahnawaz

  • Caffeinated energy drinks are health hazard; FED enhanced to 25pc

    Caffeinated energy drinks are health hazard; FED enhanced to 25pc

    ISLAMABAD: The federal government has increased federal excise duty from 13 percent to 25 percent on consumption o f caffeinated energy drinks on both local supplies and import of such drinks.

    Hammad Azhar, Federal Minister for Industry and Production, while presenting the federal budget 2020/2021 on June 12 on floor of the house said that caffeinated energy drinks are health hazard, hence to reduce the consumption of such drinks it is proposed that the FED may be increased from 13 percent to 25 percent both at import and at local supply.

    It may be noted that aerated waters are already subject to FED at 13 percent.

    Further, FED on imported cigarettes, cheroots, cigarillos, cigars and other tobacco substitutes is being enhanced from 65 percent to 100 percent in line with WHO (World Health Organization) standards.

    Necessary changes are also proposed to be made in Table 1 of the First Schedule pertaining to aforesaid items to cover for tobacco substitutes as well as E-cigarettes, the minister said.

    Filter rod is a basic input material for cigarette manufacturing. Present rate of FED is Rs.0.75 per filter rod. To enhance the effect of monitoring and enforcement on tobacco consumption and tax management, it is proposed that the existing rate be enhanced to Rs.1 per filter rod.

    FED structure is already in place for both local and imported motor cars and SUVs excluding auto rickshaw falling under the PCT heading 87.03.

    Double cabin pick up which is currently classified as goods transport vehicle is being reclassified as passenger transport vehicle, which will bring it in the ambit of FED at 7.5 percent ad valorem in case of locally manufactured vehicles and at 25 percent in the case of imported ones.

    Sales tax is charged on standard rate of 17 percent on import and local supply of Potassium Chlorate and in addition to that Rs 70 per kg is also collected. On the recommendation of the Match manufacturers association the rate of Rs. 70 per kg is being enhanced to Rs. 80 per kg. Provided that rate of rupees 70/80 per kilogram is not applicable on imports made by and supplies made to organizations under the control of Ministry of Defense Production.

  • CGT on immovable properties reduced by 50 percent

    CGT on immovable properties reduced by 50 percent

    ISLAMABAD: The capital gain tax on (CGT) disposal of immovable properties has been reduced by 50 percent in order to promote investment in construction industry.

    According to Deloitte Yousuf Adil, Chartered Accountants, the Finance Bill 2020 proposed reduction in tax rates by 50 percent on capital gains arising on disposal of immovable property.

    This is in line with the Government’s vision to promote construction industry and to provide stimulus for the growth in economy as construction sector provide employment to a number of sub-sectors.

    S. No.Amount of gainRate of tax
      ExistingProposed
    1.Where the gain does not exceed Rs.5 million5%2.5%
    2.Where the gain exceeds Rs.5 million but does not exceed Rs.10 million10%5%
    3.Where the gain exceeds Rs.10 million but does not exceed Rs.15 million15%7.5%
    4.Where the gain exceeds Rs.15 million20%10%

    A person responsible for registering, recording, or attesting transfer of immovable property is required to collect advance tax from seller of such property.

    Such advance tax is not collected where the immovable property is held for a period exceeding 5 years.

    The Bill proposes to reduce this time limit of 5 years to 4 years.

  • Automated scrutiny of tax returns to end universal self assessment scheme

    Automated scrutiny of tax returns to end universal self assessment scheme

    The Federal Board of Revenue (FBR) has introduced a significant policy shift through the Finance Bill 2020, proposing the automated scrutiny of all income tax returns, which may signal the end of the Universal Self-Assessment Scheme (USAS) in Pakistan.

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  • Weekly Review: Positive sentiments may prevail

    Weekly Review: Positive sentiments may prevail

    KARACHI: Trading activities likely witness positive sentiments during upcoming week as political uncertainty may settle down, analysts said.

    Analysts at Arif Habib Limited said that the political noise is expected to settle down as the government is making efforts to mend ties with the coalition partners.

    Moreover, rise in international oil prices is expected to fuel interest in E&P’s.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 7.1x (2020) compared to Asia Pac regional average of 12.6x and while offering DY of ~6.6 percent versus ~2.8 percent offered by the region.

    The market commenced on a negative note this week following the FY21 budget announcement which once again included highly ambitious revenue targets.

    However rise in international oil prices (benefitting E&P) and news regarding breakthrough in discovery of drug for treating COVID-19 patients, improved investor sentiment briefly.

    The sentiment was short lived as re-introduction of a “smart lockdown” by sealing off hotspots in cities adversely affected sentiment in the bourse. Moreover fall in large scale manufacturing data by 41.89 percent YoY during April 2020 and Pak Rupee depreciation against USD to PKR 167.40/USD further dented confidence.

    The market settled at 33,439 points, shedding 1,172 points (down by 3.4 percent) WoW.

    Sector-wise negative contributions came from i) Commercial Banks (293 points), ii) Fertilizer (226 points), iii) Cement (183 points), iv) Oil & Gas Marketing Companies (96 points) and Power Generation & Distribution (91 points). Whereas, sector-wise positive contribution came from i) Pharmaceuticals (9 points) and ii) Textile Spinning (3 points). Scrip-wise negative contributions were led by UBL (94 points), LUCK (92 points), ENGRO (74 points), FFC (68 points) and HUBC (65 points).

    Foreign selling continued this week clocking-in at USD 4.8 million compared to a net sell of USD 7.7 million last week. Selling was witnessed in Fertilizer (USD 2.4 million) and Commercial Banks (USD 1.9 million).

    On the domestic front, major buying was reported by Individuals (USD 12.3 million) and Broker Proprietary Trading (USD 0.5 million).

    Average Volumes settled at 229 million shares (up by 1 percent WoW) while average value traded clocked-in at USD 42 million (down by 16 percent WoW).

  • KTBA advises FBR to suspend notices amid alarming rise in COVID cases

    KTBA advises FBR to suspend notices amid alarming rise in COVID cases

    KARACHI: Karachi Tax Bar Association (KTBA) has advised Federal Board of Revenue (FBR) to suspend notices for various tax matters with immediate effect considering the alarming increase in cases of COVID-19 in the country.

    The KTBA in a letter to FBR chairperson sent on Friday, informed that the bar members were receiving notices issued by the tax officials right in the month of June when the COVID-19 pandemic was in its worst phase in the country, and the city of Karachi is passing through its hardest times.

    The grim situation at hand, in terms of helplessness and number of deaths of both taxpayers and the tax officers, cannot possibly be remained devoid of any mindful sight.

    It is rather what today has the fullest attention of everyone concerned and the FBR as the tax regulator cannot simply be an exception. It cannot keep shooting notices mindlessly to the taxpayers for tax compliance when the taxpayers or their counselors cannot even reach their offices these days. The Bar equally feels compassionately about officers. “You must be aware of the deaths of tax officials posted at LTU, Karachi and at Regional Tax Office, Karachi due to Coronavirus.”

    Around 160,000 coronavirus positive cases have been registered in the country out of which, almost 55,000 are in Sindh. Among the cities of Sindh, Karachi is at the top with 45,000 plus cases.

    Keeping the above in view, the number of notices being issued these days is beyond ones comprehension. The members, like other service providers (shops, markets and manufacturing units are an exception), are largely not operating from their offices and are working from home, which has its own limitations. As such, in these testing times, it is not humanly possible for our members to respond to the notices issued for various proceedings discuss below.

    Even otherwise responding to these notices is not possible without provision of details/ information by clients/ taxpayers who are also suffering from the short comings discussed above. On the other hand, IRIS still has its own limitations.

    Any assignment created especially in ‘completed tasks’ cannot be replied via IRIS. Even if a notice can be responded to via IRIS, attachments containing details beyond a specific size are not acceptable by IRIS i.e. not every notice can be responded to via IRIS.

    This would mean that bar members have to come to the tax office for making the compliance. Under the present scenario of infections (tax offices are not immune from this), this poses a great threat for the visitors.

    What has been observed that as a matter of fact, the notices, which are being issued can broadly been categorized under the following categories:

    (i) Audit notices for the Tax Years 2015 to 2019

    (ii) Audit notices for the TY 2014 including notices for making amendment under section 122(5) of the Income Tax Ordinance, 2001

    (iii) Monitoring of withholding tax

    (iv) Set-aside proceedings

    (v) Appeal effect proceedings

    For Audit notices relating to the Tax Years 2015 to 2019, the bar is of the view that there should not arise any issue of getting barred due to any time limitation. As such, these proceedings can well be taken up at a later stage as well, say after two to three months when gravity of the spread of Coronavirus will be subsided.

    The notices for monitoring of withholding tax are again not poised with any time limitation issue.

    As for the notices related to the set aside and appeal effect proceedings, it would be advisable to seek an advice from the Ministry of Law as to any possible waiver from the application of calculation of limitation period under the Income Tax Ordinance, 2001 read with Section 4 of the Limitation Act, 1908 for these extra ordinary days; alternatively, some moratorium should be asked for. This will be in utter necessity for saving precious lives from any jeopardy due to any insensitivity.

    The tax bar urged the FBR to suspend the notices at least till the end of July 2020. Further that no adverse action would be taken on the notices already issued.

    This is acutely necessary to defuse the tension in the atmosphere and for instilling the much-needed confidence in the taxpayers of the country towards the single most pivotal federal tax regulator of the country.

  • Highlights of tax relief announced by Khyber Pakhtunkhwa for 2020/2021

    Highlights of tax relief announced by Khyber Pakhtunkhwa for 2020/2021

    PESHAWAR: The Khyber Pakhtunkhwa government announced tax relief package in order to mitigate the adverse impact of coronavirus.

    Key points of the tax incentives to be granted during the next fiscal year.

    i. Sales tax on services (STS) will be reduced for over 27 categories. This will be an allencompassing reduction for sectors where the economic activity has dampened and directly impacted cash flow and liquidity. These sectors include business support services, construction sector, oil and gas exploratory services, hospitality sector, bargain centers etc.

    ii. Entertainment and Hotel Tax will be removed from Excise and Taxation department’s portfolio, to encourage recreation and entertainment during these testing times for the economy.

    iii. Professional Tax will be phased out to Khyber Pakhtunkhwa Revenue Authority dovetailed with tax breaks and concessions for a year to remove duplicity of taxes and provide relief for more than 15 professions involved including Doctors, Lawyers, Retailers etc.

    iv. To promote and incentivize the tourism sector, a special concession will be introduced for the hotels and restaurants located in hilly areas. Coupled with a reduced rate, a clause of tax hypothecation will be included to ensure that the tax collected from this sector is invested into the same regions’ growth and prosperity.

    v. Rates for the Urban Immovable Property Tax will be rationalized, and compliant taxpayers will be offered a rebate of 35%. This is directly intended to promote compliance, provide direct relief, encourage construction and comfort the taxpayers during this economic slump.

    vi. Urban Immovable Property Tax under the Excise and Taxation Department will be introducing special discounts or pending arrears. Under this scheme, special concessions will be introduced for those who volunteer to clear arrears, intention is to lend a helping hand to the construction sector during this liquidity crises.

    vii. Board of Revenue will reduce both Capital Value Tax and Stamp duty for the construction sector, under the Federal Amnesty Scheme. This concession will be amalgamated with a complete digitization of the system with reduced discrepancies.

  • Khyber Pakhtunkhwa presents Rs923 billion tax free budget for 2020/2021

    Khyber Pakhtunkhwa presents Rs923 billion tax free budget for 2020/2021

    PESHAWAR: The Khyber Pakhtunkhwa Government on Friday presented budget 2020/2021 with total outlay of Rs 923billion. The budget is a tax free and with an amount of Rs104 billion allocated for Annual Development Plan (ADP) for the next fiscal year.

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  • So far 30 FBR officials die of coronavirus

    So far 30 FBR officials die of coronavirus

    ISLAMABAD: So far 30 officials of Federal Board of Revenue (FBR) have died of coronavirus, including a BS-22 officer of customs service.

    This was disclosed by FBR in a statement issued on Friday.

    It said that the FBR arranged a eulogy in remembrance of martyred officers and staff due to coronavirus / Covid-19.

    On this occasion, Secretary Finance Naveed Kamran Baloch, Chairperson FBR Nausheen Javaid Amjad and other senior officers and officials of FBR participated in the eulogy.

    Prayers were offered for the departed Muhammad Zahid Khokhar, a Pakistan Customs grade-22 officer and other officers and officials of FBR.

    A special tribute was also paid by the participants on the services of the martyred officers and staff for the organization and country, who continued to work for the collection of revenue despite outbreak of corona virus throughout the country.

    “So far, 30 employees of FBR have embraced martyrdom due to Covid-19. These officers and officials worked at FBR HQ and its Field Offices,” it said.

  • Banks directed to observe extended working hours on June 30 to facilitate tax payment

    Banks directed to observe extended working hours on June 30 to facilitate tax payment

    The State Bank of Pakistan (SBP) has instructed commercial banks to observe extended working hours on June 30, 2020. This decision aims to facilitate the timely payment of duties and taxes as the fiscal year concludes.

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  • KCCI submits recommendations to rectify anomalies in Finance Bill 2020

    KCCI submits recommendations to rectify anomalies in Finance Bill 2020

    KARACHI: The Karachi Chamber of Commerce and Industry (KCCI) has submitted its recommendations to rectify anomalies in the Finance Bill 2020, highlighting concerns over several taxation measures impacting trade and industry.

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