Author: Mrs. Anjum Shahnawaz

Advance tax exempted on sale of immovable properties on holding period of above five years

KARACHI: The Federal Board of Revenue (FBR) has exempted the advance tax on sale of immovable property subject to the property is held for above five years.

The officials of Federal Board of Revenue (FBR) said that advance tax under Sub-Section (1) of Section 236C of Income Tax Ordinance, 2001 would not be collected if the immovable property is held for a period exceeding five years.

Under Sub Section 1 of Section 236C of the Income Tax Ordinance, 2001, Any person responsible for registering, recording or attesting transfer of any immovable property shall at the time of registering, recording or attesting the transfer shall collect from the seller or transferor advance tax at the rate specified in Division X of Part IV of the First Schedule:

Explanation,—For removal of doubt, it is clarified that the person responsible for registering, recording or attesting transfer includes person responsible for registering, recording or attesting transfer for local authority, housing authority, housing society, co-operative society and registrar of properties.

Provided that this sub-section shall not apply to a seller, being the dependant of a Shaheed belonging to Pakistan Armed Forces or a person who dies while in the service of the Pakistan Armed Forces or the service of Federal or Provincial Government, in respect of first sale of immovable property acquired from or allotted by the Federal Government or Provincial Government or any authority duly certified by the official allotment authority, and the property acquired or allotted is in recognition of or for services rendered by the Shaheed or the person who dies in service.

(2) The Advance tax collected under sub-section (1) shall be adjustable

Provided that where immovable property referred to in sub-section (1) is acquired and disposed of within the same tax year, the tax collected under this section shall be minimum tax.

According to the ordinance the advance tax rate on sale of immovable properties is one percent of the gross amount of the consideration received. However, the tax rate shall be two percent if a person is not appearing on the Active Taxpayers List.

December 28, 2019
SBP abolishes fee on tax payment through alternate delivery channels

KARACHI: The State Bank of Pakistan (SBP) has announced to abolish the fee on payment of government taxes and duties through Alternate Delivery Channels (ADCs) and Over-the-Counter (OTC) from January 1, 2020.

A statement issued on Saturday said that presently, the taxpayers pay Rs.10 to Rs.50 per transaction for payment of taxes through ADCs depending on the amount of tax paid, and Rs.50 per transaction for the payments through OTC.

This fee will be borne by SBP instead of taxpayers from January 1, 2020. The change has been notified through SBP FD Circular No.4 of 2019 dated December 27, 2019.

The decision is part of SBP efforts to promote digital payments and is likely to attract larger number of taxpayers towards digital payment of government taxes and duties.

The mechanism for online collection of taxes and duties was introduced in March 2018 in collaboration with Federal Board of revenue (FBR) with the primary objective of taxpayers’ facilitation. The tax payers can pay their taxes from the convenience of their homes or offices using internet/mobile banking facilities, through 14000 plus ATMs or any of the 15000 plus branches of commercial banks across the country. So far Rs.346 billion has been collected through this mechanism. The collections through the ADCs/OTC modes are likely to grow exponentially as the awareness about the mechanism improves.

SBP is also running an awareness campaign to familiarize the taxpayers, tax bar associations, chambers of commerce, clearing and forwarding agents and business community at large about the ADC and OTC payment mechanisms.

Seminars and awareness sessions are being arranged across the country through the field offices of SBP Banking Services Corporation. The first such seminar was held in Karachi on December 26, 2019, which was attended by corporate taxpayers, representatives from chamber of commerce, trade associations, commercial banks, tax bars and audit firms.

The participants appreciated SBP efforts for promotion of digital payments and said that such sessions are critically important for enhancing public awareness and allaying their fears and apprehensions about digital payments.

December 28, 2019
Return filing due date Dec 31 for all taxpayers

KARACHI: The income tax return filing date for tax year 2019 is December 31, 2019 for all types of taxpayers, which is unusual considering past years.

The taxpayers including salaried individuals, business individuals, association of persons (AOPs), final taxpayers, companies falling under special tax year, corporate entities whose financial year ending June 30.

The filing of annual returns by all the types of taxpayers is unusual as during past years the return filing date paused around December 15 to give ample space and time for corporate entities to file their returns.

The filing date for salaried individuals, business individuals, AOPs and corporate entities having special tax year was September 30, 2019. While, the filing of annual return for tax year 2019 for companies is December 31, 2019.

The FBR granted four extensions to taxpayers who were required to file their returns by September 30, 2019 and extended up to December 31, 2019.

The return filing reached to 2.73 million for tax year 2018. The FBR received around 1.8 million returns for tax year 2019 by December 13, 2019. Therefore, FBR required around one million returns during December 13 to December 31 to reach the return filing number of last tax year.

Sources in the FBR said that the return filing date would be extended further as filing huge number during remaining days was not possible. While FBR will announce return filing date for retailers under which a general relief may be granted to all the taxpayers.

The FBR is eying around 3.5 million returns during tax year 2019. Therefore, in order to achieve this number the FBR will need to extend the filing date.

The last date for filing the return for tax year was extended up to August 9, 2019. Therefore, the experts believe the FBR would continue to allow taxpayers to file their returns till the desired number is achieved.

December 28, 2019
Weekly Review: stock market likely to stay stable

KARACHI: The stock market likely to stay during next week owing to transfer second IMF tranche and stable rupee value, analysts said.

Analysts at Arif Habib Limitd said that the market to be positive in the coming week.

With SBP reserves climbing up and stable Pak Rupee/USD parity the investors’ sentiment should remain positive.

Furthermore, Pakistan has received second tranche of $452 million of IMF loan. Moreover, new portfolio allocations are expected from the start of the New Year, which can improve the market sentiment and flows.

The KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 7.2x (2020) compared to Asia Pac regional average of 13.7x and while offering DY of ~6.6 percent versus ~2.5 percent offered by the region.

The market commenced on a negative note this week, losing 900 points during the intraday trading. Tensions on Indo-Pak border kept the momentum suppressed during the week. Bulls took over after IMF expressed contentment in first quarterly review regarding improvement in external side in the light of market determined exchange and steady improvement on the fiscal front.

Furthermore, IMF allowed Pakistan to change performance standards for issuance of sovereign guarantees. Albeit market closed at 40,848 points, gaining 16 points (up by 0.04 percent WoW) as 2019 approached its end.

Sector-wise positive contributions came from i) Commercial Banks (43 points), ii) Power Generation & Distribution (42 points), iii) Oil & Gas Marketing Companies (19 points), iv) Engineering (15 points), and v) Cement (13 points).

Whereas, negative sector-wise contribution came from i) Insurance (31 points), Tobacco (31), Automobile Parts & Accessories (21 points) and Fertilizers (17 points). Scrip-wise positive contributions were led by ENGRO (70 points), HUBC (55 points), OGDC (39 points), PSO (20 points) and UBL (18 points).

Foreign selling was witnessed this week clocking-in at USD 2.9 million compared to a net buy of USD 3.1 million last week. Selling was witnessed in Exploration & Production (USD 1.5 million) and Commercial Banks (USD 0.7 million).

On the domestic front, major buying was reported by Insurance Companies (USD 10.5 million) and Mutual Funds (USD 7.2 million). Average Volumes settled at 230 million shares (down by 23 percent WoW) while average value traded clocked-in at USD 54 million (down by 35 percent WoW).

December 28, 2019
Law amended to stop NAB taking action against businessmen: Prime Minister

KARACHI: Prime Minister Imran Khan on Friday said that the government has amended law to restrict National Accountability Bureau (NAB) from taking action against business community.

Addressing at a ceremony of Pakistan Stock Exchange (PSX), the prime minister said the powers of NAB had been restricted to the corruption cases of public office holders.

He said that the business community should be free from coercive action of NAB. The other institutions like FBR and courts are there to deal with cases of business community.

He said that business community has key role in creation of wealth. He further said that no nation can grow without wealth.

The prime minister said that the wealth creation was only possible when business community was facilitated.

He said that in the past there was misconception about making of profit. The prime minister said that there was difference between profiteer and profit making.

The prime minister said that the government desired the businesses should make profit and attract more investment.

He said that the government was making all out efforts to improve ease of doing business. He said that in the outgoing year the ease of doing business was improved by 27 points despite challenging economic situation.

December 27, 2019
Bank holiday announced on January 01

KARACHI: The State Bank of Pakistan (SBP) on Friday declared bank holiday on January 01, 2020 on account of financial close of banking companies.

In a circular issued to presidents and chief executives of all banks, development financial institutions and microfinance banks, the SBP informed that the central bank will remain closed for public dealing on Wednesday, January 1, 2020, which will be observed as ‘Bank Holiday’.

All banks / DFIs / MFBs shall, therefore, remain closed for public dealing on the above date. However, all employees of banks / DFIs / MFBs will attend the office as usual, the SBP said.

December 27, 2019
Stock market sheds 279 points on selling pressure

KARACHI: The stock exchange fell by 279 points on Friday owing to selling pressure during trading sessions.

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 40,849 points as against 41,128 points showing a decline of 279 points.

Analysts at Arif Habib Limited said that the market moved both ways during the day with +162 points and -401 points, ending the session at -279 points.

Month end closing met anticipated flows from institutions that created selling pressure on the bourse.

O&GMCs, E&P, Power and Cement sectors remained under pressure, and even though MLCF managed to hit upper circuit, it couldn’t hold ground for much long and stock price dropped significantly, though remained positive.

Technology sector led the volumes with 49.2 million shares, followed by Cement (35.7 million) and O&GMCs (35.5 million). Among scrips, WTL led the volumes with 31.8 million, followed by UNITY (22.6 million) and HASCOLR (22.4 million).

Sectors contributing to the performance include Power (+35 points), Fertilizer (+29 points), Banks (-89 points), E&P (-63 points), Inv Banks (-28 points), Cement (-27 points) and Insurance (-26 points).

Volumes increased from 236.8 million shares to 267.6 million shares (+12 percent DoD). Average traded value also increased by 19 percent to reach US$ 61.2 million as against US$ 51.3 million.

Stocks that contributed significantly to the volumes include WTL, UNITY, HASCOLR1, MLCF and FFL, which formed 39 percent of total volumes.

Stocks that contributed positively include ENGRO (+67 points), HUBC (+46 points), UBL (+6 points), HGFA (+5 points) and PMPK (+5 points). Stocks that contributed negatively include OGDC (-33 points), FFC (-25 points), DAWH (-24 points), HBL (-23 points), and MCB (-22 points).

December 27, 2019
Rupee gains four paisas amid demand for import, corporate payments

KARACHI: The Pak Rupee gained four paisas against dollar on Friday amid higher demand of greenback for import and corporate payments.

The rupee ended Rs155.03 to the dollar from previous day’s closing of Rs155.07 in interbank foreign exchange market.

Currency dealers said that the rupee was under pressure during the day due to upcoming weekly holidays. Besides, the financial year ending for many corporate entities also escalated the demand for the greenback.

The dealers said the inflows of export receipts and remittances helped the rupee to appreciate during later in the day.

The exchange rate in open market also witnessed appreciation in rupee value. The buying and selling of dollar was recorded at Rs154.60/Rs155 from previous day’s closing of Rs154.70/Rs155.10 in cash ready market.

December 27, 2019
Banks to observe extended working hours on Dec 31 to facilitate taxpayers

KARACHI: State Bank of Pakistan (SBP) on Friday announced that banks will observed extended working hours to facilitate taxpayers in payment of duty and taxes on December 31, 2019.

In order to facilitate the collection of government receipts / duties / taxes, it has been decided that authorized branches of National Bank of Pakistan (NBP) as well as field offices of SBP Banking Services Corporation (SBP-BSC) will observe extended banking hours up to 9:00 PM on December 31, 2019 (Tuesday).

Accordingly, NBP branches will settle their transactions with respective SBP-BSC field offices on the same day i.e. December 31, 2019 for which purpose a special clearing has been arranged at 7:00 P.M. by the NIFT.

All banks are, therefore, advised to keep their concerned branches open on December 31, 2019 (Tuesday) till such time that is necessary to facilitate the special clearing for Government transactions, the SBP said.

December 27, 2019
FBR issues procedure for verification of sales tax invoice

KARACHI: Federal Board of Revenue (FBR) has issued procedure for verification of sales tax invoices prepared by Tier-1 retailers.

According to FBR officials the following procedure shall be adopted for the verification of sales tax invoices.

— Customer visits the counter to pay for his/her shopping.

— Counter Boy Prepares the Invoice.

— Invoice is forwarded to FBR system for invoice number.

— Fiscal Invoice is generated and stored in FBR Sale Data Controller and returns a fiscal invoice number to POS.

— Point of Sale (POS) generate the QR Code for fiscal invoice.

— The receipt is printed out from the POS and physically delivered to the customer.

— Customer receives the printed fiscal invoice and verify it from FBR System using any of proposed mode.

The officials said that

Tier -I retailer as defined under Section 2(43A) of Sales Tax Act 1990 are required to integrate their sales with the FBR.

Tier-1 retailer means:-

A retailer operating as a unit of a national or international chain of stores.

A retailer operating in an air conditioned shopping mall plaza or centre, excluding kiosks.

Retailer whose cumulative electricity bill during the immediately preceding twelve consecutive months exceeds rupees six hundred thousands.

A wholesaler-cum-retailer, engaged in bulk import and supply of consumer goods on wholesale basis to the retailers as well as on retail basis to the general body of the consumers.

A retailer whose shop measures one thousand square feet in the area or more.

The officials said that the integrated supplier shall prominently display on each outlet a signboard bearing FBR’s official logo along with the text “Integrated with FBR” and also registration number of each POS verifiable through FBR verification services.

Explaining the benefits of establishing integration with the FBR, the sources said that supplies of finished fabric and locally manufactured finished articles of textile and textile made ups and leather and artificial leather shall be entitled to reduced rate of 14 per cent subject to condition they have maintained 4 percent value addition during the last six months.

Further, customers entitled to receive a cash back of up to 5 per cent of the tax involved in the manner and to the extent as may be prescribed.

The penalty for non-compliance by the Tier-1 retailers, the sources said that under sub section (6) of section 8B of the Act, adjustable in put tax for whole of that tax period shall be reduced by 15 percent.

Penalty as prescribed at serial No.(19) of the section 33 of the Act besides default surcharge under section 34 of the Act.

December 27, 2019