The Federal Board of Revenue (FBR) has announced its decision to defer the implementation of the Computerized National Identity Card (CNIC) condition on sales transactions exceeding Rs50,000 until January 31, 2020.
(more…)Author: Mrs. Anjum Shahnawaz
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KTBA seeks date extension for Tax Year 2019 return filing
KARACHI: Karachi Tax Bar Association (KTBA) on Wednesday asked Federal Board of Revenue (FBR) to extend the last date for filing income tax returns for tax year 2019 in order to facilitate the genuine taxpayers and give opportunity to those who are out of tax net.
The KTBA in a letter to FBR chairman said that against the legal and permissible time period for filing the return of income of ninety (90) days under section 118 of the Ordinance, only 58 days have been allowed between September 2nd and October 31, 2019, which implies that 32 more days should be allowed further for the purpose.
It said that at the same time, it is equally critical to decide the fate of the filers of the Assets Declaration Scheme of 2019 who could not submit their declarations due to untimely closure of the option on IRIS.
Consequently, they also could not revise their wealth statements for the Tax Year 2018, which you would appreciate is a necessary component for filing the return of income for the Tax Year 2019.
It is apprehended that if they are not allowed to submit their declarations, which they have not been so far, in the last four months, their right to timely file their returns of income for the Tax Year 2019 is systematically been jeopardized as well.
Lastly, it would not be out of context to refer to the ongoing resistance from Shopkeepers and Trader of the country who still have to be given, inter alia, a final format of Return for their tax filing, which the FBR introduced vide its notification under Sections 99B and 9C of the Ordinance and committed that the same would be applicable right from the very Tax Year of 2019.
It may be appreciated that we as a Bar, are very much cognizant of the FBR’s campaign to increase the number of tax filers and compliant taxpayers in the country to proportionately increase the much needed Tax revenue for which we would like to render our due role as an association.
Taking stock of whole of the ongoing situation, however, it can conveniently be drawn that unless and until the concerns are addressed, not less than two third of the population of the tax payers of the country will turn to Non-Filers or to say “not appearing on the ATL”, which merely would further add to their woes.
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UBL pays Rs11.59 billion against tax demand
KARACHI: United Bank Limited (UBL) has paid Rs11.59 billion against tax demand created by Federal Board of Revenue (FBR) for past multiple years.
According to financial statement submitted to Pakistan Stock Exchange (PSX) on Wednesday, the bank said that the income tax authorities had issued amended assessment orders for the tax years 2003 to 2018, and created additional tax demands (including disallowances of provisions made prior to Seventh Schedule) of Rs.11.591 billion (December 31 2018: Rs.13.119 billion), which had been fully paid as required under the law.
However, the bank has filed appeals before the various appellate forums against these amendments, the bank said, adding that where the appellate authorities have allowed relief on certain issues, the assessing authorities have filed appeals before higher appellate forums.
“Where the appellate authorities have not allowed relief the Bank has filed appeals before higher appellate forums. The management of the Bank is confident that the appeals will be decided in favor of the Bank.”
According to the financial statement, the bank said that the tax returns for Azad Kashmir (AK) and Gilgit Baltistan (GB) Branches have been filed up to the tax year 2018 (financial year 2017) under the provisions of section 120(1) read with section 114 of the Ordinance and in compliance with the terms of the agreement between banks and the Azad Kashmir Council in May 2005.
The returns filed are considered as deemed assessment orders under the law.
The bank further said that the tax authorities have also carried out monitoring for Federal Excise Duty, Sales tax and withholding taxes covering period from year ended 2007 to 2017.
Consequently various addbacks and demands were raised creating a total demand of Rs. 889 million (2018: Rs. 995 million).
The Bank has filed appeals against all such demands and is confident that these would be decided in the favor of the bank.
The tax returns for Yemen, Qatar and UAE branches have been filed upto the year ended December 31, 2018 under the provisions of the laws prevailing in the respective countries, and are deemed as assessed unless opened for reassessment.
The bank has received corrective tax assessment of QAR 1 M (Rs: 42.946 million) from the General tax Authority (GTA) in respect of tax year 2004 with no supporting calculations from GTA.
Management has requested details for 2004 assessment from GTA, however to date no response has been received. Management is confident that the matters will be decided in favour of the Bank and the possibility of any outcome against it is remote, the UBL said in its financial statement.
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Tax collection from salary income plunges by 43pc: State Bank
KARACHI: The income tax collection from salary income has witnessed sharp decline of 43 percent during fiscal year 2018/2019 due to significant concession granted in the budget of election year.
State Bank of Pakistan (SBP) in its annual report on State of Pakistan Economy 2018/2019, revealed that withholding income tax fell 43 percent to Rs76.4 billion in 2018/2019 as compared with Rs133.4 billion in the preceding fiscal year.
The overall collection of withholding taxes declined by 8.2 percent to Rs960.7 billion in the fiscal year 2018/2019 as compared with Rs1,047 billion in the preceding fiscal year.
Besides, collection of income tax from salary the collection of withholding tax from telephone also witnessed steep fall of 64 percent. The Federal Board of Revenue (FBR) collected Rs17.2 billion during fiscal year 2018/2019 as compared with Rs47.4 billion in the preceding fiscal year.
The collection of income tax from contracts witnessed 17 percent decline to Rs234.7 billion during the last fiscal year as compared with Rs283 billion in the preceding fiscal year.
The SBP said that the decline in withholding taxes, having a share of nearly 65.0 percent in direct taxes, came from prominent reductions in the collection from salaries, contracts, cash withdrawals, and telephone.
“While collection from salaries took a hit from concessions on income tax granted in the FY19 budget, the decline in PSDP spending lowered the collection from Contracts.”
The composition of direct taxes is quite suboptimal reflecting lack of sufficient tax effort, the SBP said.
The government relies heavily on withholding taxes, which downplays the role of revenue authorities.
Furthermore, when these taxes are treated as final and are passed on to final consumers, they gain properties of indirect taxes. Despite a large tax machinery, comprising regional tax officers, nearly 64.1 percent of the income tax is collected via withholding agents such as banks, telecom companies, utility companies and car dealers.
As for voluntary payments and collection on demand, their contribution is quite minimal. And even within the voluntary payments, around 90 percent collections are made in the form of advance tax; less than 10 percent comes through return filing.
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National Bank declares marginal growth in profit with over 20 percent high earnings in nine months
KARACHI: National Bank of Pakistan (NBP) has declared marginal growth in after tax profit of one percent for nine months period ended September 30, 2019. However, income of the bank posted over 20 percent increase for the period.
According to a statement issued by the bank, after-tax profit for the nine-months period amounted to Rs 16.3 billion being marginally 1.0 percent higher than Rs 16.2 billion earned during the corresponding period of 2018.
Meeting of the Board of Directors (BoD) of the bank held on October 29, 2019 (Tuesday) at the bank’s Head Office in Karachi in which the BoD approved financial statements of the bank for the nine-months period ended June 30, 2019.
For the nine-month period, total income of the bank amounted to Rs 79.4 billion which is 20.3 percent higher than Rs 66.0 billion YoY. While net interest income closed at Rs 53.9 billion, non-mark-up / interest income closed at Rs 25.6 billion, up by 23.7 percent and 13.7 percent respectively.
With an increase of 26.2 percent YoY, the bank’s profit before taxation amounted to Rs 29.2 billion as against Rs 23.1 billion for September 2018.
The drop in after-tax profit is mainly attributed to higher taxation charge of 44.0 percent as compared to 30.0 percent for the corresponding period last year. Net profit translates into earnings per share of Rs 7.68 as against Rs 7.60 for the corresponding nine-months period of prior year.
Total assets of the bank amounted to Rs 3,025.4 billion which is 8.1 percent higher than Rs 2,798.6 billion as at December 31, 2018.
These represent 13.8 percent of the banking industry total assets. The bank’s market share in deposits, advances and investment is around 14 percent, 12 percent, and 15 percent respectively.
Representing 12.0 percent of the total industry loans, gross advances of the bank amounted to Rs 1,093.4 billion, marginally higher than Rs 1,059.5 billion as at December 31, 2018.
However, compared to Rs 953.3 billion of September 2018, gross advances stand increased by Rs 140.1 billion or 14.7 percent. As of September 30, 2019 deposits of the bank amounted to Rs 1,938.0 billion, depicting a drop of Rs 73.3 billion or 3.6 percent as against Rs 2,011.4 billion as of December 31, 2018.
Deposits constitute translate into ~13.5 percent share in total banking industry deposits. Customer deposits that form 87.5 percent of the bank’s total funding pool remained stable during the period and amounted to Rs 1,695.0 billion (2018: Rs 1,674.12 billion).
Year 2019 is NBP’s 70th year of service to the Nation, and it continues to deliver strong results. Its business strategy is evolving to ensure a focus on inclusive development through reaching and supporting underserved sectors including SME, Microfinance, Agriculture Finance, and finance for Micro-Housing on a priority basis.
This is in addition to the bank’s dominant role in dealing with public sector enterprises and its employees. Building a digital banking capability and a technology platform will be a central part of this strategy as will the inculcation of a performance driven culture within the institution.
For achieving the strategic goals of the bank, certain functions at the Head Office level have been re-organized to create synergies and enhance risk controls.
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Stock market ends down by 64 points in narrow band trading
KARACHI: The stock market ended down by 64 points on Tuesday while traded in narrow band.
The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 33,798 points as against 33,862 points showing a decline of 64 points.
Analysts at Arif Habib Limited said that the market traded in a narrow band of -146 points and +155 points, testing 34,000 level again but closed below this level -64 points.
Cement and Steel sectors that have been in the limelight lately braced selling pressure.
Though earlier in the session, cement sector blue chips hit upper circuit but later profit booking brought stock prices down.
Other than steel and cement, E&P and O&GMCs also faced selling activity mainly due to expectation of poor results of O&GMCs and otherwise lower international crude oil prices.
Technology sector led the volumes with 43.6 million shares, followed by Cement (36.1 million) and Banks (31.5 million).
Among scrips, WTL registered trading volume of 37.5 million shares, followed by BOP (22.5 million) and PIBTL (10.6 million).
Sectors contributing to the performance include Banks (-24 points), Fertilizer (-16 points), O&GMCs (-13 points), Insurance (-12 points) and Chemical (-11 points).
Volumes increased significantly from 135.6 million shares to 224.8 million shares (+66 percent DoD. Average traded value also increased by 32 percent DoD to reach US$ 34.8 million as against US$ 26.3 million.
Stocks that contributed significantly to the volumes include WTL, BOP, PIBTL, FCCL and MLCF, which formed 39 percent of total volumes.
Stocks that contributed positively include PSEL (+23 points), BOP (+12 points), SEARL (+10 points), FFBL (+7 points) and GLAXO (+6 points). Stocks that contributed negatively include OGDC (-13 points), ENGRO (-13 points), LUCK (-13 points), COLG (-11 points), and BAHL (-11 points).
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Rupee gains eight paisas on better economic projections
KARACHI: The Pak Rupee gained eight paisas against dollar on Tuesday owing to better economic projections of the central bank.
The rupee ended Rs155.78 to the dollar from previous day’s closing of Rs155.85 in interbank foreign exchange market.
Currency experts said that the rupee gained on the back of projection made by the State Bank of Pakistan (SBP) a day earlier about improved economic conditions were visible due to reforms taken.
The foreign currency market was initiated in the range of Rs155.80 and Rs155.85. The market recorded day high of Rs155.84 and low of Rs155.77 and closed at Rs155.78.
The exchange rate in open market also witnessed appreciation in local currency value. The buying and selling of dollar was recorded at Rs155.70/Rs156.00 as compared with previous day’s closing of Rs155.80/Rs156.10 in cash ready market.
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Enfrashare, Telenor sign agreement to develop connectivity infrastructure
KARACHI: Enfrashare Pakistan Private Limited and Telenor Pakistan, one of Pakistan’s top mobile network operators, have signed an agreement to develop connectivity infrastructure, a statement said on Tuesday.
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Consumer financing loses pace on housing, car loan shocks
KARACHI: The consumer financing has lost pace in fiscal year 2018/2019 to total loans of Rs57.3 billion as compared with Rs86.5 billion in preceding fiscal year. The major drag came from auto and house financing segments, State Bank of Pakistan (SBP) said in its annual report on Pakistan Economy 2018/2019.
The SBP issued the report a day earlier, stating that the auto and housing financing suffered due to the government’s ban on non-filers from purchasing/ registering assets such as cars and residential properties (above Rs 5 million), several price hikes of cars, and rising interest rates.
The anticipation of new product launches and phasing out one popular model also played their part, as some customers may have adopted a wait-and-see approach.
The SBP data shows that the car financing fell to Rs22.2 billion in fiscal year 2018/2019 as compared with Rs43.3 billion in preceding fiscal year. Similarly, housing loans fell to Rs10.4 billion in 2018/2019 as compared with Rs22.3 billion in the preceding fiscal year.
The SBP said that since interest rates were on an upward trajectory, the substantial increase in installment amount compelled borrowers to either opt for high equity participation ratio or avoid bank financing altogether.
Apart from these factors, the popularity of ride hailing services, which itself was an early contributing factor to the rise in auto financing, also seemed to have reached its saturation level, thereby negatively contributing to the growth in advances.
The SBP said that in terms of outstanding portfolio, Islamic banks were able to keep their share intact at around 46 percent as of June 2019. However, in flow terms, the increase stemmed mainly from conventional banks where medium-sized players dominated.
Nonetheless, the ban on non-filers on purchasing property (above Rs. 5.0 million) kept this segment suppressed during the year. As per industry sources, the increased price levels also eroded the capacity of many households to afford residential units in close vicinity of urban centers.
Moreover, as per anecdotal evidence, consistent interest rate hikes during the year significantly raised the installment amount for potential borrowers, many of whom stand disqualified due to the breach of the maximum required debt-burden ratio.
Compared to other segments, personal loans and consumer durables performed better. The flow of FY19 for consumer durables was historically highest, but price impact mainly explained this phenomenon, as there was more than double-digit inflation in consumer durables during the year.
The argument also gets support from the fact that while banks received around 20 percent lower applications, the average loan size of accepted applications more than doubled to Rs 2.8 million in FY19 from Rs 1.2 million last year.
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PTBA urges FBR to extend return filing date up to December 31
KARACHI: Pakistan Tax Bar Association (PTBA) has urged the Federal Board of Revenue (FBR) to extend the last date for filing income tax returns up to December 31, 2019 for salaried and business individuals as around 1.6 million returns cannot be filed by October 31, 2019.
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