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Author: Mrs. Anjum Shahnawaz

  • Tax Amendment Ordinance: consumer goods to be confiscated on failure to print retail price

    Tax Amendment Ordinance: consumer goods to be confiscated on failure to print retail price

    ISLAMABAD: Tax officials have been empowered to confiscate goods where importer / manufacturer failed to mandatory print the retail price on consumer goods.

    The government introduced Tax Laws (Second Amendment) Ordinance, 2019 on Wednesday through promulgated through presidential ordinance.

    Federal Board of Revenue (FBR) issued salient features of the ordinance and stated that penalty had been proposed through the ordinance for person failed to comply with mandatory requirement of printing retail price on imported goods falling under Third Schedule of Sales Tax Act, 1990.

    According to the amendment, any person, being a manufacturer or importer of an item which is subject to tax on the basis of retail price, who fails to print the retail price in the manner as stipulated under the Act.

    “Such person shall pay a penalty of ten thousand rupees or five percent of the amount of tax involved, whichever is higher:

    Further, such goods shall also be liable to confiscation. However, the adjudication authority, after such confiscation, may allow redemption of such goods on payment of fine which shall not be less than twenty percent of the total retail price of such goods.”

  • Tax Amendment Ordinance: revised sales tax rates on imported mobile phones

    Tax Amendment Ordinance: revised sales tax rates on imported mobile phones

    ISLAMABAD: The government has massively reduced sales tax on imported mobile phone valuing up to $100 to Rs200 from Rs1,320 through amendment to Sales Tax Act, 1990 through Tax Laws (Second Amendment) Ordinance, 2019.

    The FBR notified the revised rates of sales tax on imported mobile phones. The amendment has been made to Ninth Schedule of the Sales Tax Act, 1990.

    The updated NINTH SCHEDULE of the Sales Tax Act, 1990 to prescribe sales tax rates on mobile phones.

    The Table:

    S.No.Description/ Specification of goodsSales Tax on import or local supplySales tax chargeable at the time of registration (IMEI number by CMOs)Sales tax on supply (payable at the time of supply by CMOs)
    1.Subscriber Identification

     

    Module (SIM) Cards

    		  Rs250
    2Cellular mobile phones or satellite phones to be charged on the basis of import value per set, or equivalent value in rupees in case of supply by the manufacturer, at the rate as indicated against each category:–

     

     

    		   
     A. Not exceeding US$ 30

     

     

    		Rs130Rs130 
     B. Exceeding US$ 30 but not exceeding US$ 100Rs200Rs200 
     C. Exceeding US$ 100 but not exceeding US$ 200Rs1,680Rs1,680 
     D. Exceeding US$ 200 but not exceeding US$ 350Rs1,740Rs1,740 
     E. Exceeding US$ 350 but not exceeding US$ 500Rs5,400Rs5,400 
     F. Exceeding US$ 500Rs9,270Rs9,270 

    LIABILITY, PROCEDURE AND CONDITIONS

    (i) In case of the goods specified against S.No 1of the Table, the liability to charge, collect and pay tax shall be on the Cellular Mobile Operator (CMO) at the time of supply. In case of the goods specified against S.No 2, the liability to pay sales tax at the time of import shall be on the importer, and the liability to charge, collect and pay sales tax payable on supplies shall be on the Cellular Mobile Operator at the time of registering International Mobile Equipment Identity (IMEI) number in his system.

    (ii) The Cellular Mobile Operators shall, if not already registered, obtain registration under the Sales Tax Act, 1990.

    (iii) No IMEI shall be registered in his system by a Cellular mobile Operator without charging and collecting the sales tax as specified in the Table.
    (iv) The Cellular Mobile Operator shall deposit the sales tax so collected through his monthly tax return in the manner prescribed in section 26 of the Sales Tax Act, 1990, and rules made thereunder.

    (v) The Cellular Mobile Operator shall maintain proper records of all IMEI numbers registered for a period of six years, and such records shall be produced for inspection, audit or verification, as and when required, by an authorized officer of Inland Revenue.

    (vi) The Pakistan Telecommunication Authority shall provide data regarding IMEI numbers registered with other Cellular Mobile Operators to prevent double taxation on the same IMEI number in case of switching by a subscriber from one operator to another, and to provide data regarding registration of IMEI numbers to the Board on monthly basis.

    (via) The sales tax as indicated in column (3) of the Table above shall be paid by the importer, in case of imports and by the manufacturer, in case of locally manufactured cellular mobile phones.

    (vii) No adjustment of input tax shall be admissible to the Cellular Mobile Operator or any purchaser of cellular mobile phone against the sales tax charged and paid in terms of this Schedule.

    (viii) The tax specified in column (4) of the Table shall be charged, collected and paid with effect from such date as may be specified by the Board and the sales tax specified in column(3) shall stand withdrawn from the date so specified.

    The FBR said that notwithstanding anything contained in any other law for the time being in force, the levy, collection and payment of sales tax under Notification No. S.R.O. 460(I)/2013, dated the 30th May, 2013, shall be deemed to always have been lawfully and validly, levied, collected and paid.

  • Tax Amendment Ordinance: highlights of changes in customs law

    Tax Amendment Ordinance: highlights of changes in customs law

    ISLAMABAD: Federal Board of Revenue (FBR) on Wednesday issued salient features of to highlight amendments to Customs Act, 1969 made through Tax Law (Second Amendment) Ordinance, 2019.

    Following are the salient features of changes made to customs law:

    1. After section 3CC, the following new section is proposed to be inserted:-

    “3CCC. Directorate General of Law and Prosecution. – The Directorate General of Law and Prosecution is being proposed for the reason that in all the Collectorates and Directorates there are a number of cases which are framed for evasion of duty/taxes but owing to excessive work load and lack of expertise on the prosecution side the cases are not properly defended at subsequent legal fora. The Directorate General of Law and Prosecution will be established with specific power to handle legal issue and equipped with staff expert in handling legal issues.

    2. The penal clause 47A of section 156(1) provides for fix penalty @ Rs.5000/- for initial five days and thereafter @ Rs.10000/- per day upto a maximum limit of Rs.100000/- in case GD is filed after ten days of the date of arrival of goods into Pakistan.

    This clause was inserted to realize stuck up Government revenue as importer will suitably discharge their liabilities to avoid their penalties. However, bonafide person need to be excluded from this penal clause.

    However, the intent of the proposed amendment is to exclude the goods imported or received as gift by individuals without NTN or STRN through courier or air cargo, diplomatic cargo and imports made by government agencies.

    3. Changes are being proposed in section 156 to penalize persons carrying foreign currency. Previously, a person carrying foreign currency beyond the permissible amount of $10000 was being prosecuted.

    It is now being proposed by means of varying slabs being taken by passengers ,ranging from $10000- $200000 and above and accordingly proposing varying degrees of penalties from a mere fine and then imprisonment upto fourteen years depending on the amount of currency apprehended by the authorities.

    Similarly, slabs for smuggling of Gold, platinum and Silver has been proposed along with their varying degrees of fine and imprisonment depending on the quantum of precious metals.

    4. Owing to surge in smuggling activities and knowing that smugglers as well equipped, it is being proposed that section 164 may be suitably amended empowering Customs officials to fire in the Line of Duty.

    5. Currently, section 185A specifies the provisions for cognizance of offences by special Judges. It is proposed that a time period of six months may be fixed for the finalization of proceedings in criminal cases because cases keep on lingering without any outcome for years. No time limitation in decision of the case also accords time to the investigating officers to submit final challan without a time limit which aspect weakens the case as the time passed by.

    6. Section 194 of the Customs Act, 1969 provides for the constitution of a Customs Appellate Tribunal by the Federal Government which is competent to adjudicate upon appeals filed against orders passed by the Collector (Appeals).

    The said section specifies various pre-requisites for appointment as a judicial or technical member and empowers the Federal Government to appoint Chairman of the Customs Appellate Tribunal.

    In order to complement revenue collection efforts by FBR, streamline the affairs of the Tribunal(s), bring about greater transparency in the manner of appointment of judicial and technical members of the Tribunal(s) and to impart greater efficiency in the working of the Tribunal for ensuring maximum disposal of cases it is proposed that in addition to the prerequisite as already mentioned, the qualification of Judicial Members may also be prescribed under rules made by the Prime Minister.

    Furthermore the constitution and functioning of benches and procedure of the Appellate Tribunal may be regulated by rules approved by the Prime Minister.

  • Amendment Ordinance: major changes made to ST law

    Amendment Ordinance: major changes made to ST law

    ISLAMABAD: Federal Board of Revenue (FBR) on Wednesday issued salient features of amendment to Sales Tax Act, 1990 made through Tax Law (Second Amendment) Ordinance, 2019.

    Following are the salient features of sales tax:

    1. Many queries have been received seeking clarification of the term “greenfield industry”. A definition of this term in section 2 of the Sales Tax Act, 1990 has now been inserted in clause 12A.

    2. In order to ensure that persons who are required to integrate with the FBR or have been integrated, either do not get themselves integrated or do not make proper compliance and tamper with the systems so installed so as to avoid reporting and recording of production and sales, it has been provided to amend section 33 of the Act to declare such act as an offence and punishable with imprisonment and fine both.

    3. Sales tax is levied on the basis of retail price on the items specified in the Third Schedule to the Act. Such retail price is required be printed with retail price. In order to ensure compliance in this respect, and to safeguard revenue associated therewith, it is penalty has been provided and also confiscation of contravening goods by amending section 33 of the Act.

    4. In order to safeguard industry in Pakistan and to prevent misuse of exemption, a new section 40D in the Act has been added and amendment in this regard has also been made in section 33 relating to penalties and offences, so as to provide for powers to prescribe documentation in relation to such goods and to examine and check vehicles coming from tax-exempt areas such as AJ&K, Gilgit-Baltistan and Tribal Areas.

    5. Section 73 has been amended to provide that a registered manufacturer shall make all taxable supplies to a registered person excluding supplies not exceeding a value of rupees hundred million in a financial year and rupees 10 million in a month.

    6. Sales tax on the imported cotton has been enhanced from 5 percent to 10 percent to remove disparity.

    7. PCT heading of bricks had been inadvertently mentioned as “6901.1000”, whereas the correct PCT heading is “6901.0000”. Tenth Schedule has been amended to correct the PCT heading.

    8. Manufacturers using plant and machinery for in house installation have now been excluded from the purview of the 12th, further refund of 3 percent value addition tax may not be barred if paid on goods used in making of zero-rated supplies.

    9. Sales tax on the mobile phones upto the value of 30 US dollars has been reduced from Rs 130 to Rs 100 and phones having value upto 100 US Dollars from Rs 1320 to Rs 200.

    10. Definition of tier-1 retailer has been amended in section 2(43A), whereby the Federal Board of Revenue is empowered to add any other category of retailers to tier-1. In view of the higher tariff rates of electricity the conditions to qualify for a Tier 1 retailer have been amended so as to increase the threshold of electricity consumption from Rs 600,000 to Rs 1200,000.

  • Tax Amendment Ordinance: Salient features of changes introduced to income tax law

    Tax Amendment Ordinance: Salient features of changes introduced to income tax law

    ISLAMABAD: Federal Board of Revenue (FBR) on Wednesday issued salient features of amendment to Income Tax Ordinance, 2001 made through Tax Law (Second Amendment) Ordinance, 2019.

    (more…)
  • Customs officials empowered using firearms in the line of duty

    Customs officials empowered using firearms in the line of duty

    ISLAMABAD: The government has authorized customs officials to use firearms in the line of duty to prevent smuggling and other illegal activities.

    In this regard a new sub-section 3 has been inserted to Customs Act, 1969 through Tax Laws (Second Amendment) Ordinance, 2019.

    Federal Board of Revenue (FBR) on Wednesday issued ‘Tax Laws (Second Amendment) Ordinance, 2019’ have been promulgated through the presidential order.

    The new sub-section shall be read as follow:

    “(3) For the execution of the above, the officers or officials shall be empowered to use all necessary force including use of firearms subject to Section 97 of the Pakistan Penal Code, 1860 in the line of duty.”

    Under Section 164 of the Customs Act, 1969, the customs officials were empowered to stop and search conveyances.

    The Section 164 is read as:

    164. Power to stop and search conveyances.- (1) Where the appropriate officer has reason to believe that within the territories of Pakistan(including territorial waters) any conveyance has been, is being or is about to be, used in the smuggling of any goods or in the carriage of any smuggled goods, he may at any time stop any such conveyance or, in the case of an aircraft, compel it to land, and –

    (a) rummage and search any part of the conveyance;

    (b) examine and search any goods thereon; and

    (c) break open the lock of any door, fixture or package for making search.

    (2) Where in the circumstances referred to in sub-section (1)-

    (a) it becomes necessary to stop any vessel or compel any aircraft to land, it shall be lawful of any vessel or aircraft in the service of the Government while flying her proper flag or bearing flag marks and any authority authorized in this behalf by the Federal Government to summon such vessel to stop or the aircraft to land, by means of an international signal, code or other recognized means, and thereupon such vessel shall forthwith stop or such aircraft shall forthwith land, and if it fails to do so chase may be given thereto by any vessel or aircraft as aforesaid and if after a gun is fired as a signal, the vessel fails to stop or the aircraft fails to land, it may be fired upon;

    (b) it becomes necessary to stop any conveyance other than a vessel or aircraft, the appropriate officer may use or cause to be used all lawful means for stopping it or preventing its escape including, if all other means fail, firing upon it.

    The new sub-section shall be included:

    “(3) For the execution of the above, the officers or officials shall be empowered to use all necessary force including use of firearms subject to Section 97 of the Pakistan Penal Code, 1860 in the line of duty.”

  • Tax Amendment Ordinance: 14-year jail, penalty of ten time of value for currency smuggling

    Tax Amendment Ordinance: 14-year jail, penalty of ten time of value for currency smuggling

    ISLAMABAD: The government has introduced very harsh penalties for offence of currency smuggling. The government enhanced the jail term to 14 years for currency smuggling above $200,000 besides ten time of value of the currency would be recovered as penalty.

    Federal Board of Revenue (FBR) on Wednesday issued ‘Tax Laws (Second Amendment) Ordinance, 2019’ have been promulgated through the presidential order.

    The following are the penal action for offences/smuggling introduced through the ordinance by amending Customs Act, 1969:

    (a) If the amount of the currency over and above the permissible limit is up to $10,000 or equivalent in value (currency of other denomination) etc.

    Such currency shall be liable to confiscation and any person concerned in the offence shall be liable to a penalty not exceeding the value of the excess amount of the currency.

    (b) If the amount of the currency over and above the permissible limit is up to $10,001 to $20,000 or equivalent in value (currency of other denomination) etc.

    Such currency shall be liable to confiscation and any person concerned in the offence shall be liable to a penalty not exceeding two times the value of the excess amount of the currency.

    (c) If the amount of the currency over and above the permissible limit is $20,001 to $50,000 or equivalent in value (currency of other denomination) etc.

    Such currency shall be liable to confiscation and any person concerned in the offence shall be liable to a penalty not exceeding three times the value of the currency; and upon conviction by a Special Judge he shall further be liable to imprisonment for a term not exceeding two years.

    (d) If the amount of the currency over and above the permissible limit is $50,001 to $100,000 or equivalent in value (currency of other denomination) etc.

    Such currency shall be liable to confiscation and any person concerned in the offence shall be liable to a penalty not exceeding four times the value of the currency; and upon conviction by a Special Judge he shall further be liable to imprisonment for a term not exceeding seven years.

    (e) If the amount of the currency over and above the permissible limit is $100,001 to $200,000 or equivalent in value (currency of other denomination) etc.

    Such currency shall be liable to confiscation and any person concerned in the offence shall be liable to a penalty not exceeding five times the value of the currency; and upon conviction by a Special Judge he shall further be liable to imprisonment for a term not exceeding ten years. Provided further that the sentence of the imprisonment shall not be less than three years.

    (f) If the amount of the currency over and above the permissible limit exceeds $200,000 or equivalent in value (currency of other denomination) etc.

    Such currency shall be liable to confiscation and any person concerned in the offence shall be liable to a penalty not exceeding ten times the value of the currency; and upon conviction by a Special Judge he shall further be liable to imprisonment for a term not exceeding fourteen years. Provided further that the sentence of the imprisonment shall not be less than five years.

  • Mini-budget implemented through presidential ordinance

    Mini-budget implemented through presidential ordinance

    ISLAMABAD: The government on Wednesday implemented a mini budget through a presidential ordinance making amendments to all duty and tax statutes.

    The amendments to tax laws namely ‘Tax Laws (Second Amendment) Ordinance, 2019’ have been promulgated through the presidential order.

    The consultants at Tax Excellence called it mini-budget and highlighted major changes made to Income Tax Ordinance, 2001, Sales Tax Act, 1990, Customs Act, 1969 and Federal Excise Act, 2005.

    Now, the Tax Laws (Second) Amendment Ordinance, 2019 has been promulgated on December 26, 2019, which will remain valid for four months, unless extended or approved by the National Assembly.

    The ordinance contains several amendments following Sections:

    Sales Tax Act, 1990

    Section 2(12A): Greenfield Industry

    Section 2(43A): Tier-1 Retailer

    Section 33: Offences and penalties

    Section 40D: Provisions relating to goods supplied from tax-exempt areas

    Section 73: Certain transactions not admissible

    Section 76: Fee and service charges

    Sixth Schedule: Table-1 (Imports or Supplies) [Exempt Supplies]

    Eighth Schedule: Table-1 [Reduced Rate]

    Ninth Schedule: Special provisions relating to traders [major change for traders]

    Tenth Schedule: Rule for persons not appearing in Active Taxpayers list

    12TH Schedule: Value-Addition Tax [major procedural changes]

    Income Tax Ordinance, 2001

    Section 2(27A): greenfield industrial undertaking [definition inserted-major impact & applicable from 1.7.19]

    Section 130: Appellate Tribunal [major change]

    Section 152: Payments to non-residents [major change]

    Section 181D: Business licence scheme. [major change]

    Section 214E: Closure of audit. [major change]

    Section 216: Disclosure of information by a public servant

    Section 222A: Fee and service charges

    Section 230E: Directorate General of International Tax Operations [major change]

    First Schedule: Part-I, II & III [major changes]

    Second Schedule: Part-I, II, III & IV [major changes]

    10TH Schedule: Rule 10 Clause (ba) inserted

    Federal Excise Act, 2005

    Section 49: Fee and service charges

    Customs Act, 1969

    Section 3CCA: Directorate General of Law and Prosecution” [newly inserted]

    Section 6: Entrustment of functions of customs officers to certain other officers

    Section 7: Assistance to the officers of customs.

    Section 139: Declaration by passenger or crew of baggage

    Section 156: Punishment for offences [major changes]

    Section 164: Power to stop and search conveyances.

    Section 169: Things seized how dealt with

    Section 185A: Cognizance of offences by Special Judges

    Section 194: Appellate Tribunal [section substituted]

    Section 196: Reference to High Court

  • Law allows fuel adjustment charges only for two months

    Law allows fuel adjustment charges only for two months

    KARACHI: Industry has raised questions over decision by National Electric Power Regulatory Authority (NEPRA) to allow past four years fuel adjustment charges to K-Electric.

    In a joint statement the leaders of North Karachi Association of Trade & Industry (NKATI) on Wednesday said that according to the law the distribution company not allowed to collect fuel adjustment charges for more than two months, but on the contrary, NEPRA has allowed to K-Electric for collecting four-year fuel adjustment charges which is a gross violation of the law.

    They said that NEPRA’s move is a conspiracy against businesses as the products that was exported four years ago can how cover the cost of fuel adjustment now.

    According to NEPRA’s notification, the amount will be charged from January 2020 to September 2020 in electricity bills.

    Capt. A Moiz Khan, patron in chief, NKATI and Nasim Akhtar, president, has strongly opposed the NEPRA to receive 4-year fuel adjustment charges from industries and refused to accept this decision.

    In an appeal to Arif Alvi, President of Pakistan, Imran Khan, Prime Minister, Power Minister and Chairman NEPRA, said that the permission to collect fuel adjustment charges to K Electric for the period from July 2016 to June 2019 should be canceled immediately or else industries will be destroyed.

    Capt. Moiz Khan and Naseem Akhtar said that business community of Karachi are already badly affected due to high doing business cost, while electricity tariffs have also been raised, huge taxes and in the current economic situation it extremely difficult to run industries, as industrial wheel is almost jammed due to over-production costs, especially the SME sector will be ruined and even the remnants of exports will be completely closed.

    They expressed concern that due to of such measures, industries will be defaulted and Government will be responsible.

    Nkati’s leaders urged to President and Prime Minister to immediately cancel K Electric’s permission to collect 4-year fuel adjustment charges and measures should be taken to protect industries from destruction, otherwise the industries will be locked up, which will lead to unemployment and worsening financial crisis. It will also have a very negative impact on exports so such decisions should be avoided.

  • Gas shortage created purposely for using RLNG: KCCI

    Gas shortage created purposely for using RLNG: KCCI

    KARACHI: Karachi Chamber of Commerce and Industry (KCCI) has said that the gas shortage in Sindh is created purposely to force industry to take RLNG.

    Agha Shahab Ahmed Khan, President KCCI in a statement on Wednesday said: “gas pressure has been reducing purposely to pressurize the industries to take RLNG, which has resulted in terribly affecting the overall production and was causing severe losses of up to billions of rupees.”

    He added: “Gas resources in Sindh are largely being mismanaged that has led to creating severe crises not only in Sindh but also in Punjab and the rest of the country.

    “None of the provinces were getting the required gas due to the said mismanagement. If gas resources are distributed exactly as per Article 158, there will not be any crises in Sindh and Karachi, which is the hub of economic & industrial activities while the rest of the country must get RLNG which has to be promptly imported.”

    He expressed displeasure over serious gas shortage being suffered by the industries situated in all industrial zones in Karachi, stressed that the gas being produced in Sindh must at first be provided to its inhabitants and industries whereas only surplus gas should be forwarded to other provinces as per Article 158 of Pakistan’s Constitution.

    Agha Shahab stated that RLNG, which was being imported to overcome gas shortages, must be provided to those provinces who either have zero gas production or were not producing sufficient amount of gas as per their requirement whereas, the Sindh province, which is blessed with abundant gas resources, must get gas from its own reserves.

    “Why the consumers in Sindh are being compelled to take RLNG, when the province has sufficient gas reserves to surmount its local demand,” he asked, adding that it is totally ‘contrary to the Constitution.’

    “We, the business & industrial community of Karachi, are already suffering badly because of high cost of doing business therefore the suspension of gas in Karachi would not only prove detrimental for the industry but would also lead to worsening the economic crises, besides raising poverty and unemployment,” he opined.

    Referring to Prime Minister Imran Khan’s remarks in which the business community was urged to set up industries and factories as 2020 is going to be a year of growth, Agha Shahab said that under the prevailing circumstances when the existing industries were confronted with severe gas crises, high electricity rates, exorbitant interest rates, devaluing rupee against dollar, rising petroleum prices, lack of infrastructure and other serious civic issues, how could anyone think of setting up industries or go for expansion.

    “In order to actually make 2020 a year of growth, the government will have to resolve all these issues on top priority otherwise there will be no growth at all and the economic performance would continue to remain depressed or it may even worsen further,” he added.