Pkrevenue.com

Author: Mrs. Anjum Shahnawaz

  • Withholding Tax Card: non-ATL persons to pay 30pc tax on dividend income

    Withholding Tax Card: non-ATL persons to pay 30pc tax on dividend income

    KARACHI: Federal Board of Revenue (FBR) has issued withholding tax card for tax year 2019/2020 effective from July 01, 2019 under which person not appearing on the Active Taxpayers List (ATL) shall pay up to 30 percent on dividend income.

    According to documents made available to PkRevenue.com, the FBR said that every person paying dividend shall collect withholding tax under Section 150 of the Income Tax Ordinance, 2001 at the time the dividend is actually paid.

    The following rates shall be applicable for tax year 2019/2020:

    (a) In the case of dividend paid by Independent Power Purchasers (IPPs) whereas such dividend is a pass through item under an Implementation Agreement or Power Purchase Agreement or Energy Purchase Agreement and is required to be reimbursed by Central Power Purchasing Agency (CPPA-G) or its predecessor or successor entity:

    The tax rate shall be 7.5 percent and in case persons not appearing in the ATL the applicable tax rate is to be increased by 100 percent (Rule-1 of Tenth Schedule to the Ordinance), i.e. 15 percent.

    (b) In cases other than mentioned at (a) above the tax rate shall be 15 percent and if persons not appearing in the Active Taxpayers’ List the rate of tax required to be deducted/collected, as the case may be, is to be increased by 100 percent of the above (as specified in the First Schedule to the Income Tax Ordinance, 2001 (updated as per Finance Act, 2019), i.e. 30 percent.

    The FBR further said that special purpose vehicle, company shall collect withholding tax under Section 150A of Income Tax Ordinance, 2001 from Sukuk holders on payment of gross amount of return on investment.

    On Payment of return on investment in Sukuks:

    a) In case the Sukuk- holder is a company, the tax rate shall be 15 percent and if persons not appearing in the Active Taxpayers’ List the applicable tax rate is to be increased by 100 percent (Rule-1 of Tenth Schedule to the Ordinance), i.e. 30 percent.

    b) In case the Sukuk – holder is an individual or an association of person, if the return on investment is more than one million, the tax rate shall be 12.5 percent and if persons not appearing in the Active Taxpayers’ List then the applicable tax rate is to be increased by 100 percent (Rule-1 of Tenth Schedule to the Ordinance), i.e. 25 percent.

    c) In case the Sukuk – holder is an individual and an association of person, if the return on investment is less than one million, the tax rate shall be 10 percent and if persons not appearing in the Active Taxpayers’ List then the applicable tax rate is to be increased by 100 percent (Rule-1 of Tenth Schedule to the Ordinance), i.e. 20 percent.

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    Withholding Tax Card: Tax rates on imports of goods for ATL, non-ATL persons

  • Withholding Tax Card: Tax rates on imports of goods for ATL, non-ATL persons

    Withholding Tax Card: Tax rates on imports of goods for ATL, non-ATL persons

    KARACHI: Federal Board of Revenue (FBR) has issued withholding tax rates on imports of goods for persons appearing on Active Taxpayers List (ATL) and for persons not on ATL under Section 148 of Income Tax Ordinance, 2001 for tax year 2019/2020 effective from July 01, 2019.

    According to documents made available to PkRevenue.com the FBR said that the collector of customs shall collect the withholding tax rate at the prevailing rates from persons on the Active Taxpayers List (ATL) and double amount of tax from those persons, who are not on the ATL.

    The FBR said that 1 percent of the import value increased by Custom duty, sales tax and federal excise duty shall be collected. And in case persons not appearing in the Active Taxpayers’ List : The applicable tax rate is to be increased by 100 percent (Rule-1 of Tenth Schedule to the Ordinance), i.e. 2 percent of the import value increased by Custom –duty, sales tax and federal excise duty.

    Tax to be collected from every importer of goods on the value of goods.

    1 (i) Industrial undertaking importing remeltable steel (PCT Heading 72.04) and directly reduced iron for its own use;

    (ii) Persons importing potassic of Economic Coordination Committee of the Cabinet’s decision No. ECC-155/12/2004 dated the 9th December, 2004

    (iii) Persons importing Urea;

    (iv) Manufactures covered under Notification No. S.R.O 1125(I)/2011 dated the 31st December, 2011 and importing items covered under S.R.O 1125(I)/2011 dated 31st December, 2011.

    (v) Persons importing Gold; and

    (vi) Persons importing Cotton

    (vii) Persons importing LNG.

    Minimum Tax [Section 148(7)]
    The tax required to be collected under this section shall be minimum tax on the income of importer arising from the imports subject to sub-section (1) of this section and this sub-section shall not apply [i.e Adjustable] in the case of Import of:

    a. Raw material, plant, equipment & parts by an industrial undertaking for its own use;

    b. [motor vehicle] in CBU condition by manufacturer of motor vehicle].

    c. Large import houses as defined / explained in 148(7)(d)

    d. A foreign produced film imported for the purposes of screening and viewing]

    The tax collected under this section at the time of import of ships by ship-breakers shall be minimum tax. [Section 148(8A)]

    Industrial undertaking importing Plastic raw material (PCT Heading 39.01 to 39.12) for its own use, the tax rate shall be

    1.75 percent of the import value as increased by Custom-duty, sales tax and federal excise duty

    Persons not appearing in the Active Taxpayers’ List :

    The applicable tax rate is to be increased by 100 percent (Rule-1 of Tenth Schedule to the Ordinance), i.e. 3.5 percent of the import value increased by Custom –duty, sales tax and federal excise duty.

    2. Persons importing pulses shall pay 2 percent of the import value as increased by Custom-duty, sales tax and federal excise duty.

    Persons not appearing in the Active Taxpayers’ List :

    The applicable tax rate is to be increased by 100 percent (Rule-1 of Tenth Schedule to the Ordinance), i.e. 4 percent of the import value increased by Custom –duty, sales tax and federal excise duty.

    3. Commercial importers covered under Notification No. S.R.O 1125(I)/2011 dated the 31st December, 2011 and importing items covered under S.R.O 1125(I)/2011 dated the 31st December, 2011, shall pay 3 percent of the import value as increased by custom-duty sales tax and federal excise duty.

    Persons not appearing in the Active Taxpayers’ List :

    The applicable tax rate is to be increased by 100 percent (Rule-1 of Tenth Schedule to the Ordinance), i.e. 6 percent of the import value increased by Custom –duty, sales tax and federal excise duty.

    Commercial Importer importing Plastic raw material (PCT Heading 39.01 to 39.12) for its own use shall pay 4.5 percent of the import value as increased by Custom-duty, sales tax and federal excise duty.

    Persons not appearing in the Active Taxpayers’ List :

    The applicable tax rate is to be increased by 100 percent (Rule-1 of Tenth Schedule to the Ordinance), i.e. 9 percent of the import value increased by Custom –duty, sales tax and federal excise duty.

    4. Persons importing coal shall pay 4 percent.

    Persons not appearing in the Active Taxpayers’ List :

    The applicable tax rate is to be increased by 100 percent (Rule-1 of Tenth Schedule to the Ordinance), i.e. 8 percent of the import value increased by Custom –duty, sales tax and federal excise duty.

    5. Persons importing finished pharmaceutical products that are not manufactured otherwise in Pakistan as certified by the Drug Regulatory of Pakistan, shall pay 4 percent.

    Persons not appearing in the Active Taxpayers’ List :

    The applicable tax rate is to be increased by 100 percent (Rule-1 of Tenth Schedule to the Ordinance), i.e. 8 percent of the import value increased by Custom –duty, sales tax and federal excise duty.

    6. Ship breakers on import of ship shall pay 4.5 percent.

    Persons not appearing in the Active Taxpayers’ List :

    The applicable tax rate is to be increased by 100 percent (Rule-1 of Tenth Schedule to the Ordinance), i.e. 9 percent of the import value increased by Custom –duty, sales tax and federal excise duty.

    7. Industrial undertakings not covered under S.No 1 to 6 shall pay 5.5 percent.

    Persons not appearing in the Active Taxpayers’ List :

    The applicable tax rate is to be increased by 100 percent (Rule-1 of Tenth Schedule to the Ordinance), i.e. 11 percent of the import value increased by Custom –duty, sales tax and federal excise duty.

    8. Companies not covered under S. Nos. 1 to 7 shall pay 5.5 percent.

    Persons not appearing in the Active Taxpayers’ List :

    The applicable tax rate is to be increased by 100 percent (Rule-1 of Tenth Schedule to the Ordinance), i.e. 11 percent of the import value increased by Custom –duty, sales tax and federal excise duty.

    9. Persons not covered Under S.Nos1 to 8 shall pay 6 percent.

    Persons not appearing in the Active Taxpayers’ List :

    The applicable tax rate is to be increased by 100 percent (Rule-1 of Tenth Schedule to the Ordinance), i.e. 12 percent of the import value increased by Custom –duty, sales tax and federal excise duty.

    On Import of Mobile Phones by any Person (individual, AOP, Company) :

    C&F Value of Mobile Phone (in USD ($) ) Tax (in Rs)
    1. Up to $30 the tax rate shall be Rs. 70

    2. Exceeding $30 & up to $100 the tax rate shall be Rs. 730

    3. Exceeding $100 & up to $200 the tax rate shall be Rs. 930

    4.Exceeding $200 & up to $350 the tax rate shall be Rs. 970

    5.Exceeding $350 & up to $500 the tax rate shall be Rs. 3,000

    6.Exceeding $500 the tax rate shall be Rs. 5,200.

    Persons not appearing in the Active Taxpayers’ List :
    The applicable tax rate is to be increased by 100 percent (Rule-1 of Tenth Schedule to the Ordinance), i.e.

    C&F Value of Mobile Phone (in USD ($) ) Tax (in Rs)

    1. Up to $30 the tax rate shall be Rs. 140

    2. Exceeding $30 & up to $100 the tax rate shall be Rs. 1,460

    3. Exceeding $100 & up to $200 the tax rate shall be Rs. 1,860

    4.Exceeding $200 & up to $350 the tax rate shall be Rs. 1,940

    5.Exceeding $350 & up to $500 the tax rate shall be Rs. 6,000

    6.Exceeding $500 the tax rate shall be Rs. 10,400.

  • FBR warns stern action against under-invoicing, mis-declaration

    FBR warns stern action against under-invoicing, mis-declaration

    ISLAMABAD: Federal Board of Revenue (FBR) has decided to launch drive against manufacturers and importers indulged in under invoicing and incurring huge revenue losses to national exchequer.

    FBR chairman Syed Shabbar Zaidi, in a statement, warned such manufacturers and importers to abstain from misdeclaration and under-invoicing.

    The statement said that the smuggling was the greatest menace but under-invocing and misdeclaration of imported goods were also depriving the country from actual revenue collection.

    The chairman warned manufacturers and importers that in case misreporting or under-invoicing was detected then stern action would be taken under relevant provisions of laws.

    The statement said that smuggled goods have badly dented the local manufacturing. The prime minister noticed the huge quantum of smuggling and directed the authorities to take all measures to stop the menace.

    In order to comply with the directives of the prime minister, Pakistan Customs enhanced the enforcement against illegal movements of goods.

  • No unnecessary transfers of senior officials: FBR

    No unnecessary transfers of senior officials: FBR

    ISLAMABAD: Federal Board of Revenue (FBR) on Thursday asked the senior officers to concentrate on their work as no unnecessary transfers and posting will be notified.

    An office order issued by the FBR stated that there had been a tradition in the revenue body for en-bloc transfers and postings each financial year, especially at senior level at the beginning of each financial year.

    “Henceforth, this tradition would not be made as a norm unless necessitated in the interest of revenue or reforms in the organization.”

    All the senior officers and their staff should concentrate on optimal collection of due taxes, facilitation of taxpayers, expansion of tax base and identifying economic activities and business units in their jurisdiction.

    “We all work as a team and shall continue to do so without affecting our ongoing efforts and efficiency,” it added.

    The FBR recently notified transfers and postings of over 3,000 employees of lower cadre. This large scale transfers and postings created panic like situation in the FBR field formation and the work of duty and tax collection was almost at halt.

    The senior officers were also waiting for notifications for their transfers. The revenue collection in the July 2019 witnessed sharp decline and unconfirmed sources said that the collection in the month was so far in the negative zone when compared with the same month of the last year.

    The government has set a target of Rs5,550 billion as collection by the FBR during current fiscal. It is also a fact that the FBR failed to meet the revenue figures of past year of Rs3,852 billion.

    In these challenge situations the transfer and postings created panic and FBR had decided to be careful in shuffling the senior officers of Inland Revenue Service and Pakistan Customs.

  • Inland Revenue directed to ensure no zero-rate supply of gas, electricity

    Inland Revenue directed to ensure no zero-rate supply of gas, electricity

    ISLAMABAD: Federal Board of Revenue (FBR) has directed offices of Inland Revenue to ensure implementation of normal tax rate on supply of gas and electricity to manufacturing facilities.

    In a communication with the offices of Inland Revenue, the FBR said: “Field formations are requested to ensure implementation accordingly and to ensure that no zero-rated supplies are made by utility companies within their jurisdiction.”

    The FBR said that SRO 1125(I)/2011 dated 31.12.2011, relating to zero-rating of five export-oriented sectors, has been rescinded since 1st July, 2019 vide rescinding SRO 694(I)/2019 dated 29.06.2019.

    From 1st July, 2019, the items listed in the said SRO shall be charged to sales tax at 17 percent at import and local supply.

    Only in case of integrated retail outlets, sales tax on finished textile and leather item shall be charged at 14 percent.

    All Sales Tax General Orders (STGOs) granting zero-rating on supply of electricity, gas, diesel, furnace oil and coal have been rescinded vide STGO 100/2019 dated 29.06.2019.

    In order to resolve the issue of increased sales tax refunds of exporters due to withdrawal of zero-rating on inputs, the scope of Expeditious Refund System is proposed to be extended with automated payment on generated RPOs.

    The changes to rules in this respect shall soon be notified, the FBR said.

    The Sales Tax Special Procedure Rules, 2007, issued vide SRO 480(I)/2007 dated 09.06.2007 have also been rescinded through SRO 694(I)/2019, dated 29.06.2019.

    All special procedures provided therein have been thus discontinued. The desirable provisions from these rules have either been transposed to the Sales Tax Act, 1990, or are being transposed to the Sales Tax Rules, 2006.

    Necessary amendments to the Sales Tax Rules, 2006, shall follow in few days, the FBR said.

    The Sales Tax Special Procedure (Withholding) Rules, 2007, issued vide SRO 660(I)/2007 have also been rescinded. The withholding requirements and rates, and the exclusions therefrom have been transposed to the new Eleventh schedule. Other procedural provisions have been re-enacted in Chapter XIV-D of the Sales Tax Rules, 2006, through SRO 698(I)/2019 dated 29.06.2019.

    SRO 693(1)72019 dated 29.06.2019 amends SRO 509(1)72013 pertaining to 5 percent extra tax on supplies of gas and electricity. The Government, semi-government and statutory regulatory bodies have been excluded from levy of said 5 percent extra tax.

    SRO 692(I)/2019 dated 29.06.2019 amends SRO 648(I)/2013 which prescribes exclusions from chargeability of further tax. Two new serial numbers 12 and 13 have been added which provide exclusion from further tax to supplies to the Government, semi government and statutory regulatory bodies and supplies of white crystalline sugar.

    The further tax under Section 3(1 A) of the Sales Tax Act, 1990, shall not be charged in the aforesaid two cases.

    SRO 190(I)/2002, issued in exercise of powers under clause (iii) of the first proviso to section 4 of the Sales Tax Act, 1990, provides that zero-rating shall not apply to exports of goods specified in SRO as made by air or via land route to Afghanistan and through Afghanistan to Central Asian Republics (CARs).

    The 2002-notification has now been amended vide SRO 691(I)/2019 dated 29.06.2019 to exclude PVC and PMC materials from purview of SRO 190(I)/2002, meaning thereby that zero-rating on export of these items shall be available on exports to Afghanistan or to CARs through Afghanistan.

    This notification has been rescinded vide SRO 694(I)/2019 dated 29.06.2019. However, this rescission is erroneous as the notification no. SRO 769(I)/2009 had already been superseded vide SRO 811(I)/2009 dated 19.09.2009, which after some amendments was finally rescinded vide SRO 611(I)/2015 dated 30.06.2015.

    Therefore, rescission of SRO 769(I)/2009 has no practical effect and this may be ignored.

  • Foreign exchange reserves increase to $15.249 billion

    Foreign exchange reserves increase to $15.249 billion

    KARACHI: The total liquid foreign exchange reserves of the country increased by $990 million to $15.249 billion by week ended July 12, 2019 as compared with $14.259 billion a week ago, State Bank of Pakistan (SBP) said on Thursday.

    The official reserves of the SBP increased by $918 million to $8 billion during the week under review as compared with $7.083 billion in the preceding week. The central bank said that the official reserves were increased due to inflows of $991.4 million from International Monetary Fund (IMF) as first tranche of $6 billion extended fund facility for Pakistan.

    The reserves held by commercial banks also increased by $73 million to $7.248 billion by week under review as compared with $7.175 billion in the preceding week.

  • SBP designates three systemically important banks for 2019

    SBP designates three systemically important banks for 2019

    KARACHI: State Bank of Pakistan (SBP) has designated three Domestic Systemically Important Banks (D-SIBs) for the year 2019, a statement said on Thursday.

    The State Bank announced the designation of D-SIBs for the year 2019 under the Framework for Domestic Systemically Important Banks (D-SIBs) that was introduced in April 2018.

    The framework introduced by State Bank is consistent with the international standards and practices and takes into account the local dynamics.

    It specifies the methodology for the identification and designation of D-SIBs, enhanced regulatory and supervisory requirements, and implementation guidelines.

    These enhanced requirements aim to further strengthen the resilience of the Systemically Important banks against shocks and augment their risk management capacities, the SBP said.

    The identification of D-SIBs involves two-step process. In the first step, sample banks are identified each year based on the quantitative and qualitative criteria. In the second step, D-SIBs are designated from among the sample banks on the basis of institutions’ systemic score in terms of their size, interconnectedness, substitutability, and complexity.

    In line with D-SIBs framework, State Bank has carried out the annual assessment on the basis of financials of end December 2018. As per this assessment, three banks viz. Habib Bank Ltd., National Bank of Pakistan, and United Bank Ltd. have been designated as D-SIBs for the year 2019. These banks will be subject to enhanced supervisory requirements and following Higher capital surcharge in the form of additional common equity tier-1 capital (CET-1) with effect from March 31, 2020:

    BUCKETName of InstitutionAdditional CET-1 Requirement for Bucket
    DEmpty3.5%
    CNational Bank of Pakistan and Habib Bank Ltd.2.0%
    BEmpty1.5%
    AUnited Bank Ltd (UBL).1.0%

    Besides, branches of Global-Systemically Important Banks (G-SIBs) operating in Pakistan will hold additional CET1 capital against their risk-weighted assets in Pakistan at the rate as applicable on the respective principal G-SIB.

  • Stock market erodes by 672 points on massive selling

    Stock market erodes by 672 points on massive selling

    KARACHI: The stock market eroded by 672 points on Thursday following significant selling pressure during the day.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 32,310 points as against 32,982 points, showing a decline of 672 points.

    Analysts at Arif Habib Limited said that the market stayed positive for a brief while earlier today and went +32 points, but after that selling pressure ensued causing a slide of 758 points and ending the session at -672 points.

    The index breached recent intra-day low of 32,350 points today and closed at a low of 32,310 points.

    Selling was observed across the board, and initially started with significant volumes in HBL. Banking sector led the volumes table with 15.7 million shares followed by Technology (11 million) and Cement (10 million).

    Scrip wise activity showed TRG ranking top with 8.5 million shares, followed by KEL (7.3 million) and HBL (4.6 million).

    Major declines were observed in OMCs, which saw significant declines in price, trading at and / or close to lower circuits.

    Sectors contributing to the performance include Banks (-115 points), E&P (-101 points), Fertilizer (-100 points), O&GMCs (-58 points), Cement (-46 points).

    Volumes declined further from 112 million shares to 86 million shares (-22 percent DoD). Average traded value however, increased by 0.9 percent DoD to reach US 23.4 million as against US$ 23.2 million.

    Stocks that contributed significantly to the volumes include TRG, KEL, HBL, LOTCHEM and MLCF, which formed 33 percent of total volumes.

    Stocks that contributed positively include MARI (+1 points), POL (+0 points), SHFA (+0 points), HGFA (+0 points) and ATLH (+0 points). Stocks that contributed negatively include ENGRO (-71 points), PPL (-64 points), HBL (-52 points), OGDC (-38 points) and HUBC (-24 points).

  • Rupee falls by 21 paisas against dollar

    Rupee falls by 21 paisas against dollar

    KARACHI: The Pak Rupee fell 21 paisas against dollar on Thursday due to higher demand for import and corporate payments.

    The rupee ended at Rs160.03 to the dollar from previous day’s closing of Rs159.82 in interbank foreign exchange market.

    The foreign currency market was initiated in the range of Rs159.95 and Rs160.05. The market recorded day high of Rs160.10 and low of Rs159.95 and closed at Rs160.03 to the dollar.

    Currency experts said that the local unit was under pressure due to scheduled repayment for foreign debt and payments for import and corporate.

    The exchange rate in open market also witnessed deterioration in rupee value. The buying and selling of dollar recorded at Rs159.80/Rs160.30 from previous day’s closing of Rs159.30/Rs160.30 in cash ready market.

  • Tax collection from salary income declines by 44 percent: State Bank

    Tax collection from salary income declines by 44 percent: State Bank

    KARACHI: Tax collection from salary income declined by 44 percent due to changes in income tax rates for all income slabs, according to a report issued by State Bank of Pakistan (SBP).

    The SBP said that during first nine-months of fiscal year 2018/2019 the tax collection on salaries remained much lower than in the same months of preceding year.

    The Federal Board of Revenue (FBR) collected Rs53.5 billion as tax from salary income during July – March of Fiscal year 2018/2019 as compared with collection of Rs95.2 billion in the same period of the preceding fiscal year.

    “Tax collection on salaries also remained much lower than last year. In absolute terms, tax on salaries declined by Rs 41.7 billion during the review period, mainly due to changes in income tax rates for all income slabs,” the SBP said.

    Direct taxes having a share of 37 percent in overall FBR tax collection recorded a decline of 0.8 percent during Jul-Mar FY19 in contrast to a rise of 12.2 percent during the same period last year.

    Measures like the suspension of tax on mobile top-ups; reduction in come tax rates on salaries; reduction in the withholding tax rate on dividends; and spending under the PSDP explain the decline in direct taxes.

    Within direct taxes, major hit emerged from withholding taxes (largest contributor in direct taxes), which recorded a contraction of 8.7 percent during Jul-Mar FY19 against a rise of 16.1 percent during the same period last year.

    One-half of the decline in total withholding taxes is in the category of telephone/mobiles. Collection from telephone was only Rs 5.3 billion during Jul-Mar FY19 compared to a collection of Rs 38.0 billion during the same period last year.

    This lower collection from telephone/mobile phones was not surprising amid suspension of taxes on mobile phone top-up by the Supreme Court.

    Receipts from contracts were also lower compared to last year largely owing to a cut in the PSDP. Voluntary payments increased by Rs 34.3 billion during Jul-Mar FY19.