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Author: Mrs. Anjum Shahnawaz

  • FBR issues procedure for zero-rated supplies to Duty Free Shops

    FBR issues procedure for zero-rated supplies to Duty Free Shops

    ISLAMABAD: Federal Board of Revenue (FBR) has issued procedure for zero-rated sales tax supply to duty free shops.

    The FBR on Thursday said that a duty free shop (DFS), duly licensed by the Customs authorities, and entitled to receive zero-rated supplies under serial No. 3 of the Fifth Schedule to the Act, for the purpose of making supplies to the passengers in terms of Customs baggage rules, may observe the following procedure for making zero-rated purchases:−

    (a) The DFS shall get itself registered under the Act, furnish monthly returns and maintain records as stipulated under the Act.

    (b) The DFS will apply to the respective Commissioner Inland Revenue for grant of authorization for taking sales tax free delivery of the goods intended to be purchased from a specified registered manufacturer. In the application DFS will exactly specify the description and quantity of goods besides particulars including sales tax registration number of the manufacturer-cum-supplier.

    Only such goods shall be included in the application as DFS intends to sell against duty free allowances under different baggage concessions.

    (c) At the time of filling application under (a) above, DFS will furnish an indemnity bond in a proper form to the effect that in case goods intended to be purchased free of sales tax are used for the purpose other than the purpose of supplying the same against duty free allowance under different baggage concessions, DFS shall pay the amount of sales tax invoiced in such goods besides additional tax payable under section 34 of Sales Tax Act, 1990.

    Original indemnity bond shall be retained under safe custody in the concerned RTO or LTU and two attested photocopies of the accepted indemnity bond shall be given to DFS and DFS shall give one copy to the concerned manufacturer.

    (d) on the basis of authorization given by the Commissioner Inland Revenue, after acceptance of the indemnity bond furnished by DFS as aforesaid, the manufacturer shall deliver the goods against a zero-rated invoice issued in the name of DFS and quote the reference number and date of authorization issued by the Commissioner Inland Revenue.

    The zero-rated invoice shall show the value of goods in rupees as well as in US dollar. The goods shall be delivered to DFS only after affixing irremovable sticker containing a caution to the effect that it is meant exclusively for supply to and sales by DFS under customs baggage rules.

    (e) DFS shall pay price of the goods in foreign currency (US dollars) which shall be surrendered by the manufacturer to the State Bank of Pakistan and manufacturer shall receive the payment in Pak rupees as per the prevailing State Bank of Pakistan’s procedures and foreign exchange regulations.

    (f) on receipt of goods DFS shall issue a certificate of receipt indicating the reference number and date of the aforesaid authorization and serial number and date of zero-rated invoice.

    This certificate shall be duly attested by the customs staff posted at duty free shops. A copy of this certificate shall be sent each to the manufacturer as well as to the Commissioner Inland Revenue.

    (g) DFS shall maintain proper separate records of the zero-rated purchases and sales of goods purchased under this rule. Full particulars of the passengers buying these goods under baggage rules shall be invariably mentioned in the records. Similarly, the manufacturer shall maintain proper record relating to the supplies made to DFS without payment of sales tax. Both DFS and the manufacturer shall present these records to the sales tax staff for inspection or audit as and when required.

    (h) the said documents shall be furnished in original with a set of photocopies and returned to the manufacturer after tallying an endorsement of verification on the photocopies by the officer-incharge of Refund Division of the Regional Tax Office (RTO).

    Refund shall be processed and sanctioned in accordance with chapter V of the Sales Tax Rules, 2006 treating the claimant as manufacturer-cum-exporter.

    (i) DFS shall procure goods under this order to meet its requirements for a period not exceeding three months and shall ensure that these goods do not find way in the local market. DFS shall be responsible to pay sales tax and additional tax in case any such goods are found being sold in the local market.

    (j) the indemnity bond furnished by DFS shall be released by the Commissioner Inland Revenue only after satisfying himself either through audit or otherwise that goods have been sold by DFS only against duty free allowances under the relevant baggage concessions.

  • HBL declares 51 percent decline in net profit during first quarter

    HBL declares 51 percent decline in net profit during first quarter

    KARACHI: Habib Bank Limited (HBL) on Thursday declared 51 percent decline in net profit during the first half ending June 30, 2019.

    The profit after tax of the bank declined to Rs3.927 billion during first half (January – June 2019) as compared with Rs8.128 billion in the corresponding half of the last year.

    According to half yearly financial results submitted to Pakistan Stock Exchange (PSX), the bank said that its results for the first half 2019 were impacted by two specific market events.

    The further 15 percent depreciation in the value of rupee, which was impacted Rs 6 billion.

    A 9 percent fall in the continuously declining PSX, which was impacted Rs1.9 billion.

    The incremental impact of these, compared to the first half of 2018, is Rs4.8 billion. “Resultantly, reported profit before tax of Rs9.9 billion for first half 2019 is Rs4.2 billion or 30 percent lower than for the same period last year.”

    The bank further said that the retrospective imposition of super tax on 2017 earnings has increased the effective tax rate for the half year to 60 percent.

    Profit after tax for the first half 2019 is therefore Rs3.9 billion compared to Rs 8.1 billion for the first half of 2018.

    Earnings per share for the period under review are at Rs 2.53.

    The bank said that its core domestic business continued to grow steadily. Total deposits increased by 6.8 percent, crossing the Rs. 2.0 trillion mark, with half the growth coming from current accounts.

    The domestic mix of current accounts improved by 66bps to 38.2 percent while the CASA ratio of 85.2 percent was just below December 2018 levels of 85.4 percent.

    Domestic advances increased marginally over December 2018 levels but the strong run-up in 2018 resulted in average advances for the first half 2019 being 25 percent (Rs 180 billion) higher than in the first half of 2018.

    The Consumer business continued its steady growth with average consumer loans increasing by 17 percent over the first half of 2018.

    Overseas deposits and advances both increased in US dollar terms with the impact more pronounced in Rupees.

    HBL’s total deposits thus grew by 7.8 percent over December 2018 to Rs 2.3 trillion with net advances of the Bank up by 5 percent to Rs 1.1 trillion.

    Average domestic deposits, driven by Rs 62 billion growth in average current accounts, increased by around Rs 100 billion.

    The average balance sheet thus increased by Rs 135 billion (6 percent). The net interest margin in the domestic business improved by 59 bps as earning asset yields improved significantly due to re-pricing of loans and rollover of maturing investments at higher rates.

    Domestic net interest income for the first half of 2019 is thus 18 percent higher than for the same period last year.

    With a 14 percent improvement from the international business in Dollar terms, total net interest income for HBL increased by 20 percent, to Rs 47.7 billion.

    Fee income continued to improve, increasing by 16 percent over the first half 2018, to Rs 10.7 billion as international fees were restored to their prior year levels.

    Domestic fee growth of 15 percent was robust, achieved due to strong performances from the card related business, trade fees and investment banking income.

    The sale of previously impaired equities resulted in a realized capital loss of Rs 1.8 billion, but with no overall P&L impact.

    “Excluding this, income from treasury related activities increased to Rs 3.4 billion in the first half of 2019 compared to Rs 2.8 billion in the same period last year,” the bank said.

    Core non mark-up income for the first half of 2019, excluding the revaluation loss on the Bank’s open position and the capital loss described above, increased by 13 percent YoY to Rs 15.8 billion.

    Headline administrative expenses for the first half of 2019 increased by 24 percent to Rs 45.0 billion. This was largely driven by an increase in the ongoing remediation, legal and regulatory costs related to the Bank’s New York branch.

    The substantial impact of Rupee depreciation on international expenses and the incremental cost of HBL’s new office building also contributed to the expense growth.

    Excluding these major items, expenses increased by 11 percent.

    Total provisions for the first half of 2019 are Rs 511 million. Net reversals in the domestic business continue, although they are considerably lower, notwithstanding an improved recovery performance.

  • Rupee gains 40 paisas in early trade

    Rupee gains 40 paisas in early trade

    KARACHI: The Pak Rupee continued appreciation against dollar as the local unit gained 40 paisas in early trade on Thursday.

    The US dollar is being traded at Rs157.85 in interbank foreign exchange market. Last day the rupee was ended at Rs158.25 to the dollar.

    Currency experts said that the inflows of home remittances related to Eid-ul-Azha helped the rupee to gain against the greenback.

    Further the improved exports receipts also helped the rupee to gain value.

    Prime Minister’s Advisor on Commerce, Textile, Industries and Production and Investment Abdul Razak Dawood a day earlier said that Pakistan’s exports had increased by 14.23 percent in July, 2019 as compared to same month of last year.

    He further said that Pakistan’s imports from other countries also reduced by 18.39 percent during the month.

  • KSE-100 falls below 30,000 points, sheds 433 points in early trade

    KSE-100 falls below 30,000 points, sheds 433 points in early trade

    KARACHI: The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) fell below the psychological barrier of 30,000 points and trading at 29,844 points on Thursday morning.

    The KSE-100 index lost 433 points in less than one hour trading at 10:13AM Thursday August 08, 2019. The stock market was ended at 30,277 points on Wednesday.

    Stock analysts said that the ongoing Kashmir issue and FATF action plan resulted in negative sentiments of investors.

    The market today recorded high of 30,277 points and low of 29,843 points.

  • 2019/2020: Withholding tax rates on insurance premium

    2019/2020: Withholding tax rates on insurance premium

    ISLAMABAD: The insurance companies are required to deduct/collect withholding tax only from persons not appearing on the Active Taxpayers List (ATL) at the time of collection of insurance premium.

    Federal Board of Revenue (FBR) issued withholding tax card for tax year 2019/2020 and updated tax on insurance premium under Section 236U of Income Tax Ordinance, 2001.

    The FBR said that advance tax to be collected at the time of collection of insurance premium from a person whose name is not appearing in the active taxpayers’ list, by every insurance company in respect of General Insurance Premium and Life Insurance Premium.

    The withholding tax rates shall be:

    General Insurance Premium at four percent

    Life Insurance Premium if exceeding Rs0.3 million in aggregate per annum at one percent

    In other cases there will be not tax collection.

  • Business community condemns Indian illegal action

    Business community condemns Indian illegal action

    KARACHI: The business community has condemned India’s illegal actions, Indian atrocities and violation of rights of Kashmiri people.

    The Federation of Pakistan Chambers of Commerce and Industry (FPCCI), on behalf of entire business community, passed a resolution to condemn India’s illegal actions, Indian atrocities and violation of rights of Kashmiri people.

    It said that India has made breach of all international laws.

    According to resolutions of UNO, Kashmir is a disputed territory and actions taken presently by India are futile.

    “We salute to government and Armed forces for their perseverance and consistent diplomacy in raising the issue,” the FPCCI said.

    Business community of Pakistan whole heartedly expresses the solidarity with people of Kashmir and government as well.

    Pakistan should send delegations to all international forums for raising the voice against this issue, according to the resolution.

    FPCCI should inform to all business communities in the world by sending letters about ongoing Indian atrocities in Kashmir and should apprise to Indian Business community (FICCI), SAARC CCI, ICCIA and Other peace making institutions as well.

    Business community of Pakistan appreciated the role of China, Malaysia, Turkey, Saudi Arabia and OIC for condemning the atrocities and oppressions of India with Kasmiri people.

  • SBP launches Islamic working capital financing for small, medium enterprises

    SBP launches Islamic working capital financing for small, medium enterprises

    KARACHI: State Bank of Pakistan (SBP) on Wednesday launched Islamic Working Capital Financing (IWCF) for small enterprises and low-end medium enterprises.

    The central bank said that “Refinance Scheme for Working Capital financing of Small Enterprises and Low-End Medium Enterprises” was available through IH&SMEFD Circular No. 09 of 2017. However, Shariah compliant alternative of this scheme was not available.

    Now, SBP is introducing a Mudarabah based “Islamic Refinance Scheme for Working Capital Financing of Small Enterprises and Low-End Medium Enterprises (IWCF)”.

    SBP shall make Mudarabah investment in general pool of Participating Islamic Financial Institutions under the scheme.

    Financing shall be initially available to meet the working capital requirements of SME sectors, included: Information Technology (IT); Gems and jewelry; Furniture; Leather industry; Surgical goods; Fruits, vegetables and food processing & packaging; Dates processing; Printing & packaging.

    Small Enterprises (SEs) as defined in SBP’s Prudential Regulations (PRs) for SME financing are eligible under the scheme. Maximum financing limit for SEs is the same as defined in SBP’s relevant PRs.

    Medium enterprises (MEs) with annual sales turnover of up to Rs 300 million are eligible under the scheme. Maximum financing limit for MEs is Rs 50 million. Maximum financing tenor under the scheme is one year.

    The banks/development financial institutions (DFIs) may submit their requests for the status of Participating Islamic Financial Institution, the SBP said.

    They may also apply for allocation/ assignment of limit under the scheme. These requests may be submitted within 30 days from the date of issuance of this circular, the SBP added.

  • Customs intelligence official awarded ‘dismissal from service’ on corruption charges

    Customs intelligence official awarded ‘dismissal from service’ on corruption charges

    ISLAMABAD: Federal Board of Revenue (FBR) has imposed major penalty of ‘dismissal from service’ upon customs intelligence official on the charges of corruption, misconduct and inefficiency.

    In a notification issued on Wednesday, the FBR said that disciplinary proceedings under Government Servants (Efficiency & Discipline) Rules, 1973 were initiated against Muhammad Afzal, Superintendent (BS-16) (Time Scale BS-17) (under suspension), Directorate of Intelligence & Investigation-Customs, Karachi vide Charge Sheet No.2(90)/2012-Cus-III dated 20.04.2017.

    Ms. Saadia Sheeraz, the then Additional Director, Directorate of Customs Valuation, Karachi was appointed as Inquiry Officer to conduct inquiry on account of various acts of omission and commission committed by the accused officer constituting “Inefficiency”, “Misconduct” and “Corruption”.

    The Inquiry Officer submitted inquiry report dated 05.06.2018, according to which the charges of “Inefficiency”, “Misconduct” and “Corruption” were established against the accused officer.

    A Show Cause Notice dated 19.06.2018 was issued to the accused officer and in response, he submitted his defence reply. After considering the inquiry report, reply of the accused to the Show Cause Notice and his oral submissions during the personal hearing with the Authorized Officer on 01.08.2018, the accused officer has been found guilty of “Inefficiency”, “Misconduct” and “Corruption” under rule 3(a),(b)&(c) of the Government Servants (E&D) Rules, 1973.

    The Member (Admn), being the Authority in this case, after having considered all aspects of the case and the recommendations of the Authorized Officer has, therefore, imposed the major penalty of “Dismissal from service” upon Muhammad Afzal, Superintendent under rule 4(1)(b)(iv) of the Govt. Servants (Efficiency & Discipline) Rules, 1973 with immediate effect.

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  • FBR promotes 57 officials to post of superintendents (BS-16)

    FBR promotes 57 officials to post of superintendents (BS-16)

    ISLAMABAD: Federal Board of Revenue (FBR) on Wednesday promoted 57 officials including superintends, inspectors, intelligence officers of customs department to the post of Superintendent (BS-16) and notified their transfer and postings with immediate effect and until further orders.

    Following officers have been promoted and posted to new places:

    01. Atique Ahmed Deputy Superintendent posted at the same place Regional Tax Office (RTO) III Karachi.

    02. Asad Mirza, Deputy Superintendent posted to Model Customs Collectorate (Preventive) Quetta from MCC Appraisement Quetta.

    03. Nawabzada Javed Haider, Inspector posted to Directorate of Transit Trade, Karachi from MCC Hyderabad.

    04. Shuja Salam, inspector posted to Directorate of Transit Trade, Karachi from MCC Hyderabad.

    05. Saudal Hasan, Inspector posted to Directorate of Transit Trade, Quetta from MCC Hyderabad.

    06. Ghulam Muhammad, intelligence officer posted to Intelligence and Investigation, FBR, Hyderabad from Intelligence and Investigation, FBR Karachi.

    07. Younis Ata, inspector posted to same place MCC Preventive Quetta.

    08. Ehtasham-ul-Haq, inspector posted to same place MCC Faisalabad.

    09. Saleem Shah, Inspector posted to same place MCC Preventive Quetta.

    10. Tariq Sultan, inspector posted to MCC Preventive Quetta from MCC Appraisement Quetta.

    11. Arshad Zubair, inspector posted to MCC Preventive Quetta from MCC Appraisement Quetta.

    12. Muhammad Asif Zaman, Inspector posted to same place MCC Preventive Quetta.

    13. Faisal Siddique, Inspector posted to MCC Preventive Quetta from MCC Appraisement Quetta.

    14. Maqsood Ahmed Jafri, inspector posted to same place Corporate RTO Karachi.

    15. Habib-ur-Rehman, Inspector posted to same place RTO III Karachi.

    16. Malik Muhammad Aslam, Inspector posted to same place Large Taxpayers Unit (LTU), Lahore.

    17. Riasat Ali Javed, inspector posted to same place MCC Preventive Lahore.

    18. Younus Qadri, intelligence officer posted to same place Intelligence and Investigation Lahore.

    19. Muhammad Ashraf Bhatti, inspector posted to same place CRTO Lahore.

    20. Malik Muhammad Ashraf, Inspector posted to same place MCC Preventive Karachi.

    21. Tariq Mehmood Butt, inspector posted to same place RTO Gujranwala,

    22. Naveed Ijaz Bajwa, inspector posted to MCC Preventive Lahore from MCC Sialkot.

    23. Muhamamd Aslam, Inspector, posted to MCC Preventive Peshawar from MCC Appraisement Peshawar.

    24. Zahid Habib Ansari, Inspector posted to same place MCC Faisalabad.

    25. Mir Zaman, inspector posted MCC Preventive Peshawar from MCC Appraisement Peshawar.

    26. Syed Muhamamd Ali, inspector posted to same place MCC Appraisement Lahore.

    27. Muhammad Aslam Makhdoom, inspector posted MCC Preventive Quetta from MCC Appraisement Quetta.

    28. Irfan Mumtaz, Inspector posted to same place MCC Faisalabad.

    29. Mansab Ali Dogar, inspector posted to same place MCC Multan.

    30. Mumtaz Ali Nizamani, inspector posted to same place RTO-III Karachi.

    31. Masood Sadiq Tarar, inspector posted to same place MCC Multan.

    32. Sadaqatum Nazar Ali, inspector posted to MCC Preventive Lahore from MCC Appraisement Lahore.

    33. Muhammad Zahid Nadeem, Inspector posted to same place Directorate of Internal Audit (Customs), Lahore.

    34. Syed Mahmood Pervez, inspector posted to same place CRTO Lahore.

    35. Rai Waqar Ahmad, inspector posted to same place MCC Preventive Lahore.

    36. Zafar Ullah Khan Niazi, inspector posted to MCC Preventive Lahore from Internal Audit (Customs) Lahore.

    37. Saleem Raza, inspector posted to same place MCC Preventive Lahore.

    38. Sohail Iqbal, inspector posted to MCC Preventive Lahore from MCC Appraisement Lahore.

    39. Qaiser Ehsan Rao, inspector posted to same place MCC Preventive Lahore.

    40. Mazhar Elahi, inspector posted to MCC Preventive Peshawar from MCC Appraisement Peshawar.

    41. Seikh Mudassar Ahmad, inspector posted to MCC Preventive Peshawar from MCC Appraisement Peshawar.

    42. Rai Khalid Javed, inspector posted to same pace MCC Multan.

    43. Tariq Hussain Bhutto, inspector posted to Directorate of Transit Trade Quetta from MCC Hyderabad.

    44. Shahid Naseem Joiya posted to MCC Preventive Lahore from Directorate of IPR Enforcement (Central) Lahore.

    45. Ibrar Hussain, Inspector posted to same place MCC Preventive Lahore.

    46. Ashfaq Ahmad, inspector posted to same place MCC Multan.

    47. Mirza Iqbal Hussain, inspector posted to same place MCC Preventive Lahore.

    48. Muhammad Saeed, inspector posted to same place MCC Preventive Lahore.

    49. Muhammad Mahmood Anwar, inspector posted to same place MCC Preventive Lahore.

    50. Abdul Qayyum, inspector posted to same place MCC Preventive Peshawar.

    51. Babar Rehman, inspector posted to same place MCC Multan.

    52. Naseem Mahmood Cheema, inspector, posted to same place MCC Preventive Lahore.

    53. Malik Sher Afzal, inspector posted to same place MCC Gilgit Baltistan.

    54. Syed Shahid Abbas, inspector posted to same place MCC Appraisement Lahore.

    55. Haleem Ullah, inspector posted to Intelligence and Investigation, FBR, Islamabad from MCC Gilgit Baltistan.

    56. Khawaja Hur Abbas, inspector posted to same place MCC Preventive Lahore.

    57. Anjum Sheraz, Inspector posted to MCC Multan from MCC Appraisement Lahore.

    FBR said that the promotions of above mentioned officials would take effect from the date of their joining / charge assumption, subject to the condition that no disciplinary proceedings were pending against them.

    They will be on probation for a period of one year, extendable for further period, not exceeding one year, provided that if no order is issued by the day following the termination of probationary period, the appointment shall deem to be held until further order.

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  • FBR allows retail price printing relaxation on imported consumer items

    FBR allows retail price printing relaxation on imported consumer items

    ISLAMABAD: Federal Board of Revenue (FBR) on Wednesday extended relaxation on mandatory printing of retail prices on imported consumer items after receiving several representations from stakeholders.

    On the basis of representations, the FBR granted relaxation by issuing sales tax notification.

    The FBR said that for the imports from North and South America, if bill of lading date is prior to June 30, 2019, the condition of printing retail price is relaxed up to August 31, 2019, subject to the condition that the importer declares retail price for each of the imported items in terms of Section 2(27) of the Sales Tax Act, 1990, and that the goods are assessed for sales tax on such declared retail price.

    FBR said that the retail price, if not printed at import stage, can be printed at the port of import in the prescribed manner.

    If that is also not possible, the importer shall undertake to print the retail price after clearance of goods and shall pay sales tax on retail rice which shall not be less than 130 percent of the customs value increased by assessed customs duties, excise duty and other applicable taxes and charges excluding sales tax.

    The FBR said that if the phrase ‘in retail packing’ appears against any item/entry in the Third Schedule, the retail price taxation thereon shall not apply if such items are not in retail packing at the time of import.

    All other items shall be charged to sales tax on the basis of retail price even if not in retail packing.

    Under existing law, the goods being raw materials or intermediary goods, with customs duty rate below 16 percent are excluded from purview of value addition tax under the Twelfth Schedule.

    Such items, if imported by a commercial importer, are in such form that the same can be sold to the customer without further manufacturing process, such as tea, spices etc. the same shall be subject to value addition tax.

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