Author: Mrs. Anjum Shahnawaz

Finance Act 2019: Tax slabs for AOPs, business individuals

ISLAMABAD: Federal Board of Revenue (FBR) has notified tax rates on income derived by Association of Persons (AOPs) and business individuals during fiscal year 2019/2020.

According to the Finance Act, 2019 following are the tax slabs to be applicable on the income of AOPs and business individuals for the tax year 2020:

S. No	Taxable Income	Rate of Tax
(1)	(2)	(3)
1.	Where taxable income does not exceed Rs. 400,000	0%
2.	Where taxable income exceeds Rs. 400,000 but does not exceed Rs. 600,000	5% of the amount exceeding Rs. 400,000
3.	Where taxable income exceeds Rs. 600,000 but does not exceed Rs. 1,200,000	Rs. 10,000 plus 10% of the amount exceeding Rs. 600,000
4.	Where taxable income exceeds Rs. 1,200,000 but does not exceed Rs. 2,400,000	Rs. 70,000 plus 15% of the amount exceeding Rs. 1,200,000
5	Where taxable income exceeds Rs. 2,400,000 but does not exceed Rs. 3,000,000	Rs. 250,000 plus 20% of the amount exceeding Rs. 2,400,000
6	Where taxable income exceeds Rs. 3,000,000 but does not exceed Rs. 4,000,000	Rs. 370,000 plus 25% of the amount exceeding Rs. 3,000,000
7.	Where taxable income exceeds Rs. 4,000,000 but does not exceed Rs. 6,000,000	Rs. 620,000 plus 30% of the amount exceeding Rs. 4,000,000
8.	Where taxable income exceeds Rs. 6,000,000	Rs. 1,220,000 plus 35% of the amount exceeding Rs. 6,000,000

July 2, 2019

Finance Act 2019: Tax slabs for salary income

ISLAMABAD: The Parliament has approved the Finance Bill 2019 to implement rate of income tax on salary income.

The statutory exempt income has been enhanced to Rs600,000 for tax year 2020 through Finance Act, 2019.

S.No	Taxable Income	Rate of Tax
(1)	(2)	(3)
1.	Where taxable income does not exceed Rs. 600,000	0%
2.	Where taxable income exceeds Rs. 600,000 but does not exceed Rs. 1,200,000	5% of the amount exceeding Rs. 600,000
3.	Where taxable income exceeds Rs. 1,200,000 but does not exceed Rs. 1,800,000	Rs. 30,000 plus 10% of the amount exceeding Rs. 1,200,000
4.	Where taxable income exceeds Rs. 1,800,000 but does not exceed Rs. 2,500,000	Rs. 90,000 plus 15% of the amount exceeding Rs. 1,800,000
5.	Where taxable income exceeds Rs. 2,500,000 but does not exceed Rs. 3,500,000	Rs. 195,000 plus 17.5% of the amount exceeding Rs. 2,500,000
6.	Where taxable income exceeds Rs. 3,500,000 but does not exceed Rs. 5,000,000	Rs. 370,000 plus 20% of the amount exceeding Rs. 3,500,000
7.	Where taxable income exceeds Rs. 5,000,000 but does not exceed Rs. 8,000,000	Rs. 670,000 plus 22.5% of the amount exceeding Rs. 5,000,000
8.	Where taxable income exceeds Rs. 8,000,000 but does not exceed Rs. 12,000,000	Rs. 1,345,000 plus 25% of the amount exceeding Rs. 8,000,000
9.	Where taxable income exceeds Rs. 12,000,000 but does not exceed Rs.30,000,000	Rs. 2,345,000 plus 27.5% of the amount exceeding Rs. 12,000,000
10.	Where taxable income exceeds Rs. 30,000,000 but does not exceed Rs.50,000,000	Rs. 7,295,000 plus 30% of the amount exceeding Rs. 30,000,000
11.	Where taxable income exceeds Rs. 50,000,000 but does not exceed Rs.75,000,000	Rs. 13,295,000 plus 32.5% of the amount exceeding Rs. 50,000,000
12.	Where taxable income exceeds Rs.75,000,000	Rs. 21,420,000 plus 35% of the amount exceeding Rs. 75,000,000″;

The tax slabs should be applicable on a person’s where the income of an individual chargeable under the head “salary” exceeds seventy-five per cent of his taxable income.

July 2, 2019

Headline inflation increases by 8.9 percent in June

ISLAMABAD: The headline inflation based on Consumer Price Index (CPI) increased by 8.9 percent on year-on-year basis in June, 2019 as compared to an increase of 9.1 percent in the previous month and 5.2 percent in June 2018, Pakistan Bureau of Statistics (PBS) said on Tuesday.

On month-on-month basis, it increased by 0.4 percent in June 2019 as compared to an increase of 0.8 percent in the previous month and an increase of 0.6 percent in corresponding month i.e. June 2018.

Core inflation measured by non-food non-energy CPI (Core NFNE) increased by 7.2 percent on (YoY) basis in June 2019 as compared to an increase of 7.2 percent in the previous month and 7.1 percent in June 2018.

On (MoM) basis, it in-creased by 0.3 percent in June 2019 as compared to an increase of 0.4 percent in previous month, and an increase of 0.3 percent in corresponding month of last year i.e. June 2018.

Core inflation, measured by 20 percent weighted trimmed mean CPI (Core Trimmed) increased by 7.3 percent on (YoY) ba-sis in June 2019 as compared to 7.5 percent in the previous month and by 5.4 percent in June 2018.

On (MoM) basis, it in-creased by 0.4 percent in June 2019 as compared to an increase of 0.4 percent in the previous month and an increase of 0.2 percent in corresponding month of last year i.e. June 2018.

Sensitive Price Indicator (SPI) based inflation on YoY basis increased by 10.6 percent in June 2019 as compared to an increase of 10.8 percent a month earlier and an increase of 1.9 percent in June 2018.

On MoM basis, it increased by 1.6 percent as compared to an increase of 1.2 percent in the previous month and an increase of 1.8 percent in corresponding month of last year i.e. June 2018.

Wholesale Price Index (WPI) inflation on YoY basis increased by 12.7 percent in June 2019 as compared to an increase of 14.0 percent a month earlier and an increase of 7.6 percent in June 2018.

WPI inflation on MoM basis increased by 0.3 percent in June 2019 as compared to an increase of 1.4 percent a month earlier and an increase of 1.5 percent in corresponding month of last year i.e. June 2018.

July 2, 2019
Karachi Chamber urges FBR to adjust refunds of previous amnesty’s refunds

KARACHI: President Karachi Chamber of Commerce and Industry (KCCI) Junaid Esmail Makda, while referring to his conversation with Minster of State for Revenue Hammad Azhar and Member IR – FBR Dr. Hamid Ateeq Sarwar during meetings in Islamabad, stated that after listening to the grievances being faced by those individuals whose asset declaration cases were stuck up due to some IT glitches on last day of Amnesty Scheme 2018, the State Minister and Member IR suggested that five percent tax paid against the assets declared by such individuals can be refunded so that they could re-declare their assets in this year’s Asset Declaration Scheme.

In a statement issued on Tuesday, President KCCI pointed out that KCCI received numerous complaints about unprocessed cases of last year’s amnesty scheme in which although the individuals submitted their taxes well in time within the last date of the amnesty scheme but their cases were not processed in FBR’s portal and to date, the fate of all such cases has not be decided.

“KCCI has written numerous letters from time to time so that the issue could be resolved and the policymakers have been assuring to look into this issue but no relief has been provided so far”, he added.

He said that as the government was making all out efforts to make this year’s Asset Declaration Scheme successful, they must look into the possibility of providing relief to such individuals whose cases were not processed in last year’s Amnesty Scheme due to congestion in FBR’s portal or any other IT-related glitch.

Junaid Makda suggested that FBR should come up with a relevant notification in this regard in which they must announce refunds to such cases so that these individuals could quickly avail this year’s amnesty scheme.

He was fairly optimistic that keeping in view the government’s seriousness towards the Ease of Doing Business, the FBR would look into this matter and accordingly announce relief for such individuals as per commitment which would encourage many others to come forward to participate in this year’s Asset Declaration Scheme.

He was of the opinion that although the last date for Asset Declaration Scheme has been extended for three more days but it was not suffice and the government must extend it for at least 30 more days so that maximum number of people could avail this scheme which would prove beneficial for the national exchequer. “The business community remained heavily engaged in identifying budget anomalies, leaving a very little time to examine and look into the possibility of benefitting from Asset Declaration Scheme whose deadline has to be extended”, he added.

July 2, 2019
Stock market gains 311 points on improved rupee value

KARACHI: The stock market gained 311 points on Tuesday amid improvement in rupee value and signing of IMF loan program on July 03.

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 34,307 points as against 33,996 points showing an increase of +311 points.

Analysts at Arif Habib Limited said that despite the bearish outlook at the start of the day, courtesy high Rupee:USD parity, pending sign-off of IMF Loan package on July 3rd and increase in gas and electricity tariffs besides the protest of textile and cement processors / dealers.

Two of the major macro economic indicators that positively impacted the market were decline in rupee:dollar parity as well as a lower reading of Inflation against street consensus.

Overall, Cement, Refinery, E&P and steel sector performed well today. Power sector led the volumes table with 15 million shares, followed by Chemical (14 million). KEL topped the volumes with 13.5 million shares, followed by TRG (8 million) and LOTCHEM (7 million).

Sectors contributing to the performance include Fertilizer (+84 points), Banks (+71 points), Cement (+40 points), E&P (+31 points) and Pharma (+23 points).

Volumes increased from 48 million shares to 91.1 million shares (+90 percent DoD. Average traded value also increased by 74 percent to reach US$ 19.3 million as against US$ 11 million.

Stocks that contributed significantly to the volumes include KEL, TRG, LOTCHEM, UNITY and MLCF, which formed 44 percent of total volumes.
Stocks that contributed positively include FFC (+40 points), HBL (+34 points), NBP (+17 points), LUCK (+17 points) and MCB (+17 points).

Stocks that contributed negatively include NESTLE (-24 points), MEBL (-6 points), PSMC (-3 points), THALL (-3 points) and SML (-2 points).

July 2, 2019
Rupee gains against dollar on positive IMF deal expectations

KARACHI: The Pak Rupee gained Rs1.99 against dollar on Tuesday owing to hopes of positive outcome of IMF board meeting on Pakistan loan program.

The rupee ended Rs158.06 to the dollar from the closing of last trading day on June 28, 2019 at Rs160.05 in interbank foreign exchange market.

The foreign currency market was initiated at Rs159.50 and Rs160.50. The market recorded day high of Rs159.75 and low of Rs157.50 and closed at Rs158.06.

The exchange rate in open market also witnessed appreciation in value of the local unit.

The buying and selling of dollar recorded at Rs156.50/Rs157.50 from last Saturday’s closing of Rs159.50/Rs161.00 in cash ready market.

July 2, 2019
FBR grants general relaxation to file tax year 2018 income returns up to August 02

ISLAMABAD: Federal Board of Revenue (FBR) on Tuesday extended the date for filing income tax returns and wealth statement for tax year 2018 up to August 02, 2019 for all persons required to file their returns under Income Tax Ordinance, 2001.

The FBR issued Circular No. 07 dated July 02, 2019 to grant extension for filing income tax returns

A day earlier the FBR issued Circular No. 06 and allowed persons, who own immovable properties and motor vehicles above engine capacity 1000CC to file their income tax returns up to August 02, 2019.

The FBR said that in continuation of Circular 06/2019 dated 01.07.2019, the other individuals/ AOPs and companies who were required to file their income tax returns/ statements for the Tax Year 2018 but have not filed, may avail the opportunity of filing of income tax return/ statement for the tax year 2018. Similarly, the individuals/ AOPs and companies who intend to revise the income tax return for the tax year 2018, may file revised income tax return/ statements till 02.08.2019.

Accordingly, in exercise of the powers conferred under Section 214A of the Income Tax Ordinance, 2001, the Federal Board of Revenue is pleased to further extend the date of filing of Income Tax Returns/ Statements for the Tax Year 2018 for individuals/ AOPs and companies up to August 02, 2019.

July 2, 2019
FBR allows immovable property, motor vehicle owners to file tax year 2018 returns up to August 02

ISLAMABAD: Federal Board of Revenue (FBR) on Monday extended the date for filing income tax return and wealth statement for tax year 2018 up to August 2, 2019 for taxpayers, who own immovable properties and motor vehicles.

The FBR issued Income Tax Circular No. 06 dated July 01, 2019 for extension in date of filing of income tax returns/ statements for tax year 2018.

The FBR said that following persons are required to furnish a return of income for tax year in terms of Section 114(1)(b)(iii) to (vi) of the Income Tax Ordinance, 2001:

(iii) Owns immovable properties with land area of two hundred and fifty square yards or more or owns any flat located in areas falling within the municipal limits existing immediately before the commencement of Local Government in the provinces; or areas in a Cantonment; or the Islamabad Capital Territory.

(iv) Owns immovable property with a land area of five hundred square yards or more located in a rating area;

(v) Owns a flat having covered area of two thousand square feet or more located in a rating area;

(vi) Owns a motor vehicle having engine capacity above 1000CC;

The FBR said that it is observed that some taxpayers falling under above conditions have not filed their income tax return/statement for the tax year 2018. “In order to facilitate the taxpayers falling under the above categories , they are hereby given an opportunity to file their income tax return/ statements.”

The FBR further said that in order to facilitate it has been decided to extend the date of filing of income tax return/statements for the tax year 2018 up to August 02, 2019 for taxpayers of above mentioned categories.

July 2, 2019
Baggage Rules amended: passengers arriving, departing required to file customs declaration

ISLAMABAD: Federal Board of Revenue (FBR) on Monday made mandatory the requirement of filing customs declaration for passengers, in case of accompanied baggage, at the time of arrival or departure.

The FBR issued SRO 689 (I)/2019 to implement the amendments in Baggage Rules, 2006, which have been previously published through SRO 653(I)/2019 dated June 22, 2019.

In the Baggage Rules, 2006 a new Rule 7A has been inserted, which stated: “In case of accompanied baggage, the passengers at the time of arrival or departure, shall file a customs declaration form as set out I n Appendix-C.”

Under the Appendix-C, a passenger is required to provide particulars, included: name, gender, date of birth, passport number, nationality, country coming from/going to, country going to (if in transit), names of countries visited during last seven days, purpose of visit (persona, official, business, tourism), contact person/sponsor contact number in Pakistan and address in Pakistan.

The passenger is required to make following declaration:

Are you carrying any of the following goods?
a. Prohibited / restricted goods such as Narcotics, Psychotropic substance, firearms, weapons, satellite phones etc?

b. Gold jewelry, precious / semi-precious stones

c. Foreign currency in US $ or equivalent

d. Any other declaration to be made to Customs

Passengers have been advised to inform to customs officers at the Red Channel if any of the above answer is in ‘Yes’.

July 1, 2019
FBR notifies new chapter for sales tax withholding rules

ISLAMABAD: Federal Board of Revenue (FBR) has notified a new chapter for deduction and deposit of sales tax withholding on taxable goods and services.

The rules shall apply from today or July 01, 2019.

The FBR issued SRO 698(I)/2019 to amend Sales Tax Rules, 2006 to include Chapter XIV-D regarding withholding of sales tax by recipient of supply.

Following is the text of rules notified by the FBR through the SRO.

“150ZZH. Application.— (1) This chapter shall apply to taxable goods and services as are supplied to the withholding agents as specified in the Eleventh Schedule to the Act, for the purpose of deduction and deposit of sales tax persons registered as exporters.

(2) This chapter shall also apply to services on which federal excise duty is payable in sales tax mode, and the ones specified in the Schedule to the Islamabad Capital Territory (Tax on Services) Ordinance, 2001 (XLII of 2001).

(3) Withholding agent, in case of supplies to Federal or Provincial Government departments, includes the accounting office which is responsible for making payment against the purchases made by a government department.

150ZZI. Responsibility of a withholding agent.--(1) The withholding agent, intending to make purchases of taxable goods, shall indicate in an advertisement or notice for this purpose that the sales tax to the extent as provided in this Chapter shall be deducted from the payment to be made to the supplier.

(2) A withholding agent, other than a recipient of advertisement services, shall deduct an amount as specified in the Eleventh Schedule to the Act and make payment of the balance amount to him as per illustration given below,–

ILLUSTRATION (in case 1/5th of sales tax amount is to be deducted)

Value of taxable supplies excluding sales tax: Rs. 1000

Sales tax chargeable @ 17%: Rs. 170

Sales tax to be deducted by the withholding Agent: Rs. 34 (i.e. Rs. 170 / 5)

Sales tax payable by the withholding agent to the supplier: Rs. 136 (i.e. Rs. 170-Rs.34)

Balance amount payable to the supplier by the withholding agent: Rs. 1136 (i.e. Rs. 1000 + Rs.136)

Provided that the withholding agent shall not be entitled to reclaim or deduct the amount of tax withheld from such persons as input tax.

(3) A person who receives advertisement services, in case the sales tax amount is not indicated on the invoice received, he shall deduct sales tax at the applicable rate of the value of taxable services from the payment due to the service provider.

(4) Where the purchases are made by a government department, the following procedure shall be observed, namely:–

(a) the Drawing and Disbursing Officer (DDO) preparing the bill for the accounting office shall indicate the amount of sales tax withheld as illustrated above. The accounting office shall adopt the procedure as indicated below:

(i) in case of purchases made by a department under the Federal Government, the office of the Accountant General of Pakistan Revenue shall account for the amount deducted at source during a month under the Head of Account “B02341-Sales Tax” and send an intimation to the Chief Commissioner, Regional Tax Office, Islamabad, by the 15th of the following month;

(ii) in case of purchases by departments under provincial or district governments, the Accountant General of the province or the District Accounts Officer, as the case may be, shall credit the amount deducted at source during a month to the head of account “GI2777-Sales Tax Deductions at Source under rule 40 & 40A of Chapter Miscellaneous of Sales Tax (Withholding) Rules, 2007”. Cheque for the amount will be prepared by the Accountant General or the District Accounts Officer, as the case may be, in the name of Commissioner having jurisdiction by debit to the aforesaid head of account and sent to the Commissioner by the 15th of the following month; and

(iii) where the purchases are made by the departments falling in purview of Military Accountant General, the MAG shall account for the amount deducted at source during a month under the Head of Account “B0234l-Sales Tax” and send intimation to the Chief Commissioner, Regional Tax Office, Rawalpindi, by the 15th of the following month. The amount so deducted at source shall be reported by MAG office to AGPR through civil exchange accounts; and

(b) the concerned Drawing and Disbursement Officer shall prepare the return in the form as set out in STR-28 for each month and forward the same to the Commissioner having jurisdiction by the 15th of the following month.

(5) In case of purchases, not covered by sub-rule (4) or sub-rule (6), the sales tax deducted at source shall be deposited by the withholding agent in the designated branch of National Bank of Pakistan under relevant head of account on sales tax return-cum-payment challan by 15th of the month following the month during which the purchase has been made. The return-cum-payment challan shall be prepared and deposited with the bank in triplicate and the bank shall send the original to the Commissioner of Sales Tax having jurisdiction, return the duplicate to the depositor and retain the triplicate for its own record:

Provided that a single return-cum-challan can be filed in respect of all purchases for which the payment has been made in a month.

(6) In case the withholding agent is also registered under the Sales Tax Act, 1990, or the Federal Excise Act, 2005, he shall deposit the withheld amount of sales tax along with return filed for the month in which the purchase was made in the manner as provided in Chapter II, along with other tax liability:

Provided that in case the withholding agent is not registered for sales tax or federal excise duty but holds a national tax number assigned under the Income Tax Ordinance, 2001 (XLIX of 2001), he shall file the return, as set out in STR-28, electronically and deposit the amount deducted at source in the manner as provided for persons filing returns electronically under rule 18:

Provided further that any other withholding agent may also opt to file the prescribed return electronically and deposit the deducted amount in the manner as provided in this sub-rule.

(7) The withholding agent shall furnish to the Commissioner of Sales Tax having jurisdiction all such information or data as may be requested by him for carrying out the purposes of these rules.

(8) A certificate showing deduction of sales tax shall be issued to the supplier by the withholding agent duly specifying the name and registration number of supplier, description of goods and the amount of sales tax deducted.

150ZZJ. Responsibility of the registered supplier.— (I) The registered supplier shall issue sales tax invoice as stipulated in section 23 of the Sales Tax Act, 1990, in respect of every taxable supply made to a withholding agent.

(2) The registered supplier shall file monthly return as prescribed in Chapter II, taking due credit of the sales tax deducted by the withholding agent, in the manner as prescribed in the return.

150ZZK. Responsibility of the Commissioner.—(1) The Commissioner shall keep a list of all withholding agents falling in his jurisdiction and monitor payment of tax deducted by withholding agents falling in his jurisdiction and shall also ensure that the return prescribed under these rules is filed.

(2) The Commissioner shall ensure that the return received from the bank is duly fed in the computerized system as referred to in clause (5AA) of section 2 of the Sales Tax Act, 1990.

(3) The Commissioner shall periodically ensure that the suppliers mentioned in the return filed by the withholding agents, as fall under his jurisdiction, are filing returns under Chapter II, and are duly declaring the supplies made to withholding agents.

150ZZL. Exclusions.-The provisions of this Chapter shall not apply to the supplies
of the following goods and services if made by a registered person, namely:-

(i) electrical energy;

(ii) natural gas;

(iii) petroleum products as supplied by petroleum production and exploration companies, oil refineries, oil marketing companies and dealers of motor spirit and high speed diesel];

(iv) telecommunication services;

(v) goods specified in the Third Schedule to the Sales Tax Act, 1990 (VII of 1990), and the goods on which federal excise duty is payable in sales tax mode on the basis of retail price;

(vi) supplies made by commercial importers who paid value addition tax on such goods at the time of import as prescribed under Twelfth Schedule to the Act, and

(vii) Supplies made by an active taxpayer as defined in the Sales Tax Act, 1990 to another registered person with the exception of advertisement services.”

This Notification shall take effect on and from the 1st day of July, 2019.

July 1, 2019