Author: Mrs. Anjum Shahnawaz

Customs stations to remain open on June 29, 30 for duty, tax collection

ISLAMABAD: Federal Board of Revenue (FBR) has instructed all the customs stations in the country to remain open and observe extended working house till 10:00 pm on Saturday (June 29, 2019) and till 12:00 mid-night Sunday (June 30, 2019).

The FBR issued these instructions for facilitation of trade in payment of duty/taxes.

The FBR has further instructed the Chief Collector of Customs to liaise with the State Bank of Pakistan and other scheduled commercial banks in their respective jurisdiction to ensure transfer of the duties/taxes collected by these branches to the respective branches of State Bank of Pakistan on the same date and to account the same towards collection for the month of June, 2019, a notification said on Monday.

June 25, 2019
SBP stops banks selling Rs40,000 prize bonds, issues procedure for conversion into registered bonds

KARACHI: State Bank of Pakistan (SBP) has stopped banks from issuing prize bond denomination of Rs40,000 with immediate effect and also issued instructions regarding conversion into registered bonds and encashment.

The SBP on Monday issued the following instructions regarding handling of Rs.40,000/- denomination National Prize Bonds are issued herewith for information, guidance and meticulous compliance:

a) National Prize Bonds of Rs.40,000/- denomination shall not be sold after June 24, 2019 and will not be encashed/redeemed after March 31, 2020.

b) No further draws of Rs.40,000/-denomination National Prize Bonds shall be held.

c) Cash payment for encashments of bonds is not allowed. However, the bond holder (s) shall have the following options to replace / encash these bonds:

1. Conversion of premium prize bonds (registered)

2. Replacement with special saving certificate (SSC)/Defence Saving Certificate (DSC)

3. Encashment at face value.

d) Appended below is the SOP for processing requests under the aforementioned options for compliance by all banks:

1. Conversion to Premium Prize Bonds (Registered)

i. The bonds can be converted to premium prize bonds (registered) through the 16 field offices of SBP Banking Services Corporation, and authorized branches of six commercial banks i.e. National Bank of Pakistan (NBP), Habib Bank Limited (HBL), United Bank Limited (UBL), MCB Bank Limited (MCB), Allied Bank Limited (ABL) and Bank Alflah Limited (BAFL).

ii. The bond holder shall be required to submit a written request for conversion of bearer bonds to premium prize bonds (registered) to be registered in his (her) name on the prescribed application.

iii. The bond holder shall also be required to submit prescribed applications forms for registrations / purchase of premium prize bond as per the procedure in vogue.

Replacement with the Special Saving Certificate (SSC)/Defence Saving Certificate (DSC)

i. The bonds can be replaced with SSC / DSC through the 16 field offices of SBP Banking Services Corporation, authorized commercial banks and National Savings Centers.

ii. All authorized commercial banks shall, therefore, accept requests for replacement of bearer bonds with SSC or DSC on the prescribed application form.

iii. The bondholder shall also be required to submit application form for purchase of SSC/DSC (SC-1) as per the prescribed procedure.

Encashment at Face Value:

i. The bonds will only be encashed by transferring the proceeds to the bond holder’s bank account through the 16 field offices of SBP Banking Services Corporation as well as the authorized commercial bank branches.

ii. All commercial banks shall receive requests for encashment of bearer bonds on the prescribed application form.

A cop of the application form, duly signed and stamped, shall be provided to the bondholder as an acknowledgement receipt.

The SBP said that it is needless to mention that the National Prize Bonds of Rs40,000 denomination tendered at the counters of banks shall be subject to through scrutiny to ascertain their genuineness. In this regard, details regarding the security features in Rs40,000 denomination National Prize Bonds are available online.

Moreover, the prize bonds encashed / replaced by general public may be surrendered to concerned SBP BSC office through respective regional office of the commercial banks. For the purpose, the regional office may intimate the SBP BSC office three days in advance so that necessary arrangements for receipt of the bonds can be made.

It is imperative to mention that a notice regarding the above / mentioned facilities must be displayed at prominent places within branch premises for awareness and information of general public.

June 24, 2019
Share market falls by 653 points on heavy selling

KARACHI: The share market sharply fell by 653 points or 1.9 percent on Monday owing to heavy selling during the day.

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 34,472 points as against 35,125 points showing a decrease of 653 points.

Analysts at Arif Habib Limited said that the market opened on a positive note with +24 points, but hit a ceiling of +69 points followed by heavy selling throughout the session.

Cement sector caused the concern among investors due to requirement introduced in the budget for presenting CNIC to buy cement as well as the protest from cement dealers highlighting the risks of low sales by cement manufacturers.

Non-activation of State Enterprise Fund, also added to the misery of investors. Across the board selling was observed and positive news flow on Qatar’s potential investment in Pakistan to the tune of US$ 3 billion also failed to stem the flow of selling.

Sectors contributing to the performance include E&P (-127 points), Cement (-106 points), Fertilizer (-102 points), Banks (-91 points), OGMCs (-56 points).

Volumes declined from 129.3 million shares to 78.7 million shares (-39 percent DoD). Average traded value also declined by 31 percent DoD to reach US$ 18.4 million as against US$ 26.9 million.

Stocks that contributed significantly to the volumes include KEL, TRG, FCCL, MLCF and UNITY, which formed 29 percent of total volumes.

Stocks that contributed negatively include LUCK (-56 points), PPL (-40 points), POL (-34 points), OGDC (-34 points) and ENGRO (-33 points). Stocks that contributed positively include PMPK (+11 points), BAHL (+7 points), NESTLE (+7 points), PKGS (+3 points) and NATF (+3 points).

June 24, 2019
Rupee hits all time low against dollar

KARACHI: The Pak Rupee ended down to hit all time low against dollar at closing on Monday owing to pressure from payment for import and corporate.

The rupee ended down by 16 paisas to close at Rs156.99 to the dollar from last Friday’s closing of Rs156.83 in interbank foreign exchange market.

The foreign exchange market initiated at Rs156.98 and Rs157.00. The market recorded day high of Rs157.00 and low of Rs156.75 and closed at Rs156.99.

The exchange rate in open market also witnessed depreciation in local currency value.

The buying and selling of dollar recorded at Rs156.00/Rs156.70 from last Saturday’s closing of Rs155.70/Rs156.70 in cash ready market.

June 24, 2019
Finance Bill 2019: tax officials granted powers to enter premises for gold, prize bonds; KCCI opposes

KARACHI: The Finance Bill 2019 has proposed discretionary powers to Commissioner Inland Revenue to enter and search any premises for undeclared gold and prize bonds.

Under Section 175 of Income Tax Ordinance, 2001 such powers have already with the commissioners but the proposal intended to expand the power to include gold and bearer security.

Karachi Chamber of Commerce and Industry (KCCI) has opposed strongly to this recommendations saying that this is against the dignity granted to an individual as per the Article 14 of the Constitution and would tantamount to violation of sanctity of residential premises, if raided.

A research report of the KCCI said that raiding of homes and subsequent breach of privacy is against national cultural norms and is an idea uncalled for, having grave social repercussions.

“This proposal is also against the spirit of withdrawal of discretionary powers of the taxman.”

The Asset Declaration Scheme 2019 also does not allow declaration of gold, precious stones, bearer security and bearer prize bonds, thereby restricting a holder of such assets from declaring them before probable confiscation. Any such measure before allowance of declaration makes this a very harsh measure.

Such sweeping discretionary powers granted to the Commissioner would result in harassment to ordinary citizens including housewives and the elderly, as now raids could be made on homes as well, and by no means should be allowed to be confiscated.

Hence, this proposal should be removed from the budget. Further, the Asset Declaration Scheme 2019 should be amended to include declaration of gold and bearer securities.

June 24, 2019

Tax slabs increased for rental income from properties

KARACHI: The government has revised tax slabs for rental income from property to eight from five.
Experts at Deloitte Pakistan Chartered Accountants said that the Finance Bill 2019, proposed the increase in the number of tax slabs from five to eight.
Three new tax slabs are proposed for income exceeding Rs4,000,000 to match the maximum rate with that of the individual tax rates.
Rates of tax on income from property, based on the finance bill, shall be as follows:

S. No.	Gross Amount of Rent	Rate of Tax
1.	Where the gross amount of rent does not exceed Rs.200,000.	Nil
2.	Where the gross amount of rent exceeds Rs.200,000 but does not exceed Rs. 600,000.	5 per cent of the amount exceeding Rs. 200,000.
3.	Where the gross amount of rent exceeds Rs.600,000 but does not exceed Rs. 1,000,000.	Rs. 20,000 plus 10 per cent of the amount exceeding Rs. 600,000.
4.	Where the gross amount of rent exceeds Rs.1,000,000 but does not exceed Rs. 2,000,000.	Rs. 60,000 plus 15 per cent of the amount exceeding Rs. 1,000,000.
5.	Where the gross amount of rent exceeds Rs.2,000,000 but does not exceed Rs. 4,000,000.	Rs. 210,000 plus 20 per cent of the amount exceeding Rs. 2,000,000.
6.	Where the gross amount of rent exceeds Rs.4,000,000 but does not exceed Rs. 6,000,000.	Rs. 610,000 plus 25 per cent of the amount exceeding Rs. 4,000,000.
7.	Where the gross amount of rent exceeds Rs.6,000,000 but does not exceed Rs. 8,000,000.	Rs. 1,110,000 plus 30 per cent of the amount exceeding Rs. 6,000,000.
8.	Where the gross amount of rent exceeds Rs. 8,000,000.	Rs. 1,710,000 plus 35 per cent of the amount exceeding Rs. 8,000,000.

June 24, 2019

FBR proposes massive increase in valuations of Lahore immovable properties

ISLAMABAD: Federal Board of Revenue (FBR) has proposed massive increase in valuations of immovable properties in Lahore to be effective from July 01, 2019.

The FBR about two days back issued valuation tables of immovable properties in 18 cities of Pakistan. The FBR invited comments and suggestions on the proposal from the stakeholders before implementing those by July 01, 2019.

A cursory look on the proposed valuation of immovable properties in Lahore suggested that the FBR was planning to generate a sizeable revenue from sales and purchase of immovable properties during next fiscal year.

The increase in valuation is not uniform as it was done by the FBR by increase valuation by 20 percent through SROs issued in February 2019.

The FBR now proposed locality based increase in valuation and the increase may be over 100 percent increase on the existing valuations.

The comparative valuations of immovable properties in Lahore are given below so readers can measure the quantum of increase:

In the proposed valuation the FBR given separate valuation of commercial and residential immovable properties. Besides, a new concept of valuation of immovable properties has been introduced for properties up to five years and properties above five years old.

June 23, 2019
Sindh adds 13 new services to provincial sales tax

KARACHI: The Sindh government has included 13 new services for the collection of sales tax from July 01, 2019.

According to PwC A F Ferguson Chartered Accountants following services are proposed to trigger Sindh Sales Tax (SST) effective July 1, 2019:

1. Renting of machinery, equipment, appliances and other tangible goods.

2. Indoor sports and games center.

3. Services provided or rendered by cab aggregator and owners or drivers of motor vehicles using the cab aggregator services.

4. Warehouses or depots for storage or cold storages.

5. Training services.

6. Actuarial services.

7. Services of mining of minerals and allied ancillary services

8. Site preparation and clearance, excavation and earth moving and demolition services

9. Waste collection, transportation, processing and management services

10. Vehicle parking and valet services

11. Electric power transmission services

12. Insurance agents

13. Tailoring and stitching services by fashion designers.

For the purpose of taxing new services, certain definitions are proposed in the Finance Bill 2019.

The chartered accountants said that no definitions have been proposed for ‘services of mining of mineral and allied & ancillary services in relation thereto’ and ‘electric power transmission services’.

In the definition of training services, exclusion is proposed for ‘coaching or training of sports’ which is apparently for promotion of sports.

June 23, 2019
Withholding agents to be liable to pay tax on failure to deduct Sindh sales tax

KARACHI: The Sindh government has proposed legislation to make withholding agents responsible to pay tax on which he fails to deduct or fails to deposit deducted amount to provincial kitty.

The Sindh Finance Bill 2019 proposed that the withholding agent is personally liable if he either fails to deduct tax or having deducted tax fails to deposit the tax in the government treasury which is revocable along with default surcharge, according to a commentary on Sindh Budget 2019/2020 released by PwC A F Ferguson Chartered Accountants.

They said that it may be noted that Section 47(1B) already provides for collection of any tax short withheld or collected from the withholding agent which has been challenged in courts on various grounds.

“Hence, the apparent purpose of bringing the said provision within Section 13 in this Finance Bill may also be examined in that context,” they said.

The government while imposing liability on withholding agents needs to cover a situation where the person from whom tax was not deducted has already paid the tax before initiation of recovery from the withholding agent.

In such situation, there should be no recovery of principal amount of tax from the withholding agent who failed to deduct the tax from the payment.

A clarification to this effect is required to be inserted by way of an explanation so that such amendment would avoid unnecessary litigation as to the double recovery of tax from the withholding agent as well from the registered service provider, they said.

June 23, 2019
Sindh tax on online taxi service creates anomaly

KARACHI: The levy on online taxi services introduced by Sindh government has created an anomaly as those taxi services not connected to ‘cab aggregator’ will remain outside the ambit of this tax, tax experts said.

The Sindh Finance Bill 2019 has proposed to tax services of the “Cab Aggregator” including the services provided or rendered by the owners or drivers of the motor vehicle using the cab aggregator services.

The rate of tax is 13 per cent on total consideration for providing or rendering such services from July 1, 2019 onwards.

The bill also defines “cab aggregator” to mean a person who is an aggregator or operator or intermediary or online marketplace who canvasses or solicits or facilitates passengers for travel by motor vehicles like tax, cab, car, van, motor cycle and rickshaw, and who connects the passenger or the intending passenger to a driver of any of the aforesaid motor vehicles through telephone cellular phone, internet, web-based services or GPS or GPRS-based services, electronic or digital means, whether or not he charges or collect any fee, fare, commission, brokerage or other charges or consideration for providing or rendering such services.

“The aforesaid insertion in taxable services has created an anomaly whereby motor vehicles, like taxi, cab, car, van, motor cycle and rickshaw not connected to a cab aggregator will remain outside the ambit of such tax,” said PwC A F Ferguson Chartered Accountants in a commentary on Sindh Budget 2019/2020.

They said that it appears that the aforesaid services will become uncompetitive compared to services of cabs, taxi, rickshaw etc. which are not connected to a cab aggregator.

“Due to complex nature of operations, special procedure rules for chargeability and collection of tax on such services is required to be introduced separately,” they added.

June 23, 2019