The federal government of Pakistan has introduced an additional advance income tax (AIT) of up to 35% on the consumption of electricity by individuals not appearing on the Active Taxpayers List (ATL).
(more…)Author: Faisal Shahnawaz
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Weekly Review: market likely to stay positive
KARACHI: The stock market is likely to stay positive during next week owing to upcoming IMF talks and ease in infection cases of coronavirus.
Analysts at Arif Habib Limited said that the market to remain positive in the upcoming week attributable to talks with IMF for the sixth tranche to start at the end of the current month.
On the other hand, the decline in the infection ratio of the novel coronavirus in Pakistan and a slowdown in global oil prices would relieve pressure off the external account.
However, current macro-economic concerns such as rising imports, higher inflation due to increasing petroleum prices and pressure on currency could deteriorate investors’ sentiment.
The benchmark KSE-100 index of the Pakistan Stock Exchange (PSX) is currently trading at a PER of 5.8x (2021) compared to the Asia Pacific regional average of 14.4x while offering a dividend yield of 7.9 per cent versus 2.3 per cent offered by the region.
During the outgoing week, trading activity remained jittery amid macro-economic concerns which included: Rupee slumping to an all-time low of 169.1 against USD; expectation of higher current account deficit due to rising imports which could stress reserves; temporary suspension of gas supply to general industries; and higher international commodity prices.
However, sentiment started reviving amid i) some recovery in the currency parity, ii) slowdown in Covid-19 cases which resulted in relaxation in restrictions in Sindh, and iii) restoration of gas supply to general industries.
As a result, the KSE-100 index closed at 46,636 points, down by 562 points or 1.19 per cent WoW.
Sector-wise negative contributions came from i) Cement (287 points), ii) Refinery (55 points), iii) Oil & Gas Marketing Companies (54 points), iv) Food & Personal Care Products (51 points), and v) Technology & Communication (44 points).
Whereas sectors which contributed positively were i) Commercial Banks (130 points), ii) Tobacco (6 points) and iii) Synthetic & Rayon (5 points). Scrip-wise negative contributors were LUCK (131 points), MEBL (102 points), SYS (70 points), MLCF (43 points) and DGKC (41 points).
Meanwhile, scrip-wise positive contribution came from UBL (73 points), HBL (56 points) and FFC (50 points).
Foreigners offloaded stocks worth of USD 10.9 million compared to a net sell of USD 18.6 million last week. Major selling was witnessed in Commercial Banks (USD 12.7 million) and All other Sectors (USD 2.2 million). On the local front, buying was reported by Individuals (USD 16.8 million) followed by Banks/DFI (USD 7.3 million). Average volumes clocked in at 400 million shares (down by 7 per cent WoW) while average value traded settled at USD 90 million (up by 3 per cent WoW).
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NADRA to compute indicative income, tax liability
ISLAMABAD: National Database and Registration Authority (NADRA) has been empowered to compute indicative income and tax liability of persons using artificial intelligence and other modes.
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FBR to block mobile phones of non-filers
ISLAMABAD: The Federal Board of Revenue (FBR) has been empowered under income tax statute to block mobile phones or mobile phone SIMs of persons who have taxable income but remained non-filer of annual return.
The government promulgated Tax Laws (Third Amendment) Ordinance, 2021, and made major amendments to the Income Tax Ordinance, 2001.
As per the amendments, the FBR has been empowered to take strict actions against non-filers, including blocking mobile phones or mobile phone SIMs. Besides, the tax authorities have also powers to give orders to utility companies for discontinuations of electricity connection and gas connection of non-filer.
Section 114B has been introduced through the Tax Law to the Income Tax Ordinance, 2001.
Following is the text of the new Section:
“114B. Powers to enforce filing of returns. — (1) Notwithstanding anything contained in any other law for the time being in force, the Board shall have the powers to issue income tax general order in respect of persons who are not appearing on Active Taxpayers List (ATL) but are liable to file return under the provisions of this Ordinance.
(2) The income tax general order issued under sub-section (1) may entail any or all of the following consequences for the persons mentioned therein, namely:-
— disabling of mobile phones or mobile phone sims;
— discontinuance of electricity connection; and
— discontinuance of gas connection.
(3) The Board or the Commissioner having jurisdiction over the person mentioned in the income tax general order may order restoration of mobile phones, mobile phone sims and connections of electricity and gas, in cases where he is satisfied that —
(a) the return has been filed; or
(b) person was not liable to file return under the provisions of this Ordinance.
(4) No person shall be included in the general order under sub-section (1) unless following conditions have been met with, namely:-
(a) notice under sub-section (4) of section 114 has been issued;
(b) date of compliance of the notice under sub-section (4) of section 114 has elapsed; and
(c) the person has not filed the return.
(5) The action under this section shall not preclude any other action provided under the provisions of this Ordinance.
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FBR slaps extra sales tax up to 17% on unregistered persons
In a move to enhance tax compliance, the Federal Board of Revenue (FBR) has imposed an additional sales tax of up to 17% on unregistered industrial and commercial connection holders of electricity and gas utilities.
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KIBOR rates on September 17, 2021
KARACHI: State Bank of Pakistan (SBP) on Friday issued the following Karachi Interbank Offered Rates (KIBOR) on September 17, 2021.
Tenor BID OFFER 1 – Week 6.94 7.44 2 – Week 7.01 7.51 1 – Month 7.08 7.58 3 – Month 7.30 7.55 6 – Month 7.51 7.76 9 – Month 7.62 8.12 1 – Year 7.77 8.27 -
Penalty for non-issuance of cash memos
The Federal Board of Revenue (FBR) has introduced a penalty provision under Section 182(2) of the Income Tax Ordinance, 2001 for individuals or businesses failing to issue cash memos, invoices, or receipts when required by the ordinance or related rules.
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SBP issues customers exchange rates for September 17
Karachi, September 17, 2021 – The State Bank of Pakistan (SBP) has disclosed the exchange rates for customers on Friday, September 17, 2021.
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Current account deficit widens to $2.29bn in July-August
KARACHI: The current account deficit of the country ballooned to $2.29 billion during first two months (July – August) of the current fiscal year.
The SBP issued details of Balance of Payment (BOP) on Friday.
The balance of payment has posted a surplus of $838 million in the same months of the last fiscal year.
The current account deficit has widened mainly significant trade gap.
The import bill increased by 74 per cent to $12.168 billion during first two months (July – August) of the current fiscal year as compared with $6.99 billion in the same period of the last fiscal year.
The exports of the country also grew by 28 per cent to $4.58 billion during first two months of the current fiscal year as compared with $3.58 billion in the corresponding months of the last fiscal year.
However, trade deficit ballooned by 122.58 per cent to $7.58 billion during first two months of the current fiscal year as compared with the deficit of $3.4 billion in the corresponding months of the last year.
Workers’ remittances increased to $5.36 billion during July – August of the current fiscal year as compared with $4.86 billion in the same period of the last year.
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Sales tax return filing portal likely to start by next month
ISLAMABAD: The single portal for filing sales tax returns – by registered taxpayers of federal and provincial tax authorities – is likely to start by next month.
Different proposals were considered by the National Tax Council (NTC) for implementing a single portal for filing sales tax returns which are being developed and are likely to be launched by the first week of October 2021.
The launching of the single portal for filing returns will cut the compliance cost for the taxpayers and will help increase Pakistan’s rating on Ease-of-Doing Index.
It was decided that detailed input will be invited from Provincial Revenue Authorities (PRAs) for the development of the single Sales tax portal acceptable to all.
Federal Minister for Finance and Revenue, Shaukat Tarin, presided over the meeting of the NTC at the Finance Division on Thursday.
Provincial Finance Ministers, Secretary Finance Division, Chairman FBR, Chairman Sindh Revenue Board, and other senior officers also participated in the meeting. In his opening remarks, the Finance Minister welcomed the participants and emphasized the need for evolving consensus between the Federation and Provinces in matters relating to Sales tax harmonization.
He stressed the need to resolve tax-related issues in a spirit of cooperation between the Federation and the Federating units.
The Chairman FBR made a detailed presentation and outlined areas for further deliberation to work out an arrangement in a collaborative manner relating to the harmonization of GST amongst the Federal Government and the Provinces.
FBR and the Provincial Finance Ministers narrated their respective positions on the taxation of transportation, restaurants, toll manufacturing and construction.
Different proposals were also considered by the NTC for implementing the single portal for filing Sales Tax returns which are being developed and are likely to be launched by the first week of October 2021.
The launching of single portal for filing returns will cut the compliance cost for the taxpayers and will help increase Pakistan’s rating on Ease-of-Doing Index.
It was decided that detailed input will be invited from Provincial Revenue Authorities (PRAs) for the development of single Sales tax portal acceptable to all.
Similarly, FBR shall also develop a standardized Income tax Return format, in consultation with the Provincial governments.
After due deliberation with all relevant stakeholders, the National Tax Council decided that the sales tax on toll manufacturing will rest with the Federation, while taxation rights on transportation business would be vested in the Provinces.
Regarding taxation on the construction business, it was decided that the taxation right would be shared as per the constitutional arrangements, and a technical committee consisting of all revenue authorities would decide the operational modalities.
On taxation of restaurants, Finance Minister in his capacity as head of National Tax Council (NTC) and after having views of FBR and Provinces, decided that the Provinces will continue to tax restaurants.
However, a reference drafted in consultation with Provinces will be sent to Law Division for an opinion on the decision. All stakeholders agreed to proceed ahead in the spirit of greater national interest and harmony under the umbrella of National Tax Council (NTC).