Section 154A of Income Tax Ordinance, 2001 tells about the tax payment on exports of IT services. The Federal Board of Revenue (FBR) issued the Income Tax Ordinance, 2001 updated up to June 30, 2021.
(more…)Author: Faisal Shahnawaz
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Interbank rate: PKR ends down by 41 paisas to dollar
KARACHI: The US dollar made a gain of 41 paisas against the Pak Rupee (PKR) on Thursday.
The rupee weakened despite the announcement of the government to make trade in Pak Rupee with neighboring country Afghanistan.
The rupee ended at Rs167.66 to the dollar from the previous day’s closing of Rs167.25 in the interbank foreign exchange market.
Currency experts said that the dollar demand remained high during the day for import and corporate payments. They said that dollar outflow to Afghanistan was also a big concern for rupee stability.
However, in order to address the Afghan trade problem, the Pakistan government decided to trade Afghanistan in the Pak Rupee.
The dealers said that the external payment kept the exchange rate under pressure during the current fiscal year. The rupee is near to the all-time low of Rs168.44 against the dollar, which was recorded on August 26, 2020.
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SBP issues customers exchange rates for September 09
Karachi, September 09, 2021 – The State Bank of Pakistan (SBP) has released the exchange rates for customers on Thursday, September 09, 2021.
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Tax to be deducted on realization of export proceeds
Section 154 of Income Tax Ordinance, 2001 explains the tax to be deducted on realization export proceeds.
The Federal Board of Revenue (FBR) issued the Income Tax Ordinance, 2001 updated up to June 30, 2021. The Ordinance incorporated amendments brought through Finance Act, 2021.
Following is the text of Section 154 of Income Tax Ordinance, 2001:
154. Exports. — (1) Every authorised dealer in foreign exchange shall, at the time of realisation of foreign exchange proceeds on account of the export of goods by an exporter, deduct tax from the proceeds at the rate specified in Division IV of Part III of the First Schedule.
(2) Every authorised dealer in foreign exchange shall, at the time of realisation of foreign exchange proceeds on account of the commission due to an indenting commission agent, deduct tax from the proceeds at the rate specified in Division IV of Part III of the First Schedule.
(3) Every banking company shall, at the time of realisation of the proceeds on account of a sale of goods to an exporter under an inland back-to-back letter of credit or any other arrangement as prescribed by the Board, deduct tax from the amount of the proceeds at the rate specified in Division IV of Part III of the First Schedule.
(3A) The Export Processing Zone Authority established under the Export Processing Zone Authority Ordinance, 1980 (VI of 1980), shall at the time of export of goods by an industrial undertaking located in the areas declared by the Federal Government to be a Zone within the meaning of the aforesaid Ordinance, collect tax at the rate specified in Division IV of Part III of the First Schedule.
(3B) Every direct exporter and an export house registered under the Duty and Tax Remission for Exports Rules, 2001 provided in Sub-Chapter 7 of Chapter XII of the Customs Rules, 2001 shall, at the time of making payment for a firm contract to an indirect exporter defined under the said rules, deduct tax at the rates specified in Division IV of Part III of the First Schedule.
(3C) The Collector of Customs at the time of clearing of goods exported shall collect tax from the gross value of such goods at the rate specified in Division IV of Part III of the First Schedule.
(4) The tax deductible under this section shall be a final tax on the income arising from the transactions referred to in this section.
“(5) The provisions of sub-section (4) shall not apply to a person who opts not to be subject to final taxation:
Provided that this sub-section shall be applicable from tax year 2015 and the option shall be exercised every year at the time of filing of return under section 114:
Provided further that the tax deducted under this sub-section shall be minimum tax.”
(Disclaimer: The text of the above section is only for information. Team PkRevenue.com makes all efforts to provide the correct version of the text. However, the team PkRevenue.com is not responsible for any error or omission.)
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Tax payment for sale of goods and services
Section 153 of Income Tax Ordinance, 2001 tells about the tax payment for the sale of goods and services.
The Federal Board of Revenue (FBR) issued the Income Tax Ordinance, 2001 updated up to June 30, 2021. The Ordinance incorporated amendments brought through Finance Act, 2021.
Following is the text of Section 153 of Income Tax Ordinance, 2001:
153. Payments for goods, services and contracts.— (1) Every prescribed person making a payment in full or part including a payment by way of advance to a resident person
(a) for the sale of goods including toll manufacturing, except where payment is less than seventy-five thousand Rupees in aggregate, during a financial year;
(b) for the rendering of or providing of services except where payment is less than thirty thousand Rupees in aggregate, during a financial year;
(c) on the execution of a contract, including contract signed by a sportsperson but not including a contract for the sale of goods or the rendering of or providing services, shall, at the time of making the payment, deduct tax from the gross amount payable (including sales tax, if any) at the rate specified in Division III of Part III of the First Schedule;
Provided that where the recipient of the payment under clause (b) receives the payment through an agent or any other third person and the agent or, as the case may be, the third person retains service charges or fee, by whatever name called, from the payment remitted to the recipient, the agent or the third person shall be treated to have been paid the service charges or fee by the recipient and the recipient shall collect tax along with the payment received.
(2) Every exporter or an export house making a payment in full or part including a payment by way of advance to a resident person or permanent establishment in Pakistan of a non-resident person for rendering of or providing services of stitching, dying, printing, embroidery, washing, sizing and weaving, shall at the time of making the payment, deduct tax from the gross amount payable at the rate specified in Division IV of Part III of the First Schedule.
(3) The tax deductible under sub-section (1) and under sub-section (2) of this section, on the income of a resident person or, shall be minimum tax.
Provided that,—
(a) tax deducted under clause (a) of sub-section (1) shall not be minimum tax where payments are received on sale or supply of goods, by a, —
(i) company being a manufacturer of such goods; or
(ii) public company listed on a registered stock exchange in Pakistan;
(c) tax deducted under clause (c) of sub-section (1) shall be adjustable if payments are received by a public company listed on a registered stock exchange in Pakistan, on account of execution of contracts;
(4) The Commissioner may, on application made by the recipient of a payment referred to in sub-section (1) and after making such inquiry as the Commissioner thinks fit, may allow in cases where tax deductible under sub-section (1) is not minimum, by an order in writing, any person to make the payment,—
(a) without deduction of tax; or
(b) deduction of tax at a reduced rate
Provided that the Commissioner shall issue certificate for payment under clause (a) of sub-section (1) without deduction of tax within fifteen days of filing of application to a company if advance tax liability has been discharged:
Provided further that the Commissioner shall be deemed to have issued the exemption certificate upon the expiry of fifteen days to the aforesaid company and the certificate shall be automatically processed and issued by Iris:
Provided also that the Commissioner may modify or cancel the certificate issued automatically by Iris on the basis of reasons to be recorded in writing after providing an opportunity of being heard.
(5) Sub-section (1) shall not apply to —
(a) a sale of goods where the sale is made by the importer of the goods and tax under section 148 in respect of such goods has been paid and the goods are sold in the same condition as they were when imported;
(c) a refund of any security deposit;
(d) a payment made by the Federal Government, a Provincial Government or a Local Government to a contractor for construction materials supplied to the contractor by the said Government or the authority;
(f) the purchase of an asset under a lease and buy back agreement by a modaraba, leasing company, banking company or financial institution; or
(g) any payment for securitization of receivables “or issuance of sukuks” by a Special Purpose Vehicle to the Originator.
(6) Where any tax is deducted by a person making a payment for a Special Purpose Vehicle, on behalf of the Originator, the tax is credited to the Originator.
(7) In this section, —
(i) “prescribed person” means—
(a) the Federal Government;
(b) a company;
(c) an association of persons constituted by, or under law;
(d) a non-profit organization;
(e) a foreign contractor or consultant;
(f) a consortium or joint venture;
(g) an exporter or an export house for the purpose of sub-section (2);
(h) an association of persons, having turnover of one hundred million rupees or above in any of the preceding tax years;
(i) an individual, having turnover of one hundred million rupees or above in any of the preceding tax years;
(j) a person registered under the Sales Tax Act, 1990 having turnover of one hundred million rupees or more in any of the preceding tax years; or
(k) a person deriving income from the business of construction and sale of residential, commercial or other buildings (builder); or
(l) a person deriving income from the business of development and sale of residential, commercial or other plots (developer).
(ii) “services” includes the services of accountants, architects, dentists, doctors, engineers, interior decorators and lawyers, otherwise than as an employee;
(iii) “sale of goods” includes a sale of goods for cash or on credit, whether under written contract or not;
(iv) “manufacturer” means a person who is engaged in production or manufacturing of goods, which includes—
(a) any process in which an article singly or in combination with other articles, material, components, is either converted into another distinct article or product is so changed, transferred, or reshaped that it becomes capable of being put to use differently or distinctly; or
(b) a process of assembling, mixing, cutting or preparation of goods in any other manner; and
(v) “turnover” means—
(a) the gross sales or gross receipts, inclusive of sales tax and federal excise duty or any trade discounts shown on invoices, or bills, derived from the sale of goods;
(b) the gross fees for the rendering of services for giving benefits including commissions;
(c) the gross receipts from the execution of contracts; and
(d) the company’s share of the amounts stated above of any association of persons of which the company is a member.
(Disclaimer: The text of the above section is only for information. Team PkRevenue.com makes all efforts to provide the correct version of the text. However, the team PkRevenue.com is not responsible for any error or omission.)
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Pakistan Petroleum discovers hydrocarbons in Sindh
KARACHI: Pakistan Petroleum Limited (PPL) on Thursday announced the discovery of hydrocarbons in Sindh province.
In a communication sent to Pakistan Stock Exchange (PSX), the company announced the hydrocarbon discovery from the exploratory well, Jugan-1, in the Latif Block which is situated in the Province of Sindh.
The company holds a 33.30 per cent working interest; Eni Pakistan Limited holds 33.30 per cent and UEPL, which is Operator of the Block, holds 33.40 per cent working interest in the Block.
The well was drilled and tested using the operator’s internal expertise and in consultation with the Block’s joint ventures partners.
The well was drilled to a depth of 11,350 ft. with a reservoir target as Lower Goru Sands. After completion of well, B sand zone (11,122-11,132 ft KB) was perforated which flowed 12.6 MMscfd (million standard cubic feet per day) of gas at FWHP (wellhead flowing pressure) of 3063 psig (pounds per square inch) at 28/64” choke size. Followed by B Sand testing, C sand zone (10,300’KB – 10,310’ KB) was also perforated which flowed 13.7 MMscfd (million standard cubic feet per day) of gas at FWHP (wellhead flowing pressure) of 3323 psig (pounds per square inch) at 28/64” choke size.
The discovery is the result of an aggressive exploration strategy adopted by the joint venture partners, leading to new opportunities.
The discovery will contribute in improving the energy security of the country from indigenous resources and it will also increase the hydrocarbon reserves of the joint venture partners and the country.
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PM praises investment of Toyota Motors
ISLAMABAD: Prime Minister Imran Khan on Wednesday praised Toyota Motors for investing $100 million for locally production of hybrid electric vehicles.
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Payment to non-resident persons chargeable to tax
Section 152 of Income Tax Ordinance, 2001 describes the payment to non-resident persons chargeable to tax.
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Stocks sink on Pakistan Indexes downgraded by MSCI
KARACHI: The stock market fell by 333 points on Wednesday as MSCI in its verdict decided to downgrade Pakistan from Emerging Markets to Frontier Market.
The benchmark KSE-100 index of the Pakistan Stock Exchange (PSX) ended at 46,397 points from the previous day’s closing of 46,730 points.
Analysts at Topline Securities said that after a slightly positive opening benchmark KSE-100 Index came under pressure as MSCI in its verdict has decided to downgrade Pakistan from Emerging Markets to Frontier Market which led the market to make an intraday low of 402 points.
Major stock negativity was witnessed from LUCK, ENGRO and OGDC which collectively dented the Index by 171 points.
On the volume and value front, the total traded volume and value clocked in at 477.7 million shares and Rs14.6 billion, respectively.
TPL was today`s volume leader with 39.04 million shares.
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Provision related to withholding tax on profit on debt
Section 151 of Income Tax Ordinance, 2001 explains the provision related to withholding tax on profit on debt.
The Federal Board of Revenue (FBR) issued the Income Tax Ordinance, 2001 updated up to June 30, 2021. The Ordinance incorporated amendments brought through Finance Act, 2021.
Following is the text of Section 151 of Income Tax Ordinance, 2001:
151. Profit on debt. — (1) Where –
(a) a person pays yield on an account, deposit or a certificate under the National Savings Scheme or Post Office Savings Account;
(b) a banking company or financial institution pays any profit on a debt, being an account or deposit maintained with the company or institution;
(c) the Federal Government, a Provincial Government or a Local Government pays to any person profit on any security other than that referred to in clause (a) issued by such Government or authority; or
(d) a banking company, a financial institution, a company referred
to in 10 sub-clauses (i) and (ii) of clause (b) of sub-section (2) of section 80, or a finance society pays any profit on any bond, certificate, debenture, security or instrument of any kind (other than a loan agreement between a borrower and a banking company or a development finance institution) to any person other than financial institution.
the payer of the profit shall deduct tax at the rate specified in Division IA of Part III of the First Schedule from the gross amount of the yield or profit paid as reduced by the amount of Zakat, if any, paid by the recipient under the Zakat and Ushr Ordinance, 1980 (XVII of 1980), at the time the profit is paid to the recipient.
(1A) Every special purpose vehicle or a company, at the time of making payment of a return on investment in sukuks to a sukuk holder shall deduct tax from the gross amount of return on investment at the rate specified in Division IB of Part III of the First Schedule.
(2) This section shall not apply to any profit on debt that is subject to sub-section (2) of section 152.
(3) Tax deductible under this section shall be a minimum tax on the profit on debt arising to a taxpayer, except where —
(a) taxpayer is a company; or
(b) profit on debt is taxable under section 7B.
(Disclaimer: The text of the above section is only for information. Team PkRevenue.com makes all efforts to provide the correct version of the text. However, the team PkRevenue.com is not responsible for any error or omission.)