Pkrevenue.com

Author: Faisal Shahnawaz

  • Loss adjustment in computing capital gain tax

    Loss adjustment in computing capital gain tax

    Section 38 of Income Tax Ordinance, 2001 outlined the procedure for deducting losses while computing an amount chargeable under the head of capital gain.

    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 38 of Income Tax Ordinance, 2001:

    38. Deduction of losses in computing the amount chargeable under the head “Capital Gains”.— (1) Subject to this Ordinance, in computing the amount of a person chargeable to tax under the head “Capital Gains” for a tax year, a deduction shall be allowed for any loss on the disposal of a capital asset by the person in the year.

    (2) No loss shall be deducted under this section on the disposal of a capital asset where a gain on the disposal of such asset would not be chargeable to tax.

    (3) The loss arising on the disposal of a capital asset by a person shall be computed in accordance with the following formula, namely: —

    A – B

    where —

    A is the cost of the asset; and

    B is the consideration received by the person on disposal of the asset.

    (4) The provisions of sub-section (4) of section 37 shall apply in determining component A of the formula in sub-section (3).

    (5) No loss shall be recognized under this Ordinance on the disposal of the following capital assets, namely:—

    (a) A painting, sculpture, drawing or other work of art;

    (b) jewellery;

    (c) a rare manuscript, folio or book;

    (d) a postage stamp or first day cover;

    (e) a coin or medallion; or

    (f) an antique.

    (Disclaimer: The text of 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.)

  • Capital gain tax on disposal of securities

    Capital gain tax on disposal of securities

    Section 37A of Income Tax Ordinance, 2001 has explained the tax treatment of capital gain on disposal of securities in the capital market.

    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 37A of Income Tax Ordinance, 2001:

    37A. Capital gain on disposal of securities.—(1) The capital gain arising on or after the first day of July 2010, from disposal of securities, other than a gain that is exempt from tax under this Ordinance, shall be chargeable to tax at the rates specified in Division VII of Part I of the First Schedule:

    Provided that this section shall not apply to a banking company and an insurance company.

    (1A) The gain arising on the disposal of a security by a person shall be computed in accordance with the following formula, namely: —

    A – B

    Where —

    (i) ‘A’ is the consideration received by the person on disposal of the security; and

    (ii) ‘B’ is the cost of acquisition of the security.

    (2) The holding period of a security, for the purposes of this section, shall be reckoned from the date of acquisition (whether before, on or after the thirtieth day of June, 2010) to the date of disposal of such security falling after the thirtieth day of June, 2010.

    (3) For the purposes of this section “security” means share of a public company, voucher of Pakistan Telecommunication Corporation, Modaraba Certificate, an instrument of redeemable capital,debt Securities, unit of exchange traded fund and derivative products.

    (3A) For the purpose of this section, “debt securities” means –

    (a) Corporate Debt Securities such as Term Finance Certificates (TFCs), Sukuk Certificates (Sharia Compliant Bonds), Registered Bonds, Commercial Papers, Participation Term Certificates (PTCs) and all kinds of debt instruments issued by any Pakistani or foreign company or corporation registered in Pakistan; and

    (b) Government Debt Securities such as Treasury Bills (T-bills), Federal Investment Bonds (FIBs), Pakistan Investment Bonds (PIBs), Foreign Currency Bonds, Government Papers, Municipal Bonds, Infrastructure Bonds and all kinds of debt instruments issued by Federal Government, Provincial Governments, Local Authorities and other statutory bodies.

    “Explanation: For removal of doubt it is clarified that derivative products include future commodity contracts entered into by the members of Pakistan Mercantile Exchange whether or not settled by physical delivery.”

    (3B) For the purpose of this section, “shares of a public company” shall be considered as security if such company is a public company at the time of disposal of such shares.

    (4) Gain under this section shall be treated as a separate block of income.

    (5) Notwithstanding anything contained in this Ordinance, where a person sustains a loss on disposal of securities in a tax year, the loss shall be set off only against the gain of the person from any other securities chargeable to tax under this section and no loss shall be carried forward to the subsequent tax year:

    Provided that so much of the loss sustained on disposal of securities in tax year 20l9 and onwards that has not been set off against the gain of the person from disposal of securities chargeable to tax under this section shall be carried forward to the following tax year and set off only against the gain of the person from disposal of securities chargeable to tax under this section, but no such loss shall be carried forward to more than three tax years immediately succeeding the tax year for which the loss was first computed.

    (6) To carry out purpose of this section, the Board may prescribe rules.

    (Disclaimer: The text of 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.)

  • KIBOR rates for August 02, 2021

    KIBOR rates for August 02, 2021

    The State Bank of Pakistan (SBP) released the Karachi Interbank Offered Rates (KIBOR) for various tenors on Monday, August 2, 2021, providing updated benchmarks for interbank lending and borrowing activities in the financial sector.

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  • New export facilitation scheme implements from August 14

    New export facilitation scheme implements from August 14

    ISLAMABAD: Federal Board of Revenue (FBR) on Monday said the new export facilitation scheme will be applicable from August 14, 2021.

    The FBR has notified Rules for new Export Facilitation Scheme 2021 which will be effective from 14th August, 2021, a statement said.

    New Export Facilitation Scheme has been approved by the Federal Government and passed by Parliament under Finance Act 2021.

    This Scheme will run parallel with existing schemes like Manufacturing Bond, DTRE and Export Oriented Schemes for two year.

    The existing old schemes shall be phased out in next two years and will be fully replaced by Export Facilitation Scheme-2021. EFS 2021 Rules can be accessed at the official website of FBR.

    Users of this Scheme will include Exporters (Manufacturers cum Exporters, Commercial Exporters, Indirect Exporters), Common Export Houses, Vendors and International Toll Manufacturers.

    Users of this Scheme shall be subject to authorization of inputs by the Collector of Customs and Director General Input Output Organization (IOCO).

    Inputs include all goods (imported or procured local) for manufacture of goods to be exported. These include raw materials, spare parts, components, equipment, plant and machinery.

    No duty and taxes shall be levied on inputs imported by the authorized users and local supplies of inputs to the authorized users shall be zero rated.

    Through this new Scheme Common Export House will import inputs duty and tax free for subsequent sale to the authorized users especially SMEs. This Scheme has also allowed International Toll manufacturing within Pakistan.

    Under the said scheme, minimum but necessary documentation and securities based on category and profile of the applicant, user or exporter will be required. This scheme will encourage new entrants and SMEs.

    This Scheme will be completely automated under WeBOC and PSW where users of the Scheme and regulators (IOCO, Regulator Collector, PCA etc.) shall be integrated through WeBOC and PSW and communicate through these systems.

    The focus of the Scheme is on post clearance compliance checks and audits. Under this new Scheme, authorization and utilization period has been enhanced from two years to five years

    It is expected that Export Facilitation Scheme 2021 shall reduce cost of doing business and cost of tax compliance, improve ease of doing business, reduce liquidity problems of exporters by eliminating Sales Tax refunds and Duty Drawback for the users of Scheme and shall attract more users and shall ultimately promote exports.

  • AHL declares Rs2.08 billion annual profit

    AHL declares Rs2.08 billion annual profit

    KARACHI: Arif Habib Limited (AHL) on Monday announced Rs2.08 billion as profit for the year ended June 30, 2021.

    The board of directors of the AHL approved the financial results for the year ended June 30, 2021.

    The company also declared a final cash dividend of Rs 10 per share i.e. 100 per cent, and bonus 10 per cent (i.e. 10 shares for every 100 shares held) for the year 2021.

    The company recorded the highest ever revenues in the history of brokerage, investment banking and money markets division; all combined have taken up AHL’s core income by Rs1,398 million.

    The brokerage division witnessed an increase of 132 per cent in revenue against the same period in the previous year.

    Investment Banking’s income increased massively by 633 per cent from Rs155 million to Rs672 million. This increase is attributable to successful completion of equity and debt IPOs.

    The Company’s investment portfolio has yielded healthy realized and unrealized revenue of Rs1,681 million against Rs228 million in the corresponding period.

    Commenting on the results, Shahid Ali Habib, CEO, AHL said: ‘’AHL’s growth momentum is outstanding and in line with our expectations. The phenomenal increase in revenue has been due to stellar performance across all business divisions and high volumes in the market. We foresee similar brokerage and investment banking performance in coming year as the economy grows and focus on capital market development intensifies.” 

    AHL, which led 8 of the 10 IPOs this year, has embarked upon expanding its footprint by establishing presence in other cities and increasing its client base both within Pakistan and abroad, which is expected to reap dividends by its shareholders in the future.

    AHL is pioneering the efforts of opening Roshan Digital Accounts (RDA) for Overseas Pakistanis that is bound to help Pakistan increase foreign investment flows and has maintained an average of 35 per cent of market share since RDA’s introduction in September.

  • Determination of tax on long term contracts

    Determination of tax on long term contracts

    Section 36 of Income Tax Ordinance, 2001 has explained that a person’s income on accrual basis shall compute such income arising for a tax year under a long-term contract on the basis of the percentage of completion method.

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  • SBP issues customers exchange rates for August 02

    SBP issues customers exchange rates for August 02

    KARACHI: The State Bank of Pakistan (SBP) on Monday issued customers’ exchange rates. The exchange rate is on the basis of weighted average rates of commercial banks.

    The SBP said the data compiled and disseminated for information only.

    These exchange rates are estimates that quoted by various commercial banks to their clients.

    The banks provide their indicative exchange rates for commercial transactions with customers.

     CURRENCYBUYINGSELLING
    AED44.380244.4745
    AUD119.6517119.9087
    CAD130.6071130.8772
    CHF179.8624180.2451
    CNY25.234025.2843
    EUR193.4138193.8341
    GBP226.5118226.9954
    JPY1.48511.4884
    SAR43.436143.5278
    USD162.8677163.2310
  • Sindh designates COVID vaccination centers in Karachi

    Sindh designates COVID vaccination centers in Karachi

    KARACHI: The Sindh Government on Sunday designated centers for COVID vaccination in Karachi in order to facilitate general public.

    Following are the hospitals for corona vaccinations:

    01. District Karachi East: DOW OJHA CAMPUS

    02. District Karachi South: I. Khaliq Dino Hall; II. JPMC; III. Lyari General Hospital

    03. District Karachi Central: I. Children Hospital; II. Sindh Government (SG) Hospital New Karachi; III. SG Hospital Liaquatabad

    04. District Karachi West: Sindh Government Qatar Hospital

    05. District Karachi Malir: SG Hospital Murad Memon Goth

    06. District Karachi Korangi: SG Hospital Korangi-05; SG Hospital, Saudabad, Karachi.

  • Container carrying 39MT sugar sinks at Karachi Port

    Container carrying 39MT sugar sinks at Karachi Port

    KARACHI: A container carrying around 39 metric tons (MT) of refined sugar fell into the sea from a ship berthed at the Karachi Port on Saturday evening.

    The container fell into the sea while handling by a trawler at berth No. 5 West Wharf of Karachi Port, sources said.

    It is believed that the container, which fell into the sea, had carried around 39 metric tons of sugar about 780 bags of 50 kilograms. The sugar was imported by the Trading Corporation of Pakistan (TCP) to provide the commodity at affordable prices in the country .

    The sources said that the breaks of the trawler suddenly failed and lost control. However, driver of the trawler was safe in the incident.

    The monetary loss due to the incident was not ascertained at the time of filing this report but sources said that a ship MV Unity brought 33,000 metric tons of sugar from Dubai on July 27, 2021.

    It was second incident within the jurisdiction of Karachi Port in ten days.

    During Eid holidays a cargo ship was stuck up at sea view Karachi. This ship has not been rescued so far.

  • FBR collects Rs410 billion; highest ever in July

    FBR collects Rs410 billion; highest ever in July

    ISLAMABAD: Federal Board of Revenue (FBR) has posted a robust growth of 48 per cent in the first month of the fiscal year 2021/2022. The collection in July 2021 is the highest collection in the same month of any past year.

    The tax collection target for the fiscal year has been set at Rs5,829 billion.

    The FBR has provisionally collected Rs410 billion in July 2021 as compared with Rs277.3 billion in the same month of the last year.

    The FBR also surpassed the revenue collection target of Rs342 billion set for the month of July 2021.

    Prime Minister Imran Khan commended the performance of the FBR in a tweet message. “I commend the efforts of FBR in achieving record revenue collection in July. As of now collection is Rs410 billion which is highest ever in the month of July and around 22 per cent above required target for the month,” the prime minister said.

    The prime minister said the revenue collection performance is a reflection of the government’s policies for sustained economic growth and revival.

    The provisional collection showed all the heads have recorded significant growth. The FBR collected Rs190 billion as sales tax, Rs135 billion as income tax, Rs22 billion as federal excise and Rs63 billion as customs duty during July 2021.