Karachi: The Pakistan stock market recorded a significant gain of 465 points on Thursday, driven by robust buying activities and positive investor sentiment. The benchmark KSE-100 index of the Pakistan Stock Exchange (PSX) closed at 35,403 points, up from the previous close of 34,660 points.
(more…)Author: Faisal Shahnawaz
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Rupee hits all time low Rs152.91 against dollar
KARACHI: The Pak Rupee hit all time low by losing Rs1.34 against dollar on Thursday owing to higher oil payment demand and scheduled repayment against foreign loan.
The rupee ended Rs152.91 to the dollar from previous day’s close of Rs151.57 in interbank foreign exchange market.
The foreign exchange market was initiated in the range of Rs151.50 and Rs151.90.
The market recorded day high of Rs153.00 and low of Rs151.85 and closed at Rs152.91.
Currency experts said that the rupee was under pressure due to schedule repayment of foreign debt. Further the inflows of remittances became lower after Eid festival, they added.
They further added that the weekly payment of oil payment also escalated the demand for the greenback.
The exchange rate in open market was also witnessed depreciation in rupee value.
The buying and selling of dollar was recorded at Rs152.00/Rs153.00 as compared with previous day’s closing of Rs151.30/Rs152.00 in cash ready market.
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Consumers allowed 5pc cash back of sales tax paid on retail purchases
ISLAMABAD: Consumers have been allowed to get five percent cash back on the total amount of sales tax charged against purchases from retail outlets.
Through Finance Bill, 2019 a major change has been introduced to Sales Tax Act, 1990 in order to widening the sales tax base and prevent sales tax evasion.
The Finance Bill 2019 proposed:
“Provided that the customers of a Tier-1 retailer shall be entitled to receive a cash back of up to five percent of the tax involved, from such date in the manner and to the extent, as may be prescribed by the Board.”
The Sales Tax Act, 1990 defines Tier-1 retailers as:
(a) a retailer operating as a unit of a national or international chain of stores;
(b) a retailer operating in an air-conditioned shopping mall, plaza or centre, excluding kiosks;
(c) a retailer whose cumulative electricity bill during the immediately preceding twelve consecutive months exceeds Rupees six hundred thousand; and
(d) a wholesaler-cum-retailer, engaged in bulk import and supply of consumer goods on wholesale basis to the retailers as well as on retail basis to the general body of the consumers;”
The FBR explained the amended regime for retailers that to rationalize tax on retailers and to capture its full potential and document its sales, following proposals are made:−
(i) Turnover tax option may be withdrawn.
(ii) For tier-1 retailer, it may be made mandatory to integrate their points of sales (POSs) with FBR’s Computerized System so that the sales are reported in real time.
(iii) Retail shops having an area in excess of 1000 square feet may be included in Tier-1.
(iv) In order to encourage customers to demand invoices from retailers, enabling provisions are proposed to be inserted in section 3 whereby FBR may allow cash back of up to 5% of the sales tax charged on invoices to the customers.
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Dollar hits all time high at Rs153 in midday trading
The US dollar surged to an all-time high against the Pakistani rupee, reaching Rs153 during midday trading on Thursday. This significant increase is attributed to weak economic indicators, which have placed considerable pressure on the local currency.
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FBR estimates additional revenue of Rs2 billion through changes in super tax
ISLAMABAD: Federal Board of Revenue (FBR) has estimated additional revenue of Rs2 billion through proposed changes in law related to super tax.
The changes have been introduced to Section 4B of Income Tax Ordinance, 2001 through Finance Bill 2019.
The FBR in explanation to the Finance Bill said that presently brought forward depreciation and business losses are excluded while computing income for calculating liability of super tax.
However, such losses are not excluded in the case of banking, insurance, oil and mineral exploration companies.
In order to ensure similar tax treatment, brought forward business and depreciation losses have been excluded from income computed to calculate super tax in the case of the abovementioned sectors.
FBR sources said that Large Taxpayers Unit (LTU) Karachi had submitted its proposals related to super tax with estimated revenue generation of Rs2 billion.
The LTU Karachi in its proposals said that the proposed amendment would bring uniform chargeability of super tax to all taxpayers including taxpayers falling within the purview of Fourth, Fifth, Seventh and Eighth Schedules of Income Tax Ordinance, 2001.
Fourth Schedule mainly deals with Insurance companies.
Fifth Schedule is related to exploration and production companies.
Seventh Schedule is about banking companies.
While Eighth Schedule covers capital gains and National Clearing Company Pakistan Limited (NCCPL).
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Finance Bill 2019: Special regime for steel sector abolished; normal tax at 17pc imposed
ISLAMABAD: The government has abolished special sales tax procedure for steel sector through Finance Bill 2019 and imposed 17 percent federal excise duty in sales tax mode.
According to amendment proposed to Federal Excise Act, 2005 through Finance Bill 2019, normal tax of 17 percent ad valorem has been proposed on supply of steel billets, ingots, ship plates, bars and other long re-rolled products.
A fourth schedule to FED Act has been proposed for minimum production of steel products.
The minimum production for steel products shall be determined as per criterion specified below:
01. Steel billets and ingots: one metric ton per 700 kwh of electricity consumed.
02. Steel bars and other re-rolled long profiles of steel: one metric ton per 110 kwh of electricity consumed.
03. Ship plates: 75 percent of the weight of the vessel imported for breaking.
Procedure and conditions:–
(i) Both actual and minimum production, and the local supplies shall be declared in the monthly return. In case, the minimum production exceeds actual supplies for the month, the liability to pay duty shall be discharged on the basis of minimum production:
Provided that in case, in a subsequent month, the actual supplies exceed the minimum production, the registered person shall be entitled to get adjustment of excess duty on account of excess of minimum production over actual supplies:
Provided further that in a full year, as per financial year of the company or registered person, or period starting from July to June next year, in other cases, the duty actually paid shall not be less than the liability determined on the basis of minimum production for that year:
Provided also that in case of ship-breaking, the liability against minimum production, or actual supplies, whichever is higher, shall be deposited on monthly basis on proportionate basis depending upon the time required to break the vessel.
(ii) The Board, may notify minimum values for steel products as mentioned in the Table above in exercise of powers under sub-section (5) of section 12.
(iii) The payment of FED on ship plates in aforesaid manner does not absolve ship breakers of any tax liability in respect of items other than ship plates obtained by ship-breaking.
(iv) The melters and re-rollers employing self-generated power shall install a tamperproof meter for measuring their consumption. Such meter shall be duly locked in room with keys in the custody of a nominee of the Commissioner Inland Revenue having jurisdiction. The officers Inland Revenue having jurisdiction shall have full access to such meter.
(v) The minimum production of industrial units employing both distributed power and self-generated power shall be determined on the basis of total electricity consumption.
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Duty exemption on foreign bandwidth services withdrawn
The Federal Board of Revenue (FBR) has announced the withdrawal of duty exemption on foreign bandwidth services provided by telecom operators.
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Finance Bill 2019: 12th Schedule introduced to levy 3pc value addition sales tax on all imported goods
ISLAMABAD: The government has proposed Twelfth Schedule to Sales Tax Act, 1990 to streamline imposition of 3 percent value addition tax on imported goods.
The schedule has been proposed to make part of the Act through Finance Bill, 2019.
According to the schedule,
(1) The sales tax on account of minimum value addition as payable under this Schedule (hereinafter referred to as value addition tax), shall be levied and collected at import stage on all taxable goods as are chargeable to tax under section 3 of the Act or any notification issued thereunder at the rate specified in the Table in addition to the tax chargeable under section 3 of the Act or a notification issued thereunder:
(2) The value addition tax under this Schedule shall not be charged on,—
(i) Raw materials and intermediary goods meant for use in an industrial process which are subject to customs duty at 16% or 20% ad valorem under First Schedule to the Customs Act, 1969;
(ii) The petroleum products falling in Chapter 27 of Pakistan Customs Tariff as imported by a licensed Oil Marketing Company for sale in the country;
(iii) Registered service providers importing goods for their in-house business use for furtherance of their taxable activity and not intended for further supply; and
(iv) Cellular mobile phones or satellite phones.
(3) The value addition tax paid at import stage shall form part of input tax, and the importer shall deduct the same from the output tax due for the tax period, subject to limitations and restrictions under the Act, for determining his net liability. The excess of input tax over output tax shall be carried forwarded to the next tax period as provided in section 10 of the Act.
(4) In no case, the refund of excess input tax over output tax, which is attributable to tax paid at import stage, shall be refunded to a registered person.
(5) The registered person, if also dealing in goods other than imported goods, shall be entitled to file refund claim of excess carried forward input tax for a period as provided in section 10 or in a notification issued there under by the Board after deducting the amount attributable to the tax paid at import stage i.e. sum of amounts paid during the claim period and brought forward to claim period. Such deducted amount may be carried forward to subsequent tax period.”
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FBR empowered to probe foreign remittances above Rs5 million received in a year
ISLAMABAD: Federal Board of Revenue (FBR) has been empowered to probe source of foreign remittances above Rs5 million received by a person in a year.
According to Finance Bill 2019, an amendment has been proposed to Section 111(4) of Income Tax Ordinance, 2001 in this regard.
At present the FBR cannot ask source to any amount of foreign exchange remitted from outside Pakistan through normal banking channels up to Rs10 million in a tax year that is encashed into rupees by a scheduled bank and a certificate from such bank is produced to that effect.
However, this threshold has been reduced to Rs5 million.
FBR sources said that the proposal had been introduced through Finance Bill 2019 to shut the window for whitening of money.
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Finance Bill 2019: Banks to pay 37.5pc tax on profit from investment in govt securities
ISLAMABAD: Banks shall pay 37.5 percent income tax on profit from investment in government securities, according to proposals made through Finance Bill, 2019.
The Federal Board of Revenue (FBR) in explanation to the Finance Bill, 2019 said that banks are earning substantial profits on account of incremental exposure to government securities.
Therefore profit from such government securities as is in excess of twenty percent of total profit before tax is being taxed separately at the rate of 37.5 percent.
The FBR further said that banks generally do not offer for taxation the provisions which were previously allowed but later on reversed. Therefore reversal of provisions already allowed is being made taxable by inserting an explanation in the Seventh Schedule.
Banks are also allowed to claim deduction in respect of provisions classified as “doubtful” and “loss”. Now only deductions only in respect of provisions classified as “loss” are to be allowed.