Pkrevenue.com

Author: Faisal Shahnawaz

  • Sales Tax Act 1990: imposition of default surcharge in fraud, non-payment

    Sales Tax Act 1990: imposition of default surcharge in fraud, non-payment

    KARACHI: A person willfully does not make sales tax payment or commits fraud shall liable to pay default surcharge along with actual amount.

    According to updated Sales Tax Act, 1990 issued by the Federal Board of Revenue (FBR) the default surcharge has been explained through Section 34.

    Section 34: Default Surcharge

    Sub-Section (1): Notwithstanding the provisions of section 11, if a registered person does not pay the tax due or any part thereof, whether willfully or otherwise, in time or in the manner specified under this Act, rules or notifications issued thereunder or claims a tax credit, refund or makes an adjustment which is not admissible to him, or incorrectly applies the rate of zero per cent to supplies made by him, he shall, in addition to the tax due, pay default surcharge at the rate mentioned below:—

    (a) the person liable to pay any amount of tax or charge or the amount of refund erroneously made, shall pay default surcharge at the rate of twelve percent per annum, of the amount of tax due or the amount of refund erroneously made; and

    (b) deleted

    (c) in case, the default is on account of tax fraud, the person who has committed tax fraud shall pay default surcharge at the rate of two per cent per month, of the amount of tax evaded or the amount of refund fraudulently claimed, till such time the entire liability including the amount of default surcharge is paid.

    Sub-Section (2): For the purpose of calculation of default surcharge, –

    (a) in the case of inadmissible input tax credit or refund, the period of default shall be reckoned from the date of adjustment of such credit or, as the case may be, refund is received; and

    (b) in the case of non-payment of tax or part thereof, the period of default shall be reckoned from the 16th day of a month (following the due date of the tax period to which the default relates) to the day preceding the date on which the tax due is actually paid.

    Explanation: For the purpose of this section tax due does not include the amount of penalty.

  • FBR issues rules for ADR in sales tax, federal excise cases

    FBR issues rules for ADR in sales tax, federal excise cases

    ISLAMABAD: Federal Board of Revenue (FBR) on Thursday notified rules to make Alternate Dispute Resolution Committee (ADRC) functional for cases in sales tax and federal excise.

    The FBR issued SROs 488 and 489 (I)/2019 to notify the rules. The ADRC is required to decide a case within 120 days and the decision will have binding effect on both taxpayers and tax officials.

    Under the rules any person interested for resolution of any dispute shall make a written application for alternative dispute resolution to the FBR.

    The FBR, after examination of contents of the application and facts stated therein and on satisfaction that the application may be referred to a Committee for the resolution of the hardship or dispute, shall appoint and notify a Committee, within a period of sixty days from receipt of the application.

    A retired judge not below the rank of District and Sessions Judge, appointed in a manner as aforesaid, shall be Chairperson of the Committee.

    After notification of the Committee, the applicant or the Commissioner or both, as the case may be, shall withdraw appeal pending before any court of law or an appellate authority relating to the hardship or dispute stated in the application.

    The Committee shall commence proceedings after receipt of order of withdrawal of appeal from the FBR.

    The chairperson of the Committee shall be responsible for deciding the procedure to be followed by the Committee which may, inter-alia, include the following, namely:-

    (a) to decide about the place of sitting of the Committee, in consultation with the Chief Commissioner having jurisdiction over the applicant;

    (b) to specify date and time for conducting proceedings by the Committee;

    (c) to supervise the proceedings of the Committee;

    (d) to issue notices by courier or registered post or electronic mail to the applicant;

    (e) to requisition and produce relevant records or witnesses from the Commissioner or other concerned quarters;

    (f) to ensure attendance of the applicant for hearing either in person or through an advocate, representative or a tax consultant;

    (g) to consolidate decision of the Committee and communicate it to the Board, the Commissioner and the applicant; and

    (h) for any other matter covered under these rules.

    The Committee may conduct inquiry, seek expert opinion, direct any officer of Inland Revenue or any other person to conduct an audit and make recommendations to the Committee in respect of dispute or hardship.

    The Committee may determine the issue and may thereafter seek further information or data or expert opinion or make or cause to be made such inquiries or audit as it may deem fit, to decide the matter.

    The Committee shall decide the dispute within one hundred and twenty days from the date of receipt of order of withdrawal from the FBR.

    Decision of majority members of the Committee shall be construed decision of the Committee which shall be communicated by the Committee to the FBR, the Commissioner having jurisdiction and the applicant.

    The decision of the Committee shall be binding on the Commissioner and the aggrieved person.

    On receipt of the Committee’s decision, the applicant shall make payment of sales tax and other taxes as specified by the Committee in its decision and the Commissioner shall modify order as per decision of the Committee.

  • PTCL upgrades network services in seven cities

    PTCL upgrades network services in seven cities

    KARACHI: Pakistan Telecommunication Company Limited (PTCL) has transformed 13 more exchanges in 7 cities as part of its Network Transformation Project (NTP).

    The upgraded exchanges include Ghakhar, Vaniawala and Pasroor Road exchanges in Gujranwala, Shahdara, Egerton Road and Bahria Town exchanges in Lahore, Chaklala & Islamabad Town exchanges in Islamabad, Charsadda Road & Cantt. exchanges in Peshawar, Sargodha Road exchange in Faisalabad, Wah Cantt. exchange in Rawalpindi and Kharian exchange in Kharian.

    Through PTCL’s new network, customers can experience a faster and more reliable internet based on the company’s enhanced copper network, along with a new fiber network. The upgraded exchanges under NTP have already resulted in a 40% reduction of customer complaints.

    Jahanzeb Taj, Chief Business Operating Officer, PTCL, said, “Under NTP, PTCL has invested considerably in transforming and upgrading its top 100 exchanges, which have the highest number of customers in major cities.

    “As a result, customers can now experience a quality network that offers high speed unlimited internet, state-of-the-art technology, seamless surfing and unlimited data streaming, all of which is vital in today’s digitally connected world.”

    PTCL customers can view the upgraded exchanges through company’s official website and subscribe to 8, 15, 25, 50 and 100 mbps unlimited internet packages offered in transformed exchanges with free PTCL calls, unlimited downloads, free PTCL Smart TV & Smart TV App and free Wi-Fi router.

    The company is striving to provide better services and improved network quality to customers’ fora truly digital lifestyle.

  • Yarn merchants urge FBR to stop harassment over turnover tax

    Yarn merchants urge FBR to stop harassment over turnover tax

    KARACHI: The Pakistan Yarn Merchants Association (PYMA) has urgently called on the Federal Board of Revenue (FBR) to issue a clear clarification regarding the applicable turnover income tax rate for yarn merchants, following what it describes as unjustified harassment by tax authorities.

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  • SBP increases maximum limit to Rs2.5bn under long term financing facility

    SBP increases maximum limit to Rs2.5bn under long term financing facility

    KARACHI: State Bank of Pakistan (SBP) on Thursday increased the maximum financing to Rs2.5 billion for a single project under long term financing facility.

    The central bank in a circular said that with a view to further promote investment in export oriented projects, it has been decided to increase the maximum financing limit for a single project under LTFF and Islamic LTFF from Rs1.5 billion to Rs2.5 billion.

    Under LTFF, Participating Financial Institutions (PFIs) can provide long term local currency finance for imported and locally manufactured new plant and machinery to be used by the export oriented projects.

    The facility will be available to the export oriented projects with at least 50 percent of their sales constituting exports or if their annual exports are equivalent to $ 5 million, whichever is lower.

    Financing shall be available through banks / DFIs approved as PFIs; list of which is given on State Bank of Pakistan’s Website.

    Other banks/ DFIs can also lodge their requests to Infrastructure, Housing & SME Finance Department of SBP for seeking the status of a PFI which shall be processed as per SBP’s criteria, as follows:

    i. Banks / DFIs should meet the minimum capital adequacy requirements set by SBP from time to time.

    ii. Banks / DFIs should have minimum 3 years experience of project financing/long term financing.

    iii. Banks / DFIs should have profitable operations during last consecutive three years.

    iv. SBP would consider the requests of banks/DFIs keeping in view the CAELS ratings assigned by SBP as well as ratings assigned by Credit Rating Agencies in Pakistan.

    c) In order to provide Shariah compliant alternative of the facility through the eligible Islamic banking institutions (IBIs), SBP has issued Islamic Long Term Financing Facility (ILTFF), vide IH&SMEFD Circular No. 01 dated 14-02-2018. IBIs may submit their requests for the status of Participating Islamic Banking Institution (PIBIs) under ILTFF, keeping in view the criteria given in said scheme.

    d) Financing under the facility will be available to the extent of the C&F value of the imported new plant and machinery and ex-factory/showroom price of the new locally manufactured machinery to be purchased by the eligible borrowers.

    e) Export oriented SME borrowers (as defined in Prudential Regulations for SMEs financing), may purchase imported machinery from the commercial importers or authorized dealers of the foreign manufacturers in Pakistan and authorized suppliers in case of locally manufactured machinery and plant. While providing financing under the facility to SME borrowers, the PFIs, however, will ensure that financing under the facility, when taken together with other borrowings, does not exceed the borrowing ceiling fixed for SMEs under the Prudential Regulations for SMEs financing.

    Maximum financing of banks/DFIs to a single export oriented unit shall not exceed Rs 2.5 billion under LTFF. However, banks/DFIs may provide financing facilities as per their credit policies over and above the said maximum limit from their own sources subject to adherence of applicable Prudential Regulations.

  • PSX recommends CGT exemption to foreign investors

    PSX recommends CGT exemption to foreign investors

    KARACHI: Pakistan Stock Exchange (PSX) has proposed to exempt capital gain tax (CGT) on disposal of securities by foreign investors.

    The PSX in its proposals for budget 2019/2020 on Thursday, recommended the exemption of CGT on disposal of securities by foreign investors.

    Giving rationale to its proposals, the PSX said that the exemption of CGT on foreign investors would facilitate substantial capital inflow by relaxing the cumbersome and time consuming account opening and registration process for foreigners as they get discouraged and overwhelmed with the current registration structure and look for better investment alternatives in regional markets.

    It further said that Pakistan has taxation treaties with a number of countries thus foreigners would be liable to pay taxes according to the treaty. “Therefore, taxing foreigners would burden them and not only increase their cost of business but most importantly discourage them from investment in Pakistan’s capital market.”

    It is proposed that the proviso to sub – rule 2 of Rule 13N of Income Tax Rules, 2002 shall be omitted.

    The PSX said that it is observed that most countries do not impose capital gains tax on disposal of securities by foreigners.

    Bangladesh, Malaysia, and many other countries do not levy CGT on transactions of disposal of securities conducted by foreigners.

    Even in countries that do have CGT on foreign investors, the rules are distinctly different from those that apply to domestic investors, in order to provide an attractive tax environment and avoid double taxation.

    One important reason for not imposing such tax is that most of the countries have double taxation treaties.

    In Pakistan, foreign investors file income tax returns regularly and pay taxes in accordance with the provisions of the Income Tax Ordinance, 2001 or reduced rates provided under treaties executed with such countries.

    Foreign investors should be given preferential tax rates as they might still be required to pay taxes in their home country where they are considered as a resident taxpayer.

    The PSX also urged the tax authorities to review the mechanism for payment of CGT on disposal of securities for domestic investors.

    It said that at present National Clearing Company of Pakistan Limited (NCCPL) calculates and collects Withholding Tax on Capital Gains made on disposal of shares listed on Pakistan Stock Exchange Limited.

    However, it is witnessed that in many countries there is no capital gain tax collected by any institution but rather individuals/ corporate are required to file their tax returns and pay taxes if any on the capital gains made by trading of shares.

    A broad range of countries including Canada, USA, Indonesia, India, and Vietnam do not mandate the collection of CGT by any intermediary at the time of disposal of securities, and the CGT is payable at the time of filling of returns.

    In Singapore, Hong Kong, Malaysia and Mauritius there is no capital gains tax.

    Therefore, considering international perspective, it would be appropriate if in Pakistan, payment of capital gains tax be made obligatory on individuals and corporates and the status of NCCPL should be such that only the information is provided to the tax authorities by NCCPL.

    In line with the common practice internationally, the government should review and revise the mechanism for payment of tax on capital gains for filers.

    An alternative to the current convention should be explored along with pros and cons. Withholding tax at NCCPL level for filers should be debated thoroughly and replaced with the obligation on investors who are filer to pay CGT through annual tax returns.

    However, the current mechanism of withholding on CGT for investors who are non-filers shall remain the same provided no WHT on such non-filers whose Capital Gains is up to Rs100,000 per annum.

    In any case, NCCPL should provide information on all investors’ capital gains and losses to tax authorities for tracking purposes.

    In line with international practice for collection of capital gains tax, an obligation to file returns and pay taxes on disposal of securities at year end would encourage a widespread tax culture among investors.

    It is proposed that section 100B, 8th Schedule to the Income Tax Ordinance 2001 and Rule 13N of Income Tax Rules, 2002 shall be amended accordingly.

  • Stock market gains 292 points in volatile trading

    Stock market gains 292 points in volatile trading

    KARACHI: The stock market gained 292 points on Thursday amid highly volatile trading sessions.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 36,796 points from previous day’s closing of 36,504 points with gain of 292 points.

    Analyst at Next Capital Limited said that the decline in international oil prices after the US Energy Information Administration (EIA) reported a much bigger than expected rise in commercial crude inventories kept the oil stocks under pressure throughout the day.

    Pakistan Petroleum Limited recorded (-0.43 percent) and Pakistan Oil Fields (-0.86 percent).

    Market participation for the 100 index decreased to 84.2 million from 93.1 million in the previous session.

    Major contribution to total market volume came from BOP, WTL, and LOTCHEM churning 25.1 million shares out of the total market all share volume of 106.8 million shares.

    Analysts at Topline Securities said that following fall of around 5.5 percent in month of April (till 24th), index slightly recovered 0.8 percent as amnesty scheme is likely to be presented in front of cabinet next week.

    Further, likely meeting of Prime Minister Imran with IMF chief in China and expected arrival of IMF mission from Apr 27-30, 2019 also restored investors confidence in getting bailout package.

  • SBP launches refinance, credit guarantee scheme for women entrepreneurs

    SBP launches refinance, credit guarantee scheme for women entrepreneurs

    KARACHI: State Bank of Pakistan (SBP) on Thursday launched refinance and credit guarantee scheme for women entrepreneurs in order to support and revive economic activities in the country.

    The SBP said that the financing would be available to women entrepreneurs across the country for a period of up to 5 years, including maximum grace period of up to six months.

    The maximum financing limit under the scheme will be Rs 1.5 million. The financing under the scheme should be provided for setting up of new business enterprises or for expansion of existing ones.

    The SBP said that financing under the scheme should be provided to women borrowers preferably under the personal guarantee of the borrower.

    The central bank said that as per the government’s policy to support and revive economic activities in the country and SBP’s measures for improving access to finance for the women entrepreneurs, a refinance cum credit guarantee scheme is being launched for the women borrowers across the country.

    Under the scheme, banks and DFIs will be required to provide financing facilities to women entrepreneurs to meet credit needs of their businesses.

    Under the scheme, refinancing will be provided by SBP at zero percent to participating financial institutions for onward lending to women entrepreneurs across the country at a mark-up rate of up to 5 percent per annum.

    Such loans will also be eligible for 60 percent risk coverage under SBP’s Credit Guarantee Scheme for Small and Rural Enterprises.

    The SBP said that it would allocate limits to PFIs under the scheme on receipt of request from them. The limits will be reviewed on yearly basis.

    At least 20 percent of the limit should be allocated for lending to women entrepreneurs in Balochistan.

    Applications for sanction of limits shall be sent by the interested banks/DFIs to the Director, Infrastructure, Housing & SME Finance Department.

    The SBP said that repayment of loans by borrowers shall be made in equal quarterly installments after grace period (if any). The refinance granted by SBP BSC offices to the PFIs shall be recovered, on the due dates as reported in the original repayment schedule, from the accounts of the PFIs maintained with the respective office of the SBP BSC.

    If a borrower repays the loan amount or its installment, in part or in full, before the due date(s), the PFIs shall be under obligation to repay the amount(s) so received within 15 days to the concerned office of SBP BSC failing which, fine for late adjustment of loan will be recovered from the concerned bank/DFI, at the rate of Paisa 60 per day per Rs 1,000 or part thereof or prospectively at such rate as may be announced by the State Bank from time to time.

    In case a borrower fails to repay the amount of installment as per the original repayment schedule, the PFIs will be entitled to charge normal rate of mark up on such overdue principal amount besides taking other actions to recover the same as are incidental to such defaults.

    The SBP will continue to recover the principal amount on the due dates as per the repayment schedule.

    In no case, the liability of banks/DFIs to pay/repay to SBP BSC the principal amount of refinance as per the repayment schedule or mark-up or any other charges or penalty thereon shall be dependent upon the recovery from the borrower nor shall such liability be affected by any default on the part of the borrower.

  • FPCCI signs three MoUs at Belt and Road Conference

    FPCCI signs three MoUs at Belt and Road Conference

    The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has taken significant steps towards strengthening international trade relations by signing three Memoranda of Understanding (MoUs) at the Belt and Road CEO Conference held in Beijing, China.

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  • Country’s foreign exchange reserves declines by $202 million

    Country’s foreign exchange reserves declines by $202 million

    Pakistan’s liquid foreign exchange reserves experienced a significant decline, falling by $202 million to $15.994 billion by the week ending April 19, 2019, compared to $16.196 billion just a week prior, according to a statement released by the State Bank of Pakistan (SBP) on Thursday.

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