Finance Minister Asad Umar announced on Saturday that the government is contemplating the implementation of a new tax amnesty scheme, driven by proposals received from the business community.
(more…)Author: Faisal Shahnawaz
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Rupee gains 20 paisas on foreign inflows
KARACHI: Pak Rupee gained 20 paisas against US dollar in open market on Saturday on reports of foreign inflows from friendly countries.
The buying and selling of dollar was recorded at Rs138.30/Rs138.80 from previous day’s closing of Rs138.50/Rs139.00 in cash free market.
Currency experts said that the signing of financing between State Bank of Pakistan (SBP) and Abu Dhabi Fund for Development (ADFD) for deposit of $2 billion helped the local currency to gain.
They further said that the local currency would strengthen during the next week owing to foreign inflows.
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SBP signs $2bn deposit pact with ADFD
KARACHI: State Bank of Pakistan (SBP) has signed $2 billion deposit agreement with Abu Dhabi Fund for Development, a statement said on Saturday.
The agreement for the placement of the second tranche of US$ 2.0 billion by Abu Dhabi Fund for Development (ADFD) with the State Bank of Pakistan (SBP) has been signed between the SBP and the ADFD. These funds are expected to be received shortly by SBP.
It may be recalled that the first tranche of US$ 1.0 billion has already been received by SBP in January 2019.
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Legislation to encourage tax non-compliance
KARACHI: All efforts of tax collecting agency in broadening of tax base will be in vain due to changes introduced to tax laws by the present government, which allows non-compliant taxpayers to make transactions.
The government through Finance Supplementary (Second Amendment) Bill, 2019, which was passed by the national assembly, allowed non-filers of income tax returns to purchase locally assembled motor vehicles of any engine capacity.
Though the decision was made to generate more revenue through high rate of withholding tax for non-filers but this would discourage compliant taxpayers.
Whereas through Finance Act, 2018 a Section 182A late filers of income tax returns have been deprived of appearing on the Active Taxpayers List (ATL), which is mandatory for availing reduced withholding tax rates applicable on various transactions for compliant taxpayers.
In a realistic approach if the government allowed late filers, who filed their returns after due date, to appear on the ATL then more people would file their returns in order to purchase motor vehicles as it has been done in the case of purchasing immovable properties.
Another change brought through Finance Supplementary (Second Amendment) Bill, 2019 was allowing commercial importers into Final Tax Regime (FTR).
It is surprising that business community belonging to industrial associations strongly proposed bringing commercial importers into the FTR from minimum tax regime, where tax rates are comparatively lower.
It is obvious that the commercial importers do not want to declare their transactions and want to stay remain out of audit proceedings.
The government has already allowed several concessions and exemptions to industrial sector, especially the export sector for importing raw material.
Allowing commercial importers an audit free regime when the country is facing challenges of money laundering will be problematic.
It is pertinent to mention here that associations of foreign investors and multinational companies do not want relaxation to commercial importers and termed it would be counterproductive for documentation of economy.
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Weekly Review: market to stay range bound
KARACHI: The equity market to stay range bound during next week after end of results season and ease in tension between Pakistan and India.
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FBR unveils basic concepts of income tax
KARACHI: Federal Board of Revenue (FBR) has pointed out basic concepts of income tax for persons intending to get registration and filing income tax returns.
The FBR said that knowledge of basic concepts would not only ensure that the tasks are performed easily but also in the prescribed manner.
Taxable Income
Taxable Income means Total Income reduced by donations qualifying straight for deductions and certain deductible allowances.
Total Income
Total Income is the aggregate of Income chargeable to Tax under each head of Income.
Head of Income
Under the Income Tax Ordinance, 2001, all Income are broadly divided into following five heads of Income:
Salary;
Income from property;
Income from business;
Capital gains; and
Income from Other Sources
Resident
An Association of Persons is Resident for a Tax Year if the control and management of its affairs is situated wholly or partly in Pakistan at any time in that year;
A Company is Resident for a Tax Year if :
It is incorporated or formed by or under any law in force in Pakistan;
The control and management of its affairs is situated wholly in Pakistan at any time in the year; or
It is a Provincial Government or a local Government in Pakistan.
An individual is Resident for a Tax Year if he/she:
Is present in Pakistan for a period of, or periods amounting in aggregate to, 183 days or more in the Tax Year; or
Is an employee or official of the Federal Government or a Provincial Government posted abroad in the Tax Year.
Non-Resident
An Association of Persons, a Company and an Individual are Non-Resident for a Tax Year if they are not Resident for that year.
Pakistan source Income
Is defined in section 101 of the Income Tax Ordinance, 2001, which caters for Incomes under different heads and situations. Some of the common Pakistan source Incomes are as under: –
Salary received or receivable from any employment exercised in Pakistan wherever paid;
Salary paid by, or on behalf of, the Federal Government, a Provincial Government, or a local Government in Pakistan, wherever the employment is exercised;
Dividend paid by Resident Company;
Profit on debt paid by a Resident Person;
Property or rental Income from the lease of immovable property in Pakistan;
Pension or annuity paid or payable by a Resident or permanent establishment of a Non-Resident;.
Foreign source Income
Is any Income, which is not a Pakistan source Income.
Person
An Individual;
A Company or Association of Persons incorporated, formed, organized or established in Pakistan or elsewhere;
The Federal Government, a foreign government, a political subdivision of a foreign government, or public international organization
Company
A Company as defined in the Companies Ordinance, 1984 (XLVII of 1984);
A body corporate formed by or under any law in force in Pakistan;
A modaraba;
A body incorporated by or under the law of a country outside Pakistan relating to incorporation of Companies;
An amendment has been made through Finance Act, 2013 to enlarge the scope of definition of a Company. Now as per Income Tax Ordinance, 2001 a company includes:
A co-operative society, a finance society or any other society;
A non-profit organization;
A trust, an entity or a body of persons established or constituted by or under any law for the time being in force.
A foreign association, whether incorporated or not, which the Board has, by general or special order, declared to be a company for the purposes of this Ordinance;
A Provincial Government;
A Local Government in Pakistan;
A Small Company
Association of Persons
Includes a firm (the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all), a Hindu undivided family, any artificial juridical person and any body of persons formed under a foreign law, but does not include a Company.
Tax Year
Is a period of twelve months ending on 30th day of June i.e. the financial year and is denoted by the calendar year in which the said date falls. For example, tax year for the period of twelve months from July 01, 2017 to June 30, 2018 shall be denoted by calendar year 2018 and the period of twelve months from July 01, 2018 to June 30, 2019 shall be denoted by calendar year 2019. It is called Normal Tax Year.
Special Tax Year
Means any period of twelve months and is denoted by the calendar year relevant to the Normal Tax Year in which closing date of the Special Tax Year falls. For example, Tax Year for the period of twelve months from January 01, 2017 to December 31, 2017 shall be denoted by calendar year 2018 and the period of twelve months from October 01, 2017 to September 30, 2018 shall be denoted by calendar year 2019.
Basic concepts on Income Tax would help answer a lot of fundamental questions, avoiding unnecessary mistakes or errors that normally arise during Registration and Filing of Income Tax Return.
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Prices of essential items increase by 11.72 percent: PBS
KARACHI: The prices of essential items increased by 11.72 percent by week ended March 07, 2019 when compared with the same week last year, according to data released by Pakistan Bureau of Statistics (PBS) on Friday.
According to Sensitive Price Indicator (SPI) all the income groups had witnessed inflation for the period.
The PBS computes the weekly SPI with base 2007-2008=100 covering 17 urban centers and 53 essential items for all income groups / quintiles and combined.
The statistics have shown that price of tomatoes posted 308 percent growth to Rs128.42 per kilogram for the week under review as compared with Rs31.42/kg in the corresponding week of the last year.
The price of LPG cylinder grew by 19 percent for the period. While prices of High Speed Diesel, Petrol and Kerosene Oil witnessed increase in their prices by 13.13 percent, 5.57 percent and 6.8 percent, respectively.
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PSX opening bell marks Women Day
KARACHI: Pakistan Stock Exchange (PSX) on Friday celebrated World Women Day as a prominent woman rang the bell for opening trading.
Dr. Shamshad Akhtar, former governor State Bank of Pakistan (SBP), rang the opening bell on the occasion of Women Day.
Women from different sectors of the economy attended the event and also rang the bell.
The stock exchange has important role in promoting women participation in financial market of the country.
The latest event is also part of those efforts to encourage women increase their participation.
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FBR investigates tax evasion by 200 Sindh govt employees
KARACHI: Federal Board of Revenue (FBR) has initiated investigation into massive tax evasion by at least 200 employees of Sindh government.
The investigation has been launched by Broadening of Tax Base (BTB) wing of Regional Tax Office (RTO)-II Karachi, according to official documents received on Friday.
Sources said that the BTB wing selected high profile cases of government employees in Sindh on the basis of their expenditures and income.
The sources said that preliminary scrutiny revealed that their income and expenses were not matched.
They also said that such identified government employees had also not filed their income tax returns and wealth statement.
The RTO-II Karachi has issued notices to the persons for filing their income tax returns otherwise department would prepare unilateral assessment and initiate action.
The sources said that in case of non-compliance by them in payment due taxes their bank account would be attached for recovery.
The tax office also issued notices to high profile 16,000 salaried persons working in private sector. The sources said that such persons had been given opportunity of being heard and in case they failed in doing so such harsh provisions of the tax law would be invoked against them.
The sources said that the RTO-II also issued notices to 2,000 persons who had purchased huge amount immovable properties but had not declared or not filed their returns.
The investigation has been launched by Broadening of Tax Base (BTB) wing of Regional Tax Office (RTO)-II Karachi, according to official documents received on Friday.
Sources said that the BTB wing selected high profile cases of government employees in Sindh on the basis of their expenditures and income.
The sources said that preliminary scrutiny revealed that their income and expenses were not matched.
They also said that such identified government employees had also not filed their income tax returns and wealth statement.
The RTO-II Karachi has issued notices to the persons for filing their income tax returns otherwise department would prepare unilateral assessment and initiate action.
The sources said that in case of non-compliance by them in payment due taxes their bank account would be attached for recovery.
The tax office also issued notices to high profile 16,000 salaried persons working in private sector. The sources said that such persons had been given opportunity of being heard and in case they failed in doing so such harsh provisions of the tax law would be invoked against them.
The sources said that the RTO-II also issued notices to 2,000 persons who had purchased huge amount immovable properties but had not declared or not filed their returns.
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If FBR not fixed, new tax authority will be created: PM
ISLAMABAD: Prime Minister Imran Khan on Thursday said that reforming Federal Board of Revenue (FBR) is priority of the government.
If the FBR fails to deliver then we will replace with a new tax authority, he said while addressing at the 11th All Pakistan Chambers President Conference.
He said that the reforms in the taxation system was need of the hour because without it the government would not able to meet its developmental expenditures.
The prime minister informed the business community that he was regularly discussing with Commerce Adviser Abdul Razak Dawood and Finance Minister Asad Umar on ways to boost revenue generation and making the FBR a business-friendly organization.
“But I should also tell you this: if we realise that the FBR cannot be fixed, we will create a new FBR,” he said.
Imran Khan said that the economy was facing challenging conditions and revenue generation was a must.He also urged the nation to come into the tax net, adding that in return he would guarantee that their tax would not be misspent.
He assured the nation that each and every penny of Pakistanis’ tax collection will be spent with great caution, he said.
He said that the government will end all unnecessary expenses. He urged the business community to pursue people that it is impossible for any country to succeed without paying their taxes.The prime minister said that it was shocking that only 72,000 taxpayers were declaring Rs200,000 or more monthly income out of 210 million people in Pakistan.
The prime minister assured the business community that his government will do all he can to facilitate them, indicating that “some more incentives are coming your way in the upcoming days”.