Pkrevenue.com

Author: Faisal Shahnawaz

  • KTBA discusses impact of SRO 1125 withdrawal

    KTBA discusses impact of SRO 1125 withdrawal

    KARACHI: The tax practitioners have discussed impact of abolishing SRO 1125(I)/2011 under which sales tax zero rating was available for export sector.

    These were discussed at post budget seminar organized by Karachi Tax Bar Association (KTBA) in collaboration with Pakistan Tax Bar Association (PTBA) on Thursday.

    Adnan Mufti at Shekha & Mufti Chartered Accountants explained changes in indirect taxes in his presentation.

    He said zero rated and reduced rates tax regime for 5 export oriented sectors i.e. textile, leather, carpets, sports and surgical goods was introduced from 1st January 2012 vide SRO 1125. Thereafter 19 amendments were made from time to time in SRO 1125.

    He highlighted following impacts would emerge after abolishment of SRO 1125:

    a) Goods which were notified under SRO 1125 now would restored at standard rate of sales tax i.e. 17%.

    b) Supplies of finished articles of textile, textile made ups, leather and artificial leather made by retailers would be subject to sales tax @ 15% subject to integration with FBR online system where data is transmitted to the FBR’s computerized system in real time. Mode and manner to be prescribed by FBR.

    c) Zero rating on import of plant & machinery (not manufactured locally) by textile industry would be abolished and will be subject to sales tax @ 10%;

    d) Ginned cotton, one of the major raw material of textile sector, will become subject to sales tax @ 10% under Eight Schedule. It was previously zero rated under SRO 1125 for textile sectors and exempted under Sixth Schedule for others;

    e) Zero rating facility on “raw cotton” stands transposed with tax exemption under Sixth Schedule;

    f) Zero rating facility on furnace oil, diesel oil, coal, electricity and gas will be withdrawn.

    He explained in details about the overall changes brought in the indirect measures through Finance Bill 2019.

    The changes in tax structure will have inflationary impact on sugar, milk, soft drinks, garments, shoes, cooking oil, cement, etc. costlier than before. Customs Duty on more than 1,650 raw materials and industrial inputs reduced – paper industry to enjoy more benefits.

    He said that restoration of trust was much needed for a tax revenue target of Rs5555 billion.

    Practical measures for boosting exports, employment, protection of local industry missing. Imports of luxury items like chocolate, eatable, shaving razors, heavy cars, etc. should have been banned. Revenue hit for the initial short run should be absorbed for a long term sustainability.

    Machinery parts and accessories used in the textile sector will be free from CD; it’s a mismatch since zero rating for textiles has been abolished in sales tax.

    FED imposed on cars; mismatch vis.a.vis sugar, milk, cooking oil, etc.

    CD waived on 18 medicinal inputs as well as on medicines for certain rare diseases. We should expect cheaper medicines in the next fiscal year.

  • KPT issues Cyclone Vayu safety warning

    KPT issues Cyclone Vayu safety warning

    KARACHI: Karachi Port Trust (KPT) on Thursday issued safety warning for ships in the wake of depression created due to ‘Cyclone Vayu’.

    In an alert the KPT informed that the deep depression had developed 1500 nautical mile south of Karachi and more likely would be upgraded to cyclone within next 24 hours.

    “It is expected this will fall on land likely between Kandla (India) and Karachi on June 15 and June 16 with strong winds up to 45 knots and gusting up to 88 knots.”

    It is strongly suggested that all ships to double up the mooring arrangement for safety of ships and port structure.

  • FBR asks police to provide agreements of rented properties

    FBR asks police to provide agreements of rented properties

    KARACHI: Federal Board of Revenue (FBR) has issued notices to police stations to acquire information about rented residential and commercial properties located in Karachi.

    The notices have been sent to Station House Officers (SHOs) under Section 176 of the Income Tax Ordinance, 2001 to provide the information of rented houses and commercial premises.

    The FBR asked the SHOs to provide information of rented agreements including address of premises, rental agreement and type of properties such as commercial or residential, according to a copy of notice made available to PkRevenue.com.

    The notices have been sent by Broadening of Tax Base (BTB) Wing of Regional Tax Office (RTO)-II Karachi stating that in terms of Section 176 of the Income Tax Ordinance, 2001, the SHOs are required to furnish such information as may be required by the commissioner Inland Revenue or an authorized person relevant to any tax leviable under the Ordinance.

    It further said that as per Section 3 of the Sindh Information of Temporary Residents Act, 2015, the property dealer, landlord and tenant, shall, within 48 hours from the time of delivery of possession of the rented property premises to the tenant, provide information about the tenant to the policy through the fastest means of communication.

    The RTO-II asked police to provide required information by June 17, 2019. The tax office also warned of imposing penalty for non-compliance.

  • FBR warns of harsh action against undeclared assets from July 01

    FBR warns of harsh action against undeclared assets from July 01

    ISLAMABAD: Federal Board of Revenue (FBR) on Thursday warned people of harsh action for possessing undeclared assets from July 01, 2019.

    The revenue body said that those people having undeclared cash, assets and expenditures should declare by availing tax amnesty scheme.

    FBR reiterates that the closing date for Assets Declaration Scheme is 30th June, 2019.

    Therefore, it is advised to the persons intending to avail this scheme to ensure that the following reliable data relating to undeclared and undisclosed assets and expenditure is available with FBR:

    a) Data of industrial and commercial gas and electricity consumers from various DISCOs and gas distribution companies has been procured to identify the persons who are chargeable to tax but have not been paying their due taxes.

    b) That there is complete cooperation between the banks and the FBR on the availability of data relating to withholding taxes and other relevant information especially related to non-filers.

    c) That FBR in collaboration with NADRA is providing access to the concerned persons (confidentially) for the transactions undertaken in the past in order to let the people know the transactions undertaken by them. This data will be available through secure channels from NADRA on demand subject to certain fee.

    d) That it is planned that bearer certificates such as bearer prize bonds will be converted into registered prize bonds over a period of time as specified by the State Bank of Pakistan in coming months.

    e) FBR is in contact with the land record authorities and relevant District Collectors with regard to shops and establishments for identifying the business establishments within their respective areas.

    f) That administrative setup is being placed for operation of the Benami Law and it is expected to be fully operational from July 1, 2019.

    In the light of the aforesaid points, it is advised that the concessions and benefits laid down in the Scheme be availed.

    Furthermore in the Finance Bill 2019 it has been further reassured that no proceedings will be initiated against persons who declare their assets under the Assets Declaration Scheme and complete confidentiality shall be maintained with respect to assets declared in the scheme.

  • Foreign exchange reserves slip to $14.827 billion

    Foreign exchange reserves slip to $14.827 billion

    KARACHI: The total foreign exchange reserves of the country have slipped by $63 million to $14.827 billion by week ended June 03, 2019 as compared with $14.89 billion as on May 31, 2019, State Bank of Pakistan (SBP) said on Thursday.

    The official foreign exchange reserves of the SBP reduced by $55 million to $7.807 billion by week ended June 03, 2019 as compared with $7.862 billion on May 31, 2019.

    The central bank said that its reserves were declined due to payments on account of external debt servicing.

    The reserves held by commercial banks also fell by $8 million to $7.019 billion from $7.027 billion.

  • Stock market gains 465 points on buying activities

    Stock market gains 465 points on buying activities

    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.

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  • Rupee hits all time low Rs152.91 against dollar

    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.

  • Consumers allowed 5pc cash back of sales tax paid on retail purchases

    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.

  • Dollar hits all time high at Rs153 in midday trading

    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

    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).