Pkrevenue.com

Author: Faisal Shahnawaz

  • Rupee makes gain against dollar on inflows

    Rupee makes gain against dollar on inflows

    KARACHI: The rupee gained against dollar on Monday after sufficient inflows were available in the market.

    The rupee gained three paisas to end at Rs141.29 against dollar from last Friday closing of Rs141.32 in interbank foreign exchange market.

    The interbank foreign exchange market was initiated in the range of Rs141.20 and Rs141.25.

    The market recorded day high of Rs141.36 and low of Rs141.15 and closed at Rs141.29.

    The exchange rate in open market also witnessed appreciation in rupee value by 30 paisas against dollar.

    The buying and selling of dollar was recorded at Rs141.00/Rs141.50 from last Saturday’s closing of Rs141.30/Rs141.80 in cash ready market.

  • Withholding tax rates on payment for goods and services during Tax Year 2019

    Withholding tax rates on payment for goods and services during Tax Year 2019

    KARACHI: Federal Board of Revenue (FBR) has updated withholding tax card for tax year 2019 amendment through Finance Supplementary (Second Amendment) Act, 2019.


    Following are the withholding tax rates applicable on payment for goods and services under Section 153 of Income Tax Ordinance, 2001.


    Under this section every withholding agent prescribed under the ordinance shall collect withholding tax from resident person, and permanent establishment in Pakistan of a non-resident at the time the amount is actually paid.


    The withholding tax rates under Section 153(I)(a):


    For sale of rice, cotton seed oil and edible oil the tax rate shall be 1.5 percent of gross amount.


    Supply made by distributors of fast moving consumer goods shall be 2 percent of gross amount in case of company and 2.5 percent of gross amount in case of other than company.


    For sale of any other goods:


    (i) in the case of company the filer of income tax return shall pay 4 percent and the rate of withholding tax shall be 8 percent for non-filer.


    (ii) In the case of other than companies the tax rate for filer shall be 4.5 percent and 9 percent for non-filer.


    The FBR said that no deduction of tax where payment is less than Rs75,000 in aggregate during a financial year.


    The withholding tax rate for transport services under Section 153(1)(b) shall be two percent.


    All others under the section shall be:


    (i) in the case of companies the filer shall pay 8 percent and 14.5 percent for non-filer.


    (ii) in all other than company taxpayers the withholding tax shall be 10 percent for filer and 17.5 percent for non-filer.


    (iii) Person making payment to electronic and print media for advertising services: filer shall pay 1.5 percent; non-filer shall pay 12 percent; and non-filer other than company shall pay 15 percent.


    The FBR said that no deduction of tax where payment is less than Rs30,000 in aggregated during a financial year.


    The rate of withholding tax on execution of contracts under Section 153(1)(c) shall be:


    (i) in case of sportsperson the rate shall be 10 percent


    (ii) in the case of companies the withholding tax rate for filers shall be 7 percent and 14 percent for non-filers.


    (iii) In the case of other than companies the rte of withholding tax shall be 7.5 percent for filers and 15 percent for non-filers.


    Every exporters or export house shall deduct tax on payments in respect of services of stitching, dying, printing etc. received or provided under Section 153(2) the withholding tax rate shall be one percent.


  • Sales Tax Act 1990: No suit shall lie against government servant

    Sales Tax Act 1990: No suit shall lie against government servant

    KARACHI: The sales tax law had explained that no suit, prosecution or other legal proceeding shall lie against the federal government or against any public servant in respect of any order passed in good faith.

    The updated Sales Tax Act, 1990 issued by the Federal Board of Revenue (FBR) explained the bar of suits, prosecution and other legal proceedings under this act.

    Section 51: Bar of suits, prosecution and other legal proceedings

    Sub-Section (1): No suit shall be brought in any Civil Court to set aside or modify any order passed, any assessment made, any tax levied, any penalty imposed or collection of any tax made under this Act.

    Sub-Section (2): No suit, prosecution or other legal proceeding shall lie against the Federal Government or against any public servant in respect of any order passed in good faith under this Act.

    Sub-Section (3): Notwithstanding anything in any other law for the time being in force, no investigation or inquiry shall be undertaken or initiated by any governmental agency against any officer or official for anything done in his official capacity under this Act, rules, instructions or direction made or issued thereunder without the prior approval of the Board.

    Section 52: Appearance by authorized representative

    A registered person required to appear before the Appellate Tribunal or an officer of 2[Inland Revenue] in connection with any proceedings under this Act may, in writing, authorize any person having such qualification as may be prescribed to represent him or appear on his behalf.

    Section 52A: e-intermediaries to be appointed

    Sub-Section (1): Subject to such conditions, limitations and restrictions, the Board may, by a notification in the official Gazette, appoint a person to electronically file return under Chapter V and such other documents electronically, as may be prescribed from time to time, on behalf of a person registered under section 14.

    Sub-Section (2): A person registered under section 14 may authorize an e-intermediary to electronically file return or any other documents, as specified in sub-section (1).

    Sub-Section (3): The return or such other documents filed by an e-intermediary on behalf of a registered person shall be deemed to have been filed by that registered person.

    Sub-Section (4): Where this Act requires anything to be done by the registered person and if such thing is done by an e-intermediary authorized by the registered person under sub-section (2), unless the contrary is proved, shall be deemed to have been done with the knowledge and consent of such registered person so that in any proceedings under this Act, the registered person shall be liable as if the thing has been done by him.

    Sub-Section (5): Where an e-intermediary, authorized by a registered person under sub-section (2) to act on his behalf, knowingly or willfully submits a false or incorrect information or document or declaration with an intent to avoid payment of tax due or any part thereof or claiming a tax credit or a refund that is not due to the registered person, such e-intermediary shall be jointly and severally responsible for recovery of the amount of tax short paid or the amount refunded in excess as a result of such incorrect or false information or document or declaration, without prejudice to any other action that may be taken against him under the relevant provisions of the law.

    Sub-Section (6): The Board may, by notification in the official Gazette, prescribe rules for the conduct and transaction of business of e- intermediaries, including their appointment, suspension and cancellation of appointment, subject to such conditions as specified therein.

    Section 53: Estate of deceased person

    The tax liability of a deceased registered person under the Act shall be the first charge on his estate in the hands of his successors.

    Section 54: Estate in bankruptcy

    Sub-Section (1): If a registered person is declared bankrupt, the tax liability under this Act shall pass on to the estate in bankruptcy if it continues to operate the business.

    Sub-Section (2): If tax liability is incurred by an estate in bankruptcy, the tax is deemed to be a current expenditure in the operations of the estate in bankruptcy and shall be paid before the claims preferred by other creditors are settled.

  • FBR provisionally revokes sales tax registration suspension of Hascol Petroleum

    FBR provisionally revokes sales tax registration suspension of Hascol Petroleum

    KARACHI: Federal Board of Revenue (FBR) has provisionally revoked the suspension of sales tax registration of M/s. Hascol Petroleum Limited on directives issued by Sindh High Court.

    (more…)
  • Reza Baqir assumes charge as SBP governor

    Reza Baqir assumes charge as SBP governor

    KARACHI: Dr. Reza Baqir assumed the charge of Governor State Bank of Pakistan (SBP) on Sunday after President of Pakistan appointed him as Governor State Bank of Pakistan for a period of three years.

    A statement issued by the SBP said that Dr. Reza Baqir has eighteen years of experience with the IMF and two years with the World Bank.

    He was the Head of the IMF’s Office in Egypt and Senior Resident Representative since August 2017.

    He has also held positions as IMF Mission Chief for Romania and Bulgaria, Division Chief of the IMF’s Debt Policy Division, Head of the IMF delegation to the Paris Club, Deputy Division Chief of the IMF’s Emerging Markets Division, IMF Resident Representative to the Philippines, and numerous other positions.

    Dr. Baqir’s research has been published in top journals of the economics profession, including the Journal of Political Economy and the Quarterly Journal of Economics.

    Dr. Baqir holds a Ph.D in Economics from the University of California at Berkeley and an A.B. (Magna cum Laude) in Economics from Harvard University.

  • PSX proposes reducing withholding tax to 2.5pc on income from margin financing transactions

    PSX proposes reducing withholding tax to 2.5pc on income from margin financing transactions

    KARACHI: Pakistan Stock Exchange (PSX) has recommended the tax authorities to reduce the withholding tax to 2.5 percent from 10 percent to develop the market and increase tax collection.

    In its budget proposals for 2019/2020, the stock market said that the proposed reduction in the rate of tax on margin financing transactions would help develop market and increase tax collection by Federal Board of Revenue (FBR) because 10 years back the size of similar market for margin transactions was several time higher.

    The PSX said that margin financing facility is made available to all members against net ready market purchases of their clients and proprietary positions.

    The National Clearing Company of Pakistan Limited (NCCPL) provides a system to margin financing participants for recording and settlement of margin financing transactions, with financing terms and conditions pre-determined by the margin financee and margin financier.

    Margin financing facility is made available only in eligible securities notified by the Securities and Exchange Commission of Pakistan (SECP).

    The PSX said that the present tax rate on gross income of the financier is 10 percent without deduction of any expenditure to earn such income.

    In most cases the funds are borrowed from financial institutions for such margin financing transactions, it added.

    The cost involved in margin financing includes financing cost payable to financial institution, trading, clearing and depository charges and other administrative cost which render that the amount deducted as advance tax could not be fully adjusted against the tax liability of most brokers leading towards claims for tax refunds that are not time bound.

    For the purpose of reducing withholding tax, the PSX proposed amendment to Division IIB of Part IV, First Schedule to Income Tax Ordinance, 2001 as: “The rate of deduction under section 233A shall be 2.5 percent of profit or mark-up or interest earned by the member, margin financier or securities lender.”

  • Commercial importers destroying domestic industry: PBC

    Commercial importers destroying domestic industry: PBC

    KARACHI: Pakistan Business Council (PBC) – the advisory forum of large corporate entities – has said that commercial importers are involved in massive under-invoicing and they are destroying the domestic industry.

    In its budget proposals for 2019/2020, the PBC recommended measures for documentation of economy to providing level playing field for domestic manufacturing.

    The PBC said that across the board massive under-invoicing and dumping of imported products had been increasing. “Information regarding values at which various customs check post clear import consignment is not publicly available. This encourages unscrupulous importers to under-declare the value of consignments to evade government revenues,” it added.

    It also pointed out that there are massive leakages in Afghan Transit Trade (ATT) and smuggled goods are being openly sold in all major shopping centers of the country. “Customs however is not willing to act against smuggled products citing lack of cooperation from local authorities,” it added.

    The PBC recommended:

    a. values at which import shipments are cleared through PRAL or CARE need to be publicly available.

    b. The government of Pakistan must insist of Electronic Data Interface (EDI), initially for both Free Trade Agreement (FTA) and non-FTA from China. “In future the requirement of EDI should be made compulsory for imports from FTA/ PTA partner countries.

    c. Depending on industry, the import trade price (ITP) should be fixed e.g. on the basis of country of origin, weight, volume etc. after discussion with stakeholders. “ITP’s may be fixed for most items prone to mis-declaration such as consumer goods and margins of commercial importers should be monitored to assess the value of subsequent supply of imported goods. A certificate to this effect should be issued by auditors of commercial importers.”

    d. For items, prone to under invoicing and mis-declaration, Federal Board of Revenue (FBR) should designate one or two ports (including the dry ports) for clearing of import consignments. “This will allow better monitoring of the import consignments where chances of mis-declaration are on a higher side.”

    e. Additionally, the old Customs General Order 25 should be revived with a provision that local manufacturer should be given the option to buy at a 15 percent premium, any consignment which appears undervalued.

    f. Taxes and duties deposited local manufacturers and commercial importers should be published.

    g. The rate of tax collected from commercial importers should be maintained at their current level. Presently, tax collected from commercial importers is treated as final tax. The income tax collected at import stage should be treated as advance tax.

    h. Commercial importers should be required to file returns under the normal tax regime as introduced through the Finance Act, 2018.

    i. In order to allow commercial importers to claim adjustment of tax deducted at import stage, commercial importers should be asked to present certificate from auditors that at least 70 percent of imported items have been exported or soled to registered manufacturers. “This will also help increase the overall tax base,” the PBC said.

    j. Monthly sales declared by commercial importers should be matched with sales declared in annual income tax returns as well as the credit entries in all business bank accounts. “In case of any discrepancy, a reconciliation with justifiable reason should be submitted by the commercial importers.

    k. Online CREST system must be amended in a way to trace sales along with value addition thereon of person to whom supplies were made by commercial importers.

  • Utility Stores Corporation implements Ramazan Package ahead of fasting month: RM Javed Khan

    Utility Stores Corporation implements Ramazan Package ahead of fasting month: RM Javed Khan

    KARACHI: Utility Stores Corporation (USC) has implemented subsidized rates under Ramazan Package announced by the government to provide relief the masses during the holy month, a top official said on Sunday.

    “The reduced rates have been implemented across the country from May 03, 2019 around three or four days ahead of Ramazan,” said Muhammad Javed Khan, USC, Regional Manager (RM), Karachi.

    “All the USC outlets are now selling hundreds of items at the subsidized rates,” he added.

    Khan said that a significant reduction had been announced in those items that were mostly used during the fasting month such as sugar, wheat flour, rice, pulses, edible oil and ghee etc.

    “These commodities have reduced prices up to 20 percent when compared with the open market,” the regional manager added.

    The federal government has provided Rs2 billion to subsidized the rates of essential items to be sold through the Utility Stores.

    The Economic Coordination Committee of the Cabinet (ECC) in its meeting on March 12 approved subsidy amounting Rs2 billion to provide relief the masses during Ramazan ul Mubarak.

    Javed Khan pointed out some of items having significant reduction in prices, which included: sugar Rs 64 per kilogram, wheat flour Rs340/10-kg, whet gram Rs100/kg, Dal Chana Rs105/kg, Dal Masoor Rs90/kg, vegetable ghee Rs129/kg, edible oil Rs153/liter, Rooh Afza Rs183/800ml, cold drink (all brands) Rs77/1.5 liters, Tapal tea 793/kg, dates Rs60/500 grams, Rice Super Rs114/kg.

    USC price

    The regional manager said that in order to ensure availability and avoid bulk sale the zonal chief had constituted vigilance teams for monitoring.

    He said that on the directives of Prime Minister Imran Khan the regional chiefs across the country were also visiting the outlets to ensure the availability and for price checks as well.

    Prime Minister Imran Khan has recently directives all the government functionaries to ensure securities and availability of essential items at reduced rates during the holy month of Ramazan ul Mubarak.

  • Sales Tax Act 1990: ownership transfer of taxable activity

    Sales Tax Act 1990: ownership transfer of taxable activity

    KARACHI: The sales tax law has explained application of sales tax on taxable activity or transfer of ownership.

    According to updated Sales Tax Act, 1990 issued by Federal Board of Revenue (FBR) the law explained the sales of taxable activity or transfer of ownership.

    Section 49: Sales of taxable activity or transfer of ownership

    Sub-Section (1): In case of termination of taxable activity or part thereof or its sale or transfer of ownership to a non-registered person, the possession of taxable goods or part thereof by the registered person shall be deemed to be a taxable supply and the registered person shall be required to account for and pay the tax on the taxable goods held by him:

    Provided that if the tax payable by such registered person remains unpaid, the amount of unpaid tax shall be the first charge on the assets of the business and shall be payable by the transferee of business.

    (2) In the case of sale or transfer of ownership of a taxable activity or part thereof to another registered person as an ongoing concern, the taxable goods or part thereof shall be transferred to the new owner through a zero-rated invoice and the sales tax chargeable thereon shall be accounted for and paid by the registered person to whom such taxable activity or part thereof is transferred.

  • Rupee gains 20 paisas in open market on monitoring to prevent money laundering

    Rupee gains 20 paisas in open market on monitoring to prevent money laundering

    KARACHI: The Pak Rupee gained 20 paisas against dollar on Saturday amid improved inflows in the open market and tight monitoring of law enforcement agency to prevent money laundering.

    The buying and selling of dollar was recorded at Rs141.30/Rs141.80 as compared with previous day’s closing of Rs141.50/Rs142.00 in cash ready market.

    Currency dealers said that the steps taken by the government to curb money laundering through money exchanges had resulted in availability of greenback for general public.

    The dealers said that during past few months the regulators and law enforcement agencies had taken various measures to stop money laundering and Hawala and Hundi.