The prices of essential commodities have risen for the third consecutive week this month, signaling high headline inflation for April 2019. According to data released by the Pakistan Bureau of Statistics (PBS), the Sensitive Price Indicator (SPI) has consistently increased in the weeks ending April 4, 11, and 18, reflecting a challenging trend for consumers.
(more…)Author: Faisal Shahnawaz
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Sales Tax Act 1990: FBR may appoint special panels for audit
KARACHI: Federal Board of Revenue (FBR) has been empowered under sales tax law to appoint special audit panels for conducting audit of any registered person.
The updated Sales Tax Act, 1990 issued by the FBR, the Section 32A explains the powers of the revenue body for appointment of special audit panels.
Section 32A: Audit by Special Audit Panels
Sub-Section (1): The Board may appoint as many special audit panels as may be necessary, comprising two or more members from the following, –
(a) an officer or officers of Inland Revenue;
(b) a firm of chartered accountants as defined under the Chartered Accountants Ordinance, 1961 (X of 1961);
(b) a firm of cost and management accountants as defined under the Cost and Management Accountants Act, 1966 (XIV of 1966); or
(d) any other person as directed by the Board,
to conduct audit of a registered person or persons, including audit of refund claims and forensic audit and the scope of such audit shall be determined by the Board or the Commissioner Inland Revenue on a case-to-case basis. In addition, the Board may, where it considers appropriate, also get such audit conducted jointly with similar audits being conducted by provincial administrations of sales tax on services.
Sub-Section (2): Notwithstanding that records of a registered person have been audited by an officer appointed under section 30, the Board or a Commissioner may direct special audit panel appointed under sub-section (1) to audit the records of any registered person.
Sub-Section (3): Every member of special audit panel appointed under sub-section (1), shall have the powers of an officer of Inland Revenue under sections 25, 37 and 38.
Sub-Section (4): Each special audit panel shall be headed by a chairman who shall be an officer of Inland Revenue.
Sub-Section (5): If any one member of the special audit panel, other than the chairman, is absent from conducting an audit, the proceedings of the audit may continue and the audit conducted by the special audit panel shall not be invalid or be called in question merely on the ground of such absence.
Sub-Section (6): The Board may prescribe rules in respect of constitution, procedure and working of special audit panel.
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FTO takes suo moto notice in concealing income in garb of agriculture tax, Iranian oil sale
ISLAMABAD: Federal Tax Ombudsman (FTO) has taken suo moto notice and initiated investigation in open sale of Iranian oil in Balochistan and tax evasion in the garb of agriculture tax.
The annual report 2018 issued by the office of FTO, stated that during the year the FTO proactively invoked powers to take action on own motion notices.
It said that own motion investigation was initiated in the phenomenon of open sale of Iranian petroleum products in Balochistan at the petrol pumps. Proceedings were in progress, it added.
Another own motion investigation was started in the phenomenon of tax evasion in the garb of agriculture tax. Since long, a large number of taxpayers have been showing a substantial portion of their income as agriculture income.
“As tax on agriculture income was a provincial subject, so they were paying income tax to Federal Board of Revenue, on the income declared other than agriculture sources.”
“While, at the same time they were not paying agriculture tax to the provinces,” the FTO report said, adding that on pointation by the FTO, the FBR had started sending notices to the defaulters.
The FTO in another own motion investigation of a case of smuggling of mobile phones, mis-declared as LED lights, and cleared through green channel of WeBOC system, was undertaken as a suo-moto case and suitable recommendations were made.
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Official website still showing Asad Umar as finance minister
The official website of Pakistan’s Ministry of Finance continues to show Asad Umar as the Finance Minister, despite Dr. Abdul Hafeez Shaikh assuming the role of Adviser to the Prime Minister on Finance and Revenue.
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Instructions issued for moving public money to treasury single account
ISLAMABAD: The ministry of finance said that the State Bank of Pakistan (SBP) has been directed to design procedure for bringing back public money from commercial banks to Treasury Single Account (TSA).
‘A Roadmap for Stability and Growth’ issued by the ministry of finance this month, said that the central bank had been instructed to design administrative procedures, and an IT system, for rolling back public monies from commercial banks to TSA.
The ministry highlighted the weakness in fiscal management that many public sector agencies park unspent monies outside the TSA.
“By end 2018 there was an estimated Rs1.4 trillion in these accounts,” the ministry said.
This reflects a clear case of lack of oversight of public finances, it added.
These accounts of the public agencies are not linked to the Treasury Single Account (TSA) and while these amounts are reflected in SBP reports, they remain outside the fiscal reporting framework of the government.
Some of the monies are due to ‘leakages’ from the fiscal management system and are reported as expenditure in the past fiscal reports.
Thus, showing a larger than actual fiscal deficit.
Moreover, these accounts adversely impact government’s cash management and audits of public expenditure.
The government has introduced an enabling provision for Treasury Single Account (TSA) regime for Government’ cash management system has been incorporated in the draft Public Finance Management and Administration Bill.
This provision gives a rule-based regime of cash management through the TSA.
Simultaneously a policy for TSA is being drafted in consultation with stakeholders and expected to be ready soon for submission to the Federal Cabinet for approval.
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Hafeez Shaikh holds phone discussion with IMF Mission chief
ISLAMABAD: Dr Abdul Hafeez Shaikh, Advisor to Prime Minister on Finance, Revenue and Economic Affairs held a phone discussion with Ernesto Ramirez-Rigo, IMF Mission Chief to Pakistan, after talking with Jihad Azour, IMF Director, earlier on Saturday.
They discussed the progress of negotiations for an IMF-supported program for Pakistan.
Both sides expressed their commitment for moving the discussions forward.
It was agreed that an IMF mission will visit Pakistan by the end of April 2019.
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Rupee sheds 20 paisas in open market
KARACHI: The Pak Rupee ended down by 20 paisas in open market on Saturday owing to recent changes in the federal cabinet.
The buying and selling of dollar was recorded at Rs142.00/Rs142.50 from previous day’s closing of Rs142.00/Rs142.50 in cash ready market.
The local unit lost 50 paisas against the greenback during the last two days.
Currency dealers said that the rupee was under pressure in the open market owing to uncertainty over the fate of the local currency after the new finance adviser had been installed by the Prime Minister.
Asad Umar, who resigned from the portfolio of finance minister, said that any new finance incharge had to take difficult decision for betterment of economy.
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PSX, China investment company hold seminar to facilitate cross border investments
KARACHI: VIS Credit Rating Company (VIS) in collaboration with Pakistan Stock Exchange Limited (PSX) and Pak China Investment Company Limited (PCIC) organized an event on Saturday to celebrate collaboration between VIS and China Chengxin International Credit Rating Company Limited (CCXI).
The theme of the event was to facilitate cross border investments into Pakistan and promote informed investment decision making along CPEC and Belt & Road.
The event, graced by Dr. Ishrat Hussain – Advisor to the Prime Minister as the chief guest, was attended by leading professionals and business personalities from the financial and industrial sectors of the country.
CCXI is the largest rating agency in China with over 20,000 ratings outstanding currently and a work force of over 900 analysts based in China.
During the event, VIS & CCXI launched their jointly developed methodology, ‘Investment Strength, Governance, Environment & Social (ISG-ES) Grading’.
ISG-ES is a pioneering grading methodology jointly developed by the two credit rating agencies, VIS & CCXI, keeping in mind the information required by foreign investors while making long term investment decisions.
The product is meant to grade organizations based on long term investment ability criterion with emphasis on overall investment financial strength, corporate governance standards established within the organization as well as a flavor of social responsibility and environmental accountability in processes and systems.
ISG-ES is especially envisioned to be useful for those organizations seeking long term local/foreign equity investment or those seeking to establish partnerships with companies for business opportunities under CPEC and/or the B&R initiative.
The product is envisioned to attract international investors and play a major role in the space of informed investment decision making.
“Pakistan Stock Exchange, being one of the stakeholders in VIS, is proud to have this collaboration between VIS and China Chengxin International Credit Rating Company Limited”, stated Richard Morin, MD, Pakistan Stock Exchange.
He added that rating agencies have a very important role to play in that they grade companies and organizations for analysts, investors, customers and other stakeholders and this grading serves as a benchmark for these companies’ performance going forward.
Three prominent players from the financial and industrial sectors of Pakistan, Habib Bank Limited, Jubilee General Insurance Limited and International Industries Limited, who have already conducted ISG-ES assessment shared their experience and discussed benefits of such a pioneering product that provides them opportunities to showcase themselves as potential investment in Pakistan.
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Sales Tax Act 1990: return filing requirement by registered persons
KARACHI: A sales tax registered person is required to file true and correct sales tax return on monthly basis by providing details of supplies and persons whom the supplies were made during the period.
According to updated Sales Tax Act, 1990 issued by Federal Board of Revenue (FBR), the Section 26 explained the requirement of filing sales tax return by registered persons.
Section 26: Return
Sub-Section (1): Every registered person hall furnish not later than the due date a true and correct return in the prescribed form to a designated bank or any other office specified by the Board [FBR], indicating the purchases and the supplies made during a tax period, the tax due and paid and such other information, as may be prescribed;
Provided that the Board may, by notification in the official Gazette, require any person or class of persons to submit return on quarterly basis:
Provided further that the Board may, by notification in the official Gazette, require any person or class of persons to submit such return as may be prescribed annually in addition to the monthly return or quarterly return:
Provided also that the return filed electronically on the web or any magnetic media or any other computer readable media as may be specified by the Board shall also be deemed to be a return for the purpose of sub-section (1) and the Board may, by notification in the official Gazette, make rules for determining eligibility of the data of such returns and e-intermediaries who will digitize the data of such returns and transmit the same electronically under their digital signatures.
Sub-Section (2): omitted
Sub-Section (3): A registered person may, subject to approval of the Commissioner Inland Revenue having jurisdiction, file a revised return within one hundred and twenty days of the filing of return under sub-section (1) or, as the case may be, sub-section (2), or under clause (a) or clause (b) of section 27, to correct any omission or wrong declaration made therein.
Sub-Section (4): Notwithstanding the penalties prescribed in section 33, if a registered person wishes to file revised return voluntarily along with deposit of the amount of tax short paid or amount of tax evaded along with default surcharge, whenever it comes to his notice, before receipt of notice of audit, no penalty shall be recovered from him:
Provided that in case the registered person wishes to deposit the amount of tax as pointed out by the officer of Inland Revenue during the audit, or at any time before issuance of the show cause notice, he may deposit the evaded amount of tax, default surcharge under section (34), and twenty five percent of the penalty payable under section 33 along with the levied return:
Provided further that in case the registered person wishes to deposit the amount after issuance of show cause notice, he shall deposit the evaded amount of sales tax, default surcharge under section 34, and full amount of leviable penalty under section 33 along with the revised return and thereafter, the show cause notice, shall stands abated.
Sub-Section (5): The Board may, by notification in the official Gazette, require any person or class of persons, for any goods of such description or class, to furnish such summary or details or particulars pertaining to the imports, purchases and supplies during any tax period or periods, in such format as may be specified.
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Market Review: technocrats’ inclusion seen positive for policy making
KARACHI: The stock market likely to gain momentum following major reshuffle in the federal cabinet and inclusion of technocrats.
Analysts at Arif Habib Limited expected the market to continue the momentum it gained on Friday and remain in the green next week.
“Inclusion of technocrats into the federal cabinet may be seen as a positive step for policy making.”
Valuations across the board have opened up and investors are advised to build positions in value stocks.
The domestic equity bourse remained under pressure the entire week owing to lack of clarity over the PM’s decision to make changes in the cabinet, which finally ended with major changes including the removal of Asad Umar from the Finance Ministry on Wednesday.
Failure to get an Amnesty Scheme approved by the cabinet by the Finance Minister also depressed sentiment. Moreover, Commercial Banks remained under pressure mid-week as news of consultation process for creation of a Treasury Single Account (TSA) that would transfer government deposits in Commercial Banks to the SBP, took rounds in the market.
However on the last trading day of the week the market rebounded strongly, accelerating 481 points during the day. The benchmark index closed at 37,292 points at the end of the week, receding by a mere 45 points WoW.
Negative sector-wise contributions came from i) Tobacco (59 points), ii) Cement (55 points), and iii) Engineering (26 points). On the flip side, sectors that contributed positively include i) Fertilizers (72 points), ii) Oil & Gas Exploration Companies (26 points), iii) Automobile Assembler (25 points), and iv) Power Generation & Distribution (25 points).
Scrip-wise major negative contributions came from PMPK (32 points), BAHL (29 points), PAKT (27 points) and BOP (24 points). Positive contributions came from FFC (78 points), UBL (58 points), PPL (37 points) and HUBC (36 points).
Foreign selling continued this week clocking-in at USD 1.9 million compared to a net sell of USD 2.2 million last week.
Selling was witnessed in Exploration & Production (USD 5.3 million) and Oil & Gas Marketing Companies (USD 0.4 million).
On the domestic front, major buying was reported by Companies (USD 4.6 million) and Individuals (USD 2.3 million). Volumes settled at 176 million shares (up by 18 percent WoW) while value traded clocked in at USD 39mn (up by 16 percent WoW).