Pkrevenue.com

Category: Budget 2020-2021

  • Finance ministry issues strategy for release of funds for development budget

    Finance ministry issues strategy for release of funds for development budget

    ISLAMABAD: The finance ministry on Wednesday issued strategy for release of funds for development budget during fiscal year 2020/2021.

    The undersigned is directed to refer to the subject mentioned above and to state that keeping in view the Public Finance Management Act (PFM) Act, 2019, the following strategy for release of funds relating to Development Budget for Financial Year 2020-21 shall be followed with immediate effect and until further orders:-

    a) Funds for Development Budget shall be released by Finance Division at the level of 20 percent for the 1st Quarter, 30 percent each for 2nd and 3rd Quarter and 20 percent for 4th Quarter.

    b) Ministry of Planning, Development and Special Initiative s shall devise project-wise/Division-wise strategy for release of funds for Public Sector Development Program (PSDP) within the appropriations approved by the National Assembly and included in the Schedule of Authorized Expenditure in terms of Article 83 of the Constitution.

    c) All payments shall be made through the pre-audit system of the Accountant General Pakistan Revenue (AGPR)/ Military Accountant General (MAG)/ Accounting Offices/ Sub-Offices, or through Assignment Account procedure issued by the Finance Division. No direct payment through the State Bank of Pakistan shall be made, except with the prior approval of the Finance Secretary.

    d) No authority shall incur or commit any expenditure from the “Federal Consolidated Fund” until the same has been sanctioned by the National Assembly and the expenditure has been provided for the financial year through (a) schedule of authorized of expenditure in terms of Article 83 of the Constitution, or (b) supplementary grant or technical supplementary grant as per Article 84 of the Constitution has been approved by the Federal Government, or (c) re-appropriation as per Sections 2(u) and 11 of the Public Finance Management Act, 2019.

    e) There shall be no requirement of ways and means clearance from Budget Wing and endorsement of sanction letters by Expenditure Wing, Finance Division for the fund releases for PSDP approved projects.

    f) All the sanctions for expenditure (in all forms) shall be issued and entered into SAP system by the Principle Accounting Officers (PAOs) before making payment by the Accounting Offices.

    g) AGPR and other Accounting Offices shall not enter the sanction letters issued by the PAO into the SAP system and shall process the payments on verification of budget, fund release and sanction letter.

    h) The provisions of Public Finance Management Act, 2019 shall be strictly adhered to by all the PAOs and the Accounting Offices.

    i) The instructions with regard to all forms of supplementary grants shall be issued by the Budget Wing, Finance Division, separately.

    j) The Development Wing of Finance Division shall coordinate and oversee the matters relating to release of funds for development of budget and other ancillary matters.

  • Cash withdrawal should be exempted from withholding tax; Senate recommends key changes in Finance Bill 2020

    Cash withdrawal should be exempted from withholding tax; Senate recommends key changes in Finance Bill 2020

    ISLAMABAD: The Senate of Pakistan has recommended the government to abolish withholding tax on cash transactions from banks. In its key tax recommendations for finalizing budget 2020/2021, the Senate recommended that the government should abolish all kinds of withholding tax chargeable on cash transactions from banks.

    (more…)
  • Senate advises salary increase by 10 percent

    Senate advises salary increase by 10 percent

    ISLAMABAD: The Senate of Pakistan has recommended increase in salary of government employees by at least 10 percent for fiscal year starting July 01, 2020.

    As per the general consensus recommendations of the upper house after the debate on budget 2020/2021, it is recommended that salary of government employees should be enhanced at least 10 percent.

    The upper house further recommended that the federal government should double the budget for education and health sectors.

    It is recommended that all important debt agreements must be placed before the parliament for scrutiny immediately.

    The budget allocation for ministry of national health services, regulations and coordination must be enhanced to a minimum five percent as per WHO recommendations.

    The 11 percent cut imposed on the share of the provinces in violation of National Finance Commission (NFC) Award must be revised immediately.

    The Senate of Pakistan recommended to the National Assembly that the allocation for Ministry of Education must be increased by 20 percent.

    It is recommended that salaries of the medical and para-medical staff working in ICT should be enhanced reasonably.

    The Senate recommended that the government should allocate more funds for management of rain water reservoirs. A special fund should also be allocated for construction of new small/mini dams.

    Budgetary allocation of Higher Education Commission (HEC) should be enhanced to Rs100 billion.

    The upper house recommended that the government should allocate funds for improvement in the aviation sector and to upgrade airports all over the country.

    The government should expedite the process of loss making projects in a transparent manner.

    The government should raise the amount of funds allotted for locust control in 2020/2021, from Rs4 billion to Rs8 billion keeping in view of the losses suffered by small farmers in locusts affected areas.

    It is recommended to raise at least 50 percent in the corona stimulus package for fertilizer subsidy, loan remission and other relief to the farmers, keeping in view of covid-19 situation and food insecurity on account of locusts attacks.

  • Senate recommends tobacco must be treated as crop, exempted from duty/taxes

    Senate recommends tobacco must be treated as crop, exempted from duty/taxes

    ISLAMABAD: The Senate of Pakistan has recommended a significant policy shift, advocating for tobacco to be treated as a crop and exempted from duties and taxes. This recommendation was made in the context of the Finance Bill 2020, reflecting the upper house’s stance on the agricultural status of tobacco.

    (more…)
  • Tax collection target of Rs4.96 trillion for 2020/2021 achievable

    Tax collection target of Rs4.96 trillion for 2020/2021 achievable

    ISLAMABAD: Hammad Azhar, Minister for Industries and Production, has said that the tax collection target of Rs4.96 trillion assigned to Federal Board of Revenue (FBR) during next fiscal year is achievable.

    (more…)
  • Banks to provide information of all recipients of profit on debt

    Banks to provide information of all recipients of profit on debt

    In a decisive move to bolster transparency in financial transactions, the Federal Board of Revenue (FBR) is set to require all banks to provide detailed information on individuals receiving profit on debt, effective from July 1, 2020.

    (more…)
  • Tax deduction allowed on salary up to Rs25,000 paid in cash

    Tax deduction allowed on salary up to Rs25,000 paid in cash

    KARACHI: The Finance Bill 2020 has proposed major changes related to tax deduction in order to provide relief to business community. Under the proposed amendments the threshold amount has been increased up to Rs25,000 for tax deduction in case salary is paid.

    According to interpretation of the Finance Bill 2020 by BDO Pakistan, the Finance Bill proposed amendments to Section 21 of the Income Tax Ordinance, 2001.

    (l) The Bill seeks to enhance threshold of deduction for cash payment against business income under single account head from Rupees fifty thousand to Rupees two hundred and fifty thousand per annum.

    This proposal seeks to relieve businesses from making transactions through banking channel, as it is difficult for business to make every transaction through banking channel.

    Further The Bill seeks to increase the threshold of expenditure liable to be disallowed as a business expense if the same is not made through a crossed banking instrument/ online transfer of payment from Rs.10,000/- to Rs.25,000/ per transaction.

    Furthermore, The Bill seeks to enhance threshold from Rs.15,000/- to Rs.25,000/- as allowable deduction against business income if the salary is paid in cash.

    (p) & (q) The Bill seeks to add two new clauses to regulate limit of expenditure on account of utility bill and sales made to persons required to be registered but not registered under the Sales Tax Act, 1990 as an admissible deduction against business income where sales equal to or exceed Rs. 100 million per person. However, the disallowance of expenditure shall not exceed 20 percent of total deduction claimed.

  • Exemption from withholding tax on foreign remittances may not practical for banks

    Exemption from withholding tax on foreign remittances may not practical for banks

    The Pakistani government has announced a significant tax relief measure, granting withholding tax exemption on the transfer of foreign remittances to Pak Rupee (PKR) accounts. However, tax experts have raised concerns about the practical implementation of this exemption, particularly regarding the bifurcation of transactions for banks.

    (more…)
  • Restoration of multiple years audit to burden taxpayers

    Restoration of multiple years audit to burden taxpayers

    KARACHI: Business community has criticized the government for eliminating condition of conducting audit once in three-year period.

    Overseas Investors Chamber of Commerce and Industry (OICCI) highlighted anomalies in the Finance Bill 2020, sent to the Federal Board of Revenue (FBR) and said that omission of the condition would burden the taxpayers and would give sweeping powers to tax officials.

    The Finance Act 2018 restricted the frequency of conducting audits to once in a three-year period.

    This amendment of 2018 demonstrated the confidence of the Government on the records maintained by registered persons.

    The Bill now seeks to omit the condition of conducting the audit once in a three-year period. If passed, this will unnecessarily burden taxpayers, while handing over sweeping powers to the assessing officers of Inland Revenue to conduct audits covering one or multiple tax years with no reprieve for the taxpayer available under the law, in absence of any prescribed limitation.

    The consequence of this change will likely erode the taxpayer’s confidence in the revenue machinery and the probable unnecessary wastage of time and effort by the revenue authorities.

    The OICCI said that during the FBR/OICCI Web link meeting on May 5th the FBR Member (IR-Operations) informed that new Audit Policy will be announced soon, where there will be only one audit in three years u/s 122, which was welcomed by OICCI members.

    Therefore the removal of condition of one audit in three years in the Finance Bill 2020, is a shock for OICCI members.

    “Hence, we strongly advocate maximum of one for audit within three years, for promoting Ease of Doing Business,” the OICCI said.

  • Foreign investors express concerns on proposed rates for imported raw materials

    Foreign investors express concerns on proposed rates for imported raw materials

    KARACHI: Foreign investors have raised concerns over the proposed tax rates on import of raw materials.

    Overseas Chamber of Commerce and Industry (OICCI), which is represented of foreign investors and multinational companies in Pakistan, highlighted anomalies in the Finance Bill 2020 and proposed rectifications.

    The OICCI said that the reduction in rate of income tax u/s 148 to 2 percent on import of raw materials/items mentioned in Part II of the Twelfth Schedule is a significant relief that will improve the cash flow position of companies.

    However, two concerns have been voiced on the changes proposed:

    a) The Bill seeks to introduce a new Schedule as the Twelfth Schedule to the Ordinance wherein all the goods imported into Pakistan may be classified under either of the three categories viz Part I, Part II and Part III based on PCT code wise listing of goods.

    However, certain core raw materials used by manufacturers are still falling under the category of 5.5 percent income tax by virtue of non-inclusion in Part II of Twelfth Schedule.

    It is suggested that a general rate of 2 percent may be prescribed for all imports by manufacturing companies for own consumption.

    b) The Bill now seeks to omit Clause 72B, therefore, exemption would no longer be available in respect of tax collected under Section 148 of the Ordinance to an industrial undertaking.

    Though there is substantial reduction in rate of collection of tax, as a result of withdrawal of such exemption, nevertheless, the taxpayer operating on margins lower than the rate of advance tax collected on imports or having adjustable losses/tax credits or enjoying tax exemption may still face liquidity hitches.

    In order to avoid cash flow issues and tax refundable situation, it is suggested that instead of omitting clause 72 B, industrial undertakings importing raw materials for in house consumption should be provided an option.