Pkrevenue.com

Category: Budget

This is parent category of budgets presented by Pakistan government. Here you will find year-wise federal and provincial budgets.

  • FBR recommended to reduce record retention period to three years

    FBR recommended to reduce record retention period to three years

    KARACHI: Federal Board of Revenue (FBR) has been recommended to reduce the time limit to past three years for retention of sales tax record.

    Karachi Chamber of Commerce and Industry (KCCI) in its proposals for budget 2020/2021 submitted to the FBR, highlighted the issue of Section 24 of Sales Tax Act, 1990, which required retention of record and document for six years.

    The KCCI said that the long time period only allows the officers of Inland Revenue to blackmail and harass the tax payers by issuing demands from closed accounts as far back as 6 years.

    The negative impact of such provision is that the revenue officials spend more time in fishing for discrepancies in old records instead of focusing their efforts on broadening of tax base.

    The KCCI proposed that the period retention of record and documents be reduced to 3 years, which is an established practice worldwide for all financial transactions.

    Regional Tax Offices (RTOs) and officers will have to work more on identifying new tax-payers instead of fishing in old records and create demand.

    The period of 6 years is counter-productive for revenue generation and renders the RTOs inefficient.

    In this era of computerization where all the transactions of the registered persons are cross verified instantaneously by the FBR, and the audits are conducted without any delay, the period of maintenance of records and documents should be reduced from 6 to 3 years.

  • FBR advised tracing unregistered persons instead collecting further tax

    FBR advised tracing unregistered persons instead collecting further tax

    KARACHI: Federal Board of Revenue (FBR) has been urged to trace unregistered persons instead collecting three percent further sales tax on local supplies.

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  • PM directs providing all possible incentives in budget 2020/2021

    PM directs providing all possible incentives in budget 2020/2021

    ISLAMABAD: Prime Minister Imran Khan on Monday directed the authorities to provide all possible incentives in budget 2020/2021 to industry for job creations and moving the wheels of the economy.

    The prime minister chaired a meeting to discuss the objectives and considerations for the forthcoming budget 2020/2021.

    The meeting was attended by Foreign Minister Shah Mehmood Qureshi, Minister for Industries and Production Muhammad Hammad Azhar, Planning Minister Asad Umar, Finance Adviser Dr. Abdul Hafeez Sheikh, Adviser Commerce Abdur Razzaq Dawood, Adviser Institutional Reform Dr. Ishrat Hussain and senior officials.

    Discussing priorities for the forthcoming budget, the prime minister said that every effort should be made to provide all possible incentives to the industry, create jobs for the youth and moving the wheels of economy.

    The prime minister stated that the corona pandemic has severely affected upward trajectory of economy towards stabilization and strengthening.

    He said that the government, despite its financial constraints, provided unprecedented stimulus economic package to support businesses and industry and to minimize the impact of corona.

    He said that the most affected sectors be identified so as to provide those with maximum possible support in the forthcoming budget.

    The prime minister directed that the process of cutting unnecessary government expenditure should be expedited at all levels including the federal government as well as provincial governments.

    Prime Minister Imran Khan stressed upon the need for reviewing the existing system of provision of subsidies to make them target-oriented and ensuring their optimum utilization.

    He said that the present situation calls for expediting reform process in critical sectors so as to reduce burden on national exchequer and provide relief to the masses.

    The prime minister also directed adviser finance to apprise the people of Pakistan about the current economic situation and the strategy being followed by the government to cope with the challenges.

    Finance Adviser Dr. Abdul Hafeez Sheikh apprised the meeting about the overall state of economy and the philosophy, objectives and considerations for the next budget 2020-2021.

    Dr. Hafeez Sheikh also dilated upon various constraints of economy, especially in wake of corona pandemic, that has obliged the government to further focus on providing incentives to the industry for its revival and growth, cutting unnecessary government expenditure, rationalize subsidies and expedite reform process in critical sectors.

    Various proposals were discussed in detail to stimulate corona-affected economy, especially ensuring greater participation of the private sector in the development process and promoting public-private partnership to complement public sector development program.

  • Bilingual one-page income tax return form advised

    Bilingual one-page income tax return form advised

    KARACHI: Federal Board of Revenue (FBR) has been advised to make one-page simple income tax return form and that should be available in Urdu and English to facilitate taxpayers.

    In its proposals for budget 2020/2021, the Karachi Chamber of Commerce and Industry (KCCI) said that every year changes are made in income tax form and ironically, it becomes more confusing and difficult for the tax-payers to fill.

    It is particularly cumbersome for the Small and Medium Enterprises (SMEs) including individuals and Association of Persons (AOPs).

    The KCCI said that taxpayers have to seek assistance from consultants and pay large amount of fee only to comply with the requirements of tax return.

    Due to the changes every year, tax-payers have to wait for the new form to be issued by the FBR which takes a month or two after the new budget is approved.

    “The complicated form only helps the business of consultants and tax practitioners at the expense of compliant taxpayers,” the KCCI said.

    It is one of the reasons that many individuals prefer to stay out of tax regime and a deterrent to broadening of tax base.

    The Karachi Chamber proposed that separate income tax return forms for companies, AOPs, individuals and salaried class should be created.

    Forms for SMEs and individuals and retailers should be a simple one page form both in English and Urdu.

    Manual completion and filing should be allowed for individuals and SMEs in order to encourage documentation.

    Extreme penalties and charges should be avoided in case of late filing.

    Errors/short payment should be notified to registered person within two months of filing and correction of errors should be allowed to tax-filer for up to 3 months of filing without requirement of commissioner’s approval.

    The chamber said that incorporation of proposal will help in simplification of filing procedures and documentation. Besides it will also help in broadening of tax base and increase in number of filers.

    Further, it will save unnecessary expenses on fees of consultants and tax practitioners. It will eliminate corruption and harassment.

  • All income tax audit selections should bring under one provision

    All income tax audit selections should bring under one provision

    KARACHI: Federal Board of Revenue (FBR) has been urged to eliminate audit selection under various provisions of Income Tax Ordinance, 2001 for the confidence building of taxpayers.

    Karachi Chamber of Commerce and Industry (KCCI) in its proposals for budget 2020/2021 submitted to the FBR, said that presently audit proceedings can be started u/s 177 as well as through balloting u/s 214C and like-wise enquiries can also be made by the Commissioner u/s 122(5A).

    There is a concept of a special audit panel u/s 177(11) as well.

    Sub-Section 7 is ambiguous and provides the Commissioner and his sub ordinates with a tool to harass, extort and victimize any taxpayer at will.

    The Commissioner can reopen the audit of any person or firm at will on unsubstantiated grounds.

    Under sub-Section 4 of Section 177, any person employed by a firm to conduct audit function may be authorized by the Commissioner to exercise powers under sections 175 and section 176.

    The chamber said that the revenue collection through such recovery proceedings is hardly Rs.92 billion whereas the costs due to litigation, involvement of entire tax collection machinery and declining number of tax filers, is far more than the collection.

    Multiple Audits under various provisions have eroded the trust of tax-payers in the FBR. RTOs and LTUs. Audit functions under various provisions have created confusion and complexity in tax regime.

    Such provisions are also prone to misuse and a source of harassment.

    The KCCI proposed that all Audit functions should be brought under one provision of Income Tax Ordinance rather than various over-lapping provisions with clear and well defined parameters.

    Audit Parameters should be transparent and open to taxpayers.

    Further, Sub-Section 7 may be deleted.

    Powers of the Commissioner and sub-ordinate officials should be curtailed to restore the trust of taxpayers and encourage broadening of tax-base.

    Such Audits should be restricted to specific queries or objections and call for relevant document only rather than opening and re-opening a comprehensive audit every time.

    The chamber said that it will bring transparency and clarity to Audit functions and rules governing the same.

    Prevent harassment to tax payers and abuse of powers by Inland Revenue officials. Broaden tax base by restoring confidence in the system.

  • Garments exporters demand sales tax zero rating revival

    Garments exporters demand sales tax zero rating revival

    LAHORE: The Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) has demanded the tax authorities to reintroduce zero-rated sales tax regime.

    In its proposals for budget 2020/2021 submitted to Federal Board of Revenue (FBR), the PRGMEA demanded restoration of zero-rated regime of ‘no payment and no refund of sales tax’ for export-oriented sectors including textile at least for one year to sustain the industry amidst the severe liquidity crunch due to COVID-19.

    The government should release all stuck claims of the exporters, including DLTL, DDT, Customs Rebates and Sales Tax rebates, as the liquidity crunch is a major stumbling block in the way of improving exports.

    It said the apparel industry should be allowed to import fabric under the SRO 492 scheme, as the weaving industry of Pakistan is unable to fulfill demand for fashion wear, adding, the government should also announce complete 100 percent drawback rate of incentive at 7 percent without the condition of increment with simple procedure and paperless working for two years (2019-2020 and 2020-2021).

    Ijaz A. Khokhar, chief coordinator PRGMEA, in a statement said they had also suggested the government that incentive amount should be directly credited to the exporter’s account at the time of realisation of export proceeds and State Bank of Pakistan may subsequently claim the amount from the government.

    Moreover, Khokhar said the government should also extend the last date for submission of claims of duty drawback.

    The PRGMEA demanded a one-window operation so that the exporters could focus on the market research and marketing for their products, besides proposing that cotton yarn, the major raw material of apparel sector, should be exempted from all duties and taxes to encourage value-addition.

    One-window operation may effectively be introduced to replace the lengthy procedures that involve interaction of manufacturer with various agencies. At the moment, different government agencies have been harassing the textile industry virtually every day. Social Security, EOBI and all other taxes should be merged and deducted at source. The government exchequer will receive more revenue, if a reasonable percentage of realised amount is deducted. And many of the SMEs companies will add in the tax net automatically.

    The PRGMEA also urged the government that the custom duty of 7 percent on import of Polyester staple fibre including a range of 20 percent anti-dumping duty should be abolished to reduce the cost of production to compete in the market.

    It further said that exporters had received just 35 percent of claims payment only, while 65 percent of the refund claims were stuck with the government, which cumulated 12 percent of the exporters’ running capital; however, the profit margin of exporters was around five to eight percent.

    “Due to availability of liquidity and smooth cash flow, the confidence of exporters will be boosted to enhance their exports and cement their business ties with the foreign counterparts to capture true business potential,” it added. The government has given assurance to clear all pending claims, but the factual position is that more and more refund claims are piling up with the payment of just a small number of claims.

    PRGMEA asked the government should announce a clear policy to finally clear all the pending refund claims.

    The trade association also requested that import of fabric be allowed under SRO 492 instead of DTRE, which was very complicated and only 2 percent exporters could avail importation under DTRE facility, whereas 97 percent SME sector could be facilitated under SRO 492, which was enforced previously.

    To compete with Bangladesh and India; it is very important for Pakistan to offer the same products as they are exporting in large variety.

    It said the incentive amount should be directly credited to the exporter’s account at the time of realisation of export proceeds and SBP may subsequently claim the amount from the government. The condition of “after receipt” should be abolished and prompt payment shall be made. Otherwise, again backlog of payments to be made to exporters shall be created as previous payments of billions of rupees have not yet been made to the exporters.

    PRGMEA also proposed that since WEBOC system was available then why do exporters need to submit the hard copies for processing of rebate and DLTL claims. “As soon as the bank may report payment realisation on WEBOC, rebate and DLTL claims should be highlighted in Green and entitled for disbursement of refund,” they added.

  • OICCI suggests eliminating Sindh infrastructure cess

    OICCI suggests eliminating Sindh infrastructure cess

    The Overseas Investors Chamber of Commerce and Industry (OICCI) has made a fervent appeal to the Sindh government, imploring for the withdrawal of the Infrastructure Cess to alleviate the burden on the cost of doing business.

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  • SRB urged to allow normal tax for car dealers

    SRB urged to allow normal tax for car dealers

    KARACHI: Sindh Revenue Board (SRB) has been urged to bring authorized dealers of car manufacturers into normal tax regime.

    Overseas Investors Chamber of Commerce and Industry (OICCI) in its proposals for budget 2020/2021 submitted to SRB, recommended that normal sales tax rate should be applied for services provided by authorized car dealers under tariff heading 9806.4000.

    It said that sales tax on services by authorized car dealers under tariff heading 9806.4000, is at reduced rates and input sales tax is barred, while no such position is available under any of the other provincial sales tax laws.

    Further, no option is available to the service provider to pay sales tax at the normal rate at the rate of 13 percent, instead of reduced rate, as provided for other services under notification No.SRB 3-4/5/2015 dated Jul 01, 2015, e.g. Construction services, Transportation services, Concrete services etc.

    The OICCI recommended that normal sales tax rate should be applied for services provided by authorized car dealers under tariff heading 9806.4000.

    Alternatively, option should be provided to “authorized car dealers of vehicle manufacturers” to pay sales tax at normal rate under tariff heading 9806.4000, as provided to other services.

    Application of standard rate will eliminate the discrimination arising on services provided by dealers in Sindh against other provinces and cost of doing business will reduce for service providers and recipients, it added.

  • Karachi Chamber seeks fair tax treatment for commercial importers

    Karachi Chamber seeks fair tax treatment for commercial importers

    KARACHI: Karachi Chamber of Commerce and Industry (KCCI) has sought fair treatment on collection of withholding tax for commercial importers on import of industrial raw material.

    KCCI in its budget proposals submitted to the Federal Board of Revenue (FBR), said that under Section 148(1) of Income Tax Ordinance, 2001, 6 percent withholding income tax is levied on import of industrial raw materials, whereas manufacturers are exempt from such withholding tax at import stage under Section 159 read with Rule 72B (PART IV OF SECOND SCHDULE OF Income Tax Ordinance, 2001).

    The exemption has created disparity of 7 percent between commercial importers and manufacturers in total incidence of taxes (when 3 percent further tax are included).

    This anomaly has led to rampant misuse and evasion of taxes through over-import by manufacturers for trading purpose, fake registrations by commercial importers and corruption in tax offices for issuance of exemption certificates U/S 159 (1).

    The KCCI said that most of the commercial importers of Raw Materials have now registered as manufacturers to avoid high rate of WHT, 3 percent value addition tax and further tax of 3 percent.

    Nearly 90 percent of all industrial raw material is now imported under the category of manufacturers, while the industry also imports raw materials for trading.

    Loss of revenue is at over Rs.80 billion on total raw material import of Rs.3,250 billion in Pakistan.

    The KCCI proposed that the rate of withholding tax on import of raw materials should be equal for both commercial importers and manufacturers and fixed at 3percent on import stage.

    Further, exemption under Rule 72B (PART IV OF SECOND SCHDULE OF ITO) on raw materials imported by manufacturers should be withdrawn and disparity in WHT may be removed.

    The rate of withholding tax on commercial importers is very high and should be reduced to 1.5 percent to qualify as minimum tax as is the case for industry and large import houses.

    The chamber said that the measure will help broaden tax base, prevent misuse of exemption by fake registration as manufacturers.

    Besides, this will help in substantial Increase in revenue collection through rationalization.

    The KCCI said that the commercial importers of raw materials are a major support to SMEs and recover taxes on behalf of the government.

    Therefore, rationalization will revive the commercial import, support SMEs and prevent misuse of exemption.

  • KCCI proposes regularizing gold, jewellery sector

    KCCI proposes regularizing gold, jewellery sector

    KARACHI: Karachi Chamber of Commerce and Industry (KCCI) has submitted proposals to tax authorities for regularizing gold and jewellery sector.

    In its proposals for budget 2020/2021, the KCCI said that gold and Jewelry sector has always been a neglected and largely unregulated sector.

    No clear policy on import of Gold and precious metals has been formulated while also the export of finished Jewelry has no incentives.

    There is a massive demand and consumption of gold, silver and gems in Pakistan and annual consumption of gold is estimated at 160.0 metric tons.

    The chamber said that the demand is met mostly by undocumented sector because the foreign exchange is not provided by State Bank of Pakistan for import of gold.

    Clause under Serial.No.16 of Part II of Import Policy Order 2016, which deals with import of Gold and Silver, stipulates the condition ‘Importable subject to the condition that importer shall arrange his own foreign exchange for the purpose’.

    But there is no provision under the Foreign Exchange Rules which provides the necessary procedure to allow the importers to arrange own foreign exchange and remit the same to the supplier.

    This has resulted in smuggling and undocumented trade in Gold, and a major sector which has immense potential for exports and revenue generation is suffering with rapid decline.

    Thousands of goldsmiths, artisans and workers have lost their jobs. This sector has the capacity to produce high quality gold ornaments and designer jewelry for export.

    The Karachi Chamber proposed that the sector can be a major employer and source of revenue if appropriate policy governing import of precious metals, documentation of sales and rational tax rates are implemented in consultation with stake holders.

    Import of Gold and Silver may be allowed against payment in foreign exchange arranged by importers through local market (exchange companies and banks). Necessary legislation may be promulgated to legalize the jewelry trade.

    It will help in curtailing smuggling of gold, silver and gems. Further, jewelry trade will be documented because if the import is legalized then the subsequent entities in supply chain will be documented.

    Besides, this will unleash the potential of a large sector to contribute in growth, employment of highly skilled workers and export of Jewelry.