Category: Budget

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

Razak Dawood hints incentives for exporters in next budget

KARACHI: Abdul Razak Dawood, Adviser to Prime Minister on Commerce, Industry and Production on Saturday said that the ministry of commerce is planning a comprehensive strategy with the help of Federal Board of Revenue (FBR) to introduce export incentives in the next federal budget 2020/2021.

Razak Dawood was addressing during his visit to Karachi Chamber of Commerce and Industry (KCCI). He said that increase in exports is must for economic growth. The adviser said that the purpose of increasing exports is to boost foreign exchange reserves of the country.

The adviser said that the economy was facing immense challenges a year ago. The economy was facing monthly $2 billion deficit during the period. The present government had taken decisions to improve the economic condition. “These decisions have resulted in shrinking current account deficit,” he added.

The foreign exchange reserves of the country have increased to $18 billion from $11 billion.

He pointed out criticism on five percent growth in exports and rupee devaluation and said that it should be realized that globally exports had declined. He said that Pakistani exports had increased in terms of volume.

Razak Dawood said that exports should be duty and tax free. “In this regard we are planning with the FBR to facilitate exporters,” he added.

He informed that India was allowed duty drawback on around 1,000 items. “If India is granting duty drawback on 1,000 items then we should increase the numbers,” he added.

The adviser said that in the past the country had focused only on five sectors for exports. “We need to identify and increase the number of exportable items.”

He said that businessmen complaining about non-issuance of refunds. “This is not correct. The government has released Rs17.5 billion refunds,” he added. “This month more refunds will be issued to non-textile sector.”

The adviser said that the export of meat and poultry had increased by 54 percent. “We analyzed data and identified the exports of livestock was going to Saudi Arabia and UAE,” he said, adding that around 60 tons sea food products had been exported to China.

January 11, 2020
Federal budget 2020/2021 tentative schedule issued for May

ISLAMABAD: The government is planning to present federal budget 2020/2021 in the cabinet and the parliament in the month of May this year.

The finance ministry on Wednesday issued budget call circular for the schedule of budget making process and its presentation in the parliament.

The finance ministry has given tentative schedule of presenting the budget 2020/2021 in May 2020 before the cabinet and the parliament.

The circular further said that the completion of all budget documents, schedules and summaries for the cabinet shall be completed by last week of April 2020.

On April 10, 2020 the principal account office shall submit BO/NIS forms, already entered into SAP system by respective PAOs, for development expenditure to the Budget Wing, Finance Division. Fair copies of the NISs for Development / Capital budget may be sent to Budget Implementation-II Section of Budget Wing, Finance Division after the same have been countersigned by the relevant Technical Section / Programming Section of the Planning, Development and Special Initiatives Division.

On the same date the office shall submit BO/NIS forms, already entered into SAP system by respective PAOs, for current expenditure to the Budget Wing, Finance Division.

January 8, 2020
Sindh issues schedule for announcing budget 2020/2021

KARACHI: Sindh government has announced to present provincial budget for 2020/2021 in first or second week of June 2020.

According to schedule issued by Sindh Finance Department the budget for the fiscal year 2021/2020 likely to be presented to the cabinet and the provincial assembly by the finance minister in the first or second week of June 2020.

According to the schedule by May 28, 2020, the finance department would complete all budget documents, schedules, and summaries for the cabinet.

The planning and development department would present finalized Annual Development Program (ADP) – 2020/2021 by third or fourth week of May 2020.

The meeting of National Economic Council (NEC) is scheduled for first week of May 2020.

The finance department would finalize new taxation proposals and review existing taxes and fees by April 30, 2020.

The meeting of Annual Plan Coordination Committee (APCC) to be held by fourth week of April 2020.

The finance department would finalize Medium Term Budge Framework (MTBF) 2022/2023 by March 31, 2020.

The finance department would finalize of revised estimates for 2019/2020, budget estimates for 2020/2021 and SNE 2020/2021 for recruitment budget by March 31, 2020.

Last date for incorporation of any modification in the ADP 2020/2021 for Annual Plan Coordination Committee by April 20, 2020.

The Sindh government issued budget circular which is integrated the formulation of the Recurrent (non-development) & Development budget and it is being issued in consultation with Planning & Development Department.

Accordingly two additional forms (Form BCC-X and BCC-XI) have been incorporated in the circular for the formulation of development budget.

The Planning & Development Department will have the lead role in development budget formulation, whereas, the Finance department will be formulating the non-development Budget, Receipts and MTBF.

All Administrative Departments are required to submit budgetary proposals on prescribed forms which will be scrutinized by Finance Department and Planning & Development Department in detail, as per prevailing practice.

December 22, 2019
2019/2020: Withholding tax rates issued on payment for goods and services

KARACHI: Federal Board of Revenue (FBR) has issued withholding tax rates on payment for goods and services during tax year 2019/2020 under Section 153 of Income Tax Ordinance, 2001.

The FBR said that every prescribed person shall collect withholding tax under Section 153 of Income Tax Ordinance, 2001 from resident persons and permanent establishment in Pakistan of non-resident at the time the amount is actually paid.

Under Section 153(1)(a) for sale of rice, cotton seed oil and edible oil, the tax rate shall be 1.5 percent of the gross amount.

Persons not appearing in the Active Taxpayers’ List : The applicable tax rate is to be increased by 100% (Rule-1 of Tenth Schedule to the Ordinance), i.e. 3 percent of the gross amount

Tax should be collected on supply made by distributors of fast moving consumer goods: two percent of gross amount in case of company; 2.5 percent of gross amount in case of other than company.

Persons not appearing in the Active Taxpayers’ List The applicable tax rate is to be increased by 100% (Rule-1 of Tenth Schedule to the Ordinance), i.e.: 4 percent of the gross amount in case of company; 5 percent of the gross amount in case of other than company.

For sale of any other goods: 4 percent of the gross amount in case of company; 4.5 percent of the gross amount in case of other than company.

Persons not appearing in the Active Taxpayers’ List: The applicable tax rate is to be increased by 100% (Rule-1 of Tenth Schedule to the Ordinance), i.e.: 8 percent of the gross amount in case of a company; 9 percent of the gross amount in case of other than a company.

Goods: No deduction of tax where payment is less than Rs. 75,000/- in aggregate during a financial year [S.153(1)(a)].

The FBR said that it shall be minimum tax for all except in the following cases where it shall not be minimum tax on sale or supply of goods, by:

(i) a company being manufacturers of such goods or

(ii) Public company listed on registered Stock Exchange in Pakistan.

The FBR said that under Section 153(1)(b) the tax rate should be collected at 3 percent in case:

(i) i. Transport services, freight forwarding services, air cargo services, courier services, man power outsourcing services, hotel services, security guard services, software development services, IT Services and IT enabled services as defined in clause (133) of Part I of the Second Schedule, tracking services, advertising services (other than by print or electronic media), share registrar services, engineering services, car rental services, building maintenance services, services rendered by Pakistan Stock Exchange Ltd. & Pakistan Mercantile Exchange Ltd. , inspection, certification, testing & training services.;

Persons not appearing in the Active Taxpayers’ List :The applicable tax rate is to be increased by 100% (Rule-1 of Tenth Schedule to the Ordinance), i.e. 6 percent of the gross amount.

ii. In case of rendering or providing of services other than as mentioned at (i) above;

a) In case of company: 8 percent of the gross amount

b) In any other case: 10 percent of the gross amount

c) In respect of persons making payment to electronic & print media for advertising services: 1.5 percent of the gross amount.

Persons not appearing in the Active Taxpayers’ List : The applicable tax rate is to be increased by 100% (Rule-1 of Tenth Schedule to the Ordinance), i.e.:

a) In case of company: 16 percent of the gross amount.

b) In any other case: 20 percent of the gross amount.

c) In respect of persons making payment to electronic & print media for advertising services: 3 percent of the gross amount.

Services : No deduction of tax where payment is less than Rs. 30,000/- in aggregate during a financial year [S.153(1)(b)].

It shall be minimum cases in mentioned above cases.

Under Section 153(1)(c), the tax rates shall be:

Execution of Contracts

i) In case of sportsperson: 10 percent

ii) In the case of Companies: 7 percent

iii) In the case of persons other than companies: 7.5 percent

Persons not appearing in the Active Taxpayers’ List: The applicable tax rate is to be increased by 100% (Rule-1 of Tenth Schedule to the Ordinance), i.e.:

i) In case of sportsperson: 20 percent

ii) In the case of Companies: 14 percent

iii) In the case of persons other than companies: 15 percent

Minimum Tax for all whereas it will remain adjustable where payments are received on account of execution of contracts by Public Company listed on registered Stock Exchange in Pakistan.

August 5, 2019
FBR issues withholding tax rates on cash, online banking transactions

KARACHI: Federal Board of Revenue (FBR) has issued withholding tax card for tax year 2019/2020 and prescribed the rate of withholding income tax to be deducted/collected on transactions made through banking system either by cash or online transfers.
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August 4, 2019
FBR explains federal excise duty on edible oils

The Federal Board of Revenue (FBR) has released detailed explanations regarding the revised implementation of the federal excise duty (FED) on ghee and cooking/edible oils, as introduced through the Finance Act, 2019.
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August 3, 2019
Threshold amount to purchase immovable properties removed for withholding tax collection: FBR

ISLAMABAD: Federal Board of Revenue (FBR) has removed threshold amount to purchase of immovable properties for collection of withholding tax.

The FBR issued Income Tax Circular No. 09 dated July 30, 2019 and said that through the Finance Act, 2019, the rate of tax on purchase of immovable property under Section 236K of Income Tax Ordinance, 2001 has been reduced to 1 percent from 2 percent.

Prior to the Finance Act, 2019, no tax was collected under Section 236K on purchase of property where the value of property up to Rs4 million.

“Through the Finance Act, 2019, the threshold of Rs4 million for collection of tax has been removed. Now tax on purchase of property will be collected on all transactions irrespective of the value of immovable property,” the FBR said.

The FBR said that tax under section 236C is collected from the seller or transfer at the rate of one percent of the gross amount of consideration received.

Prior to the Finance Act 2019, this tax was not collected if the property was held for a period exceeding three years.

Through the Finance Act, 2019, the period of three years has been extended to five years which means that tax under section 236C shall be collected if the immovable property is held for a period up to five years.

The FBR further explained that as per section 236W read with clause (c) of sub-section (4) of Section 111, every person responsible for registering, recording or attesting transfer of any immovable property was required to collect tax at the rate of 3 percent of the difference between the FBR value of property and the value recorded by the authority registering or attesting the transfer in cases where FBR value was greater than the recorded value.

So by paying three percent on the difference, the purchaser was not required to explain the source of difference of amount between FBR value and the recorded value.

Through Finance Act, 2019, section 236W as well as clause (c) of sub-section (4) of Section 111 have been omitted. Consequently, the purchasers are not required to explain the source of investment of property up to the FBR value of property whereas previously such purchasers were required to explain the source of investment to the extent of recorded value of property.

July 31, 2019
Persons not appearing in ATL will pay 100 percent increased withholding tax rate: FBR

KARACHI: Persons whose names are not appearing in the Active Taxpayers List (ATL) will be subjected to hundred percent increased rate of withholding tax, Federal Board of Revenue (FBR) said in a circular issued to explain changes made in Income Tax Ordinance, 2001 through Finance Act, 2019.

The FBR issued Circular No. 19 of 2019 and said that prior to Finance Act, 2019 a concept of non-filer existed in the Ordinance whereby higher tax rates of withholding were prescribed for persons who were non-filers.

Such non-filers could claim adjustment of the higher tax collected at the time of filing of income tax returns. The aim was to compel the non-filers to file their returns of income. “However, it was observed that the non-filers, even though subjected to higher withholding rates, still had a propensity not to file their returns,” the FBR said.

This proved detrimental to exercise of expansion or tax base. This was due to the absence of an explicit provision specifying a standard procedure for action against such persons.

Through Finance Act, 2019 the concept of non-filers has been done away with and a new concept regarding persons not appearing in the active taxpayers list has been introduced. This concept is a m ore paradigm shift from the erstwhile non-filer higher tax regime in that it not only penalizes those persons not appearing in the ATL but also introduces an effective mechanism for enforcing returns from such persons.

In this regard a new section 100BA to Income Tax Ordinance, 2001 has been introduced which provides that collection or deduction of advance income tax, computation of income and tax payable thereon shall be determined in accordance with the rules in the newly introduced ‘The Tenth Schedule’ which envisages the entire path to be adopted by the Inland Revenue Department to enforce returns from persons who make financial transactions yet choose not to file their returns of income.

The FBR said that the persons whose names are not appearing in the ATL will be subjected to 100 percent increased tax rate.

The FBR further said that where a withholding agent is of the opinion that 100 percent increased tax is not required to be collected on the basis that the person was not required to file return, the withholding agent shall furnish a notice to the commissioner having jurisdiction over withholding agent setting out –

a. The name, CNIC or NTN and address of the person not appearing in the ATL

b. The nature and amount of the transaction on which tax is required to be collected or deducted; and

c. Reason on the basis of which it is considered that the person was not required to file return or statement, as the case may be.

July 31, 2019
Unexplained foreign remittances will be subject to tax: FBR

ISLAMABAD: Federal Board of Revenue (FBR) on Tuesday said that unexplained foreign remittances will be subject to income tax.
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July 30, 2019
FBR sets 200pc penalty for offshore tax evasion

ISLAMABAD: Federal Board of Revenue (FBR) on Tuesday said the amended income tax law attract 200 percent penalty amount of tax evaded in cases of undeclared offshore assets.

The FBR issued income tax circular to explain the changes brought through Finance Act, 2019 regarding offshore assets and tax evasion.

The FBR said that through the Finance Act, 2019, the term “offshore Assets” has been defined by inserting a new clause (38AA) in section 2 of Income Tax Ordinance, 2001, which includes any movable or immovable assets held, any again, profit or income derived, or any expenditure incurred outside Pakistan.

The term “offshore evader” has been defined by inserting a new clause (38AB) in section 2 and it means a person who owns, possesses, control, or is the beneficial owner of an offshore assets and dos not declare, or under declares or provides inaccurate particulars of such assets to the Commissioners.

Penalty has also been provided in serial No. 22 in sub section (1) of section 182 that where an offshore tax evader is involved in offshore tax evasion in the course of any proceedings under this Ordinance before any Income Tax authority or the appellate tribunal, such person shall pay a penalty of Rs100,000 or an amount equal to 200 percent of the tax sought to be evaded, whichever is higher.

Prosecution for concealment of an offshore assets has been provided by inserting a new section 192B according to which any person who fails to declare an offshore assets to the Commissioner or furnishes inaccurate particulars of an offshore assets and the revenue impact of such concealment or furnishing of inaccurate particulars is ten million rupees or more shall commit an offence punishable on conviction with imprisonment up to three years or with a fine up to Rs. 500,000, or both.

A new sub-section (5) has been added in section 145 as per which the Commissioner may freeze any domestic assets of a person where on the basis of information received from an offshore jurisdiction, the Commissioner has reason to believe the such person who is likely to leave Pakistan may be involved in offshore tax evasion or such person is about to dispose of any assets.

The Commissioner may freeze any domestic assets of the person including any assets beneficially owned by such person for a period of 120 days or till the finalization of proceedings including recovery proceedings and any other proceeding under the Ordinance, whichever is earlier.

The term “offshore enabler” has been defined by inserting a new clause (38AC) in section 2 to include any person who enables, assist, or advises any person to plan, design, arrange or manage a transaction or declaration relating to an offshore assets, which has resulted or may result in tax evasion.

Penalty has been provided in serial no.23 of sub-section (1) of section 182 that where in the course of any transaction or declaration made by a person an enabler has enabled, guided, advised or managed any person to design, arrange or manage that transaction or declaration in such a manner which has resulted or may result in offshore tax evasion in the course of any proceedings under the Ordinance, such person shall pay a penalty of Rs 300,000 or an amount equal to 200 percent of the tax which was sought to be evaded, whichever is higher.

Prosecution for enabling offshore tax evasion has been provided by inserting a new section 195B to the effect that any enabler who enables, guides or advises any person to design, arrange or manage a transaction or declaration in such a manner which results in offshore tax evasion, shall commit an offence punishable on conviction with imprisonment for a term not exceeding seven years or with a fine up to five million rupees or both.

The term “asset move “has been defined by inserting a new clause(5C) in section 2 and it means the transfer of non offshore assets to an unspecified jurisdiction by or an behalf of a person who owns, possesses, controls or is the beneficial owner of such offshore asset for the purpose of tax evasion.

An unspecified jurisdiction means a jurisdiction which has not committed to automatically exchange information under the Common Reporting Standard with Pakistan. The term “specified jurisdiction “has been defined by inserting a new clause (60A) in section 2 and it means any jurisdiction which has committed to automatically exchange information under Common Reporting Standard with Pakistan.

Penalty has also been provided in serial 24 of sub-section (1) of section 182 that any person who is involved in asset move from specified to un-specified territory shall pay a penalty of Rs. 100,000 or an amount equal to 100 percent of the tax, whichever is higher.

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