Category: National

FBR notifies statutory tax rates for salaried persons

The Federal Board of Revenue (FBR) has notified the statutory rates of income tax for salaried persons during Tax Year 2023.

In order to implement the rate of tax for salaried persons, the FBR issued Income Tax Ordinance, 2001 updated up to June 30, 2022. The following table is enacted for the taxation of salaried taxpayers for the Tax Year 2023:

Taxable Income	Rate of Tax
Up to Rs600,000	0%
Rs600,001 –1,200,000	2.5% of amount exceeding Rs600,000
Rs1,200,001 –2,400,000	Rs15,000 + 12.5% of amount exceeding Rs1,200,000
Rs2,400,001 –3,600,000	Rs165,000 + 20% of amount exceeding Rs2,400,000
Rs3,600,001 –6,000,000	Rs405,000 + 25% of amount exceeding Rs3,600,000
Rs6,000,001 –12,000,000	Rs1,005,000 + 32.5% of amount exceeding Rs6,000,000
Amount exceeding Rs12,000,000	Rs2,955,000 + 35% of amount exceeding Rs12,000,000

The rate of tax in the table above are applicable where the income of an individual chargeable under the head ‘salary’ exceeds seventy-five per cent of his/her taxable income.

It is pertinent to mention that Finance Minister Dr. Miftah Ismail on floor of the House while presenting the federal budget 2022/2023 announced massive relief for salaried persons.

According to the budget speech of the finance minister, the basic threshold of taxable salary is proposed to be enhanced to Rs1.2 million from the Rs600,000 for salaried individuals.

“This would pass tens of billions of rupees benefit to salaried people. This will generate a positive economic cycle whereby this money would get transferred to the businesses as the disposable income of salaried people increases therefore ultimately, the government will benefit through the thriving of the business, the creation of more jobs, and tax revenues in the future,” according to the budget speech.

However, the government withdrew the proposal and revived the exempt income to Rs600,000 while approving the Finance Act, 2022 from the National Assembly.

Haider Ali Patel, former president of Karachi Tax Bar Association (KTBA) in a recent presentation on the Finance Act, 2022 stated that the revised rates in respect of salaried taxpayers had been enacted with the change in maximum rate of tax from 32.5 per cent to 35 per cent.

He stated that the enacted tax rates have taken away the proposed tax relief sought to be provided to the individuals belonging to lower salaried class.

“On the other hand, the tax incidence has been increased considerably for the individuals belonging to higher salary brackets,” he added.

Patel presented the following table provides the increase / decrease in the tax incidence of salaries taxpayers from tax liability of the tax year 2022 to tax year 2023 and also the tax liability calculated as per the proposed Finance Bill, 2023:

August 24, 2022

SBP issues instructions to banks for flood relief donation awareness

KARACHI: The State Bank of Pakistan (SBP) on Wednesday issued instructions to banks for raising awareness among the potential donors for contributing in flood relief fund.

The central bank said that with a view to raise awareness among the potential donors and facilitate them in contributing to the PM’s Flood Relief Fund 2022, banks are advised to undertake following measures on immediate priority and submit compliance by August 30, 2022:

READ MORE: Pakistan current account deficit widens by 42% in July 2022

a) Banks shall prominently display banners at all their branches bearing the description “DONATIONS TO THE PRIME MINISTER’S (PM) FLOOD RELIEF FUND ARE ACCEPTED HERE”.

b) Banks shall highlight the IBAN of the Fund at their websites and ATMs screens enabling their clients to donate to the fund digitally.

c) Banks shall also send SMS alerts to all their clients informing them about the establishment of the Prime Minister Flood Relief Fund and its IBAN.

READ MORE: Pakistan’s FY22 current account deficit widens to $17.41 bn

d) To facilitate the walk-in customers in making cash deposits in the fund “pre-printed deposit slips” shall be available at the banks’ counters.

e) The banks offering Roshan Digital Account (RDA) shall make the “PM Flood Relief Fund” available on their Roshan Samaji Khidmat page/portal enabling RDA holders to contribute to the Fund in hassle free manner. The donations received through RDA shall be transmitted to SBP along with donations received through other sources on daily-basis through RTGS as advised earlier.

READ MORE: Pakistan’s CAD balloons to $15.19 billion in 11 months

The Banks are also encouraged to advertise the PM Flood Relief Fund through their social media pages including their webpages, Facebook pages, twitter accounts etc. to create maximum awareness about the fund and the mechanism to make the donations in the fund.

The banks shall ensure that their branch staff has full awareness and understanding of establishment of the fund and the mechanism to collect the donations in the fund account.

READ MORE: Current account deficit swells to $13.78 bn in 10 months

August 24, 2022
FBR slaps additional customs duty at 35% on motor vehicles

ISLAMABAD: The Federal Board of Revenue (FBR) has imposed additional customs duty at the rate of 35 per cent on import of motor vehicles under various HS Codes.

The FBR issued SRO 1572(I)/2022 dated August 22, 2022 to notify amended rates of additional customs duty on import of various items. Through the instant SRO, the revenue body amended SRO 967(I)/2022 dated June 30, 2022.

According to the latest SRO 1572(I)/2022, the FBR said thirty-five per cent additional customs duty on vehicle falling under PCT codes 8703.2323, 8703.2329, 8703.2490, 8703.3223, 8703.3225, 8703.3229, 8703.3390 and 8703.9000.

The FBR said that the notification would take effect on and from August 22, 2022 till 21^st day of February 2023.

Through previous SRO 967(I)/2022 the additional customs duty was imposed at 2 per cent on cars, jeeps, light commercial vehicles in CKD condition exceeding 1,000 CC and heavy commercial vehicles in CKD condition.

The FBR imposed the additional customs duty in order to discourage luxury imports into the country in order to save foreign exchange.

It is worth mentioning that the government on May 19, 2022 through imposed a complete ban on import of luxury and non-essential items in order to stop depletion in foreign exchange reserves as well as stop free fall in rupee value.

READ MORE: Pakistan lifts ban on import of cars, phones, luxury items

However, on August 20, 2022, the government reversed its decision and allowed import of luxury and non-essential items despite the fact the foreign exchange reserves were declined drastically and the rupee value also registered massive fall against the US dollar.

Alternate to allowing import of luxury and non-essential items, the government increased regulatory duty and additional customs duty on import of various goods.

READ MORE: Pakistan raises Regulatory Duty to 100 % on motor vehicle import

August 24, 2022
Tax exemption granted to donations for PM flood relief fund

ISLAMABAD: The federal government on Tuesday granted tax exemptions to donations made for Prime Minister’s Flood Relief Fund 2022.

The Federal Board of Revenue (FBR) issued SRO 1590(I)/2022 dated August 23, 2022 to exempts deduction of tax under various provisions of Income Tax Ordinance, 2001.

According to the SRO an amendment has been made into Part 1 of the Second Schedule of the Income Tax Ordinance, 2001 that any income derived from The Prime Minister’s Flood Relief Fund, 2022 has been exempted from income tax with effect on and from August 5, 2022.

Furthermore, an amendment has been made to Part IV of the Second Schedule under which minimum tax under Section 113 of the Income Tax Ordinance, 2001 shall not apply to the flood relief fund.

In the same part of the schedule a new clause 120 has been inserted under which Section 151 related to profit from debt shall not apply to the relief fund with effect on and from August 5, 2022.

It further said that the provisions of Section 236 of Income Tax Ordinance, 2001 shall not apply on the amount donated through SMS to the Prime Minister’s Flood Relief Fund, 2022 with effect on and from August 5, 2022.

The FBR issued another SRO 1589(I)/2022 dated August 23, 2022, under which the federal government exempted the federal excise duty leviable on any donation received in Prime Minister’s Flood Relief Fund, 2022. “The notification shall take effect on and from August 5, 2022,” the FBR added.

The Finance Division on August 5, 2022 issued a notification to establish Prime Minister’s Flood Relief Fund 2022.

According to the notification: “It has been decided to establish / open with immediate effect a Fund to be known as ‘Prime Minister’s Flood Relief Fund 2022’ for collective national effort to meet the challenge of providing relief and rehabilitation to the affected population due to excessive rains and floods across the country.

It said that all proceeds and payments for the fund will be received at all branches of State Bank of Pakistan (SBP), all treasuries and branches of National Bank of Pakistan (NBP) and all other scheduled banks.

The fund may receive donations from both domestic, international donors and contributions from abroad which will be received at all the branches of above referred banks where such branches are existing. In other foreign countries contributions will be received at Pakistan missions and remitted to the State Bank of Pakistan which would prescribe necessary procedure for their accounting.

August 23, 2022
Pakistan amends laws to tax retailers

ISLAMABAD: Pakistan on Monday revised laws to impose tax on retailers after suspending fixed tax scheme. President Arif Alvi has signed the bill namely Tax Laws (Second Amendment) Ordinance, 2022 to promulgate the revised taxation on the retailers.

Through the immediate ordinance, amendments have been made to Sales Tax Act, 1990 under which retailers are required to pay sales tax through electricity bill.

READ MORE: FBR allows tax refund deducted through electricity bills

The retailers/shopkeepers are now required to pay 5 per cent of the electricity bill is amounting up to Rs20,000.

The rate of tax is not applicable on the Tier-1 retailers as a separate mechanism for charging sales tax is in vogue.

The sales tax rate shall be 7.5 per cent in case the electricity bill is above Rs20,000.

The amendments have been applicable from July 01, 2022. This means the retailers have to pay the tax on their electricity bill issued for the month of July 2022.

A commissioner of Inland Revenue, Federal Board of Revenue (FBR) has been authorized to issue order to the electricity supplier regarding exclusion of a person who is either a Tier-1 retailer or not a retailer.

READ MORE: Pakistan decides to roll back fixed tax scheme

According to the latest ordinance, notwithstanding anything contained in this Act, the Federal Government may, in lieu of or in addition to the tax under sub-section (9), by notification in the official Gazette, levy and collect such amount of tax at such rates and from such date as it may deem fit, from retailers, other than those falling in Tier-1, through their monthly electricity bill, and may also specify the mode, manner or time of payment of such tax:

Provided that different rates or amounts of tax may be specified for different persons or class of persons.

The ordinance also amended Income Tax Ordinance, 2001 and introduced special provision relating to payment of tax through electricity connections.

READ MORE: FTO investigates tax collection through electricity bills

It said that notwithstanding anything contained in the Ordinance, a tax shall be charged and collected from retailers other than Tier-I retailers as defined in the Sales Tax Act, 1990 (VII of 1990) and specified service providers on commercial electricity connections at the rates specified in the income tax general order issued in terms of sub-section (2).

Sub-Section (2): For the purposes of this section, the Federal Government or the Board with the approval of the Minister in-charge pursuant to the approval of the Economic Coordination Committee of the Cabinet may, issue an income tax general order to-

(a) provide the scope, time, payment, recovery, penalty, default surcharge, adjustment or refund of tax payable under this section in such manner and with such conditions as may be specified;

(b) provide the collection of tax on the amount of bill or on any basis of consumption, in addition to or in lieu of advance tax collectible under sub-section (1) of section 235, at such rates or amounts, from such date and with such conditions as may be specified;

READ MORE: Withdrawal of sales tax through electricity bills demanded

(c) provide record keeping, filing of return, statement and assessment in such manner and with such conditions as may be specified;

(d) provide mechanism of collection, deduction and payment of tax in respect of any person;

(e) include or exempt any person or classes of persons, any income or classes of income from the application of this section, in such manner and with such conditions as may be specified; and

(f) provide that tax collected under this section shall in respect of such persons or classes of persons be adjustable, final or minimum, in respect of any income to such extent and with such conditions as may be specified.

The provisions of sub-section (1) of section 235 shall apply to the persons as specified therein unless specifically exempted under the income tax general order issued under sub-section (2).

The provisions of section 100BA and rule 1 of the Tenth Schedule shall not apply to the tax collectible under this section unless specifically provided in respect of the person or class of persons mentioned in the income tax general order issued under sub-section (2).”

August 22, 2022
President Alvi rejects Habib Bank plea, orders to pay victims

ISLAMABAD: The President of Pakistan, Dr. Arif Alvi has rejected plea in six different cases filed by Habib Bank Limited (HBL) and ordered to pay victims.

A statement issued on stated that the President ordered the HBL to compensate the victims of online banking fraud as justifications presented by the bank were not sufficient.

READ MORE: HBL ordered to compensate bank fraud victim

Dr. Alvi directed HBL to refund and compensate the 6 defrauded customers with their stolen money and observed that since the bank failed to prove observance of relevant provision of laws, rules and regulations, therefore, its representations were devoid of any merit and deserved to be rejected.

The President rejected HBL’s six representations involving a total amount of Rs. one million and observed that victims were deprived of their hard earned deposits when the bank unilaterally activated the electronic funds transfer (EFT) facility without the request/consent of account holders and failed to put in place necessary safeguards against online exploitation of the account holders by the fraudsters.

READ MORE: FBR directed to bring entire sugar supply chain into tax net

In all six cases, the President found the bank negligent of its duty to inform the account holders about the pros and cons of activating the electronic funds transfer (EFT) as required by the mandatory guidelines of the State Bank of Pakistan (SBP).

Had the bank not opened EFT facility without customers’ consent, the account holders could have avoided the financial loss, he added.

The President rejected the bank’s claim that all transactions were 3D secured, being a secondary step, by observing that the State Bank of Pakistan (SBP), required all banks to register its customers for internet banking prior to offering them internet based products and services and putting in place all necessary safety measures to safeguard its clients from fraudsters.

READ MORE: President Alvi directs bank to refund unfair recovery

In his decisions, the President concluded that since the bank could not produce any evidence to the effect that it had complied with the provisions of relevant laws, rules and regulations, therefore, its representations were devoid of any merit and deserved to be rejected.

According to details, the account holders were called by fraudsters who lured them in their trap by providing them information regarding their names, CNIC, dates of birth, ATM Card numbers and obtained from them the names of their mothers and used this information to deprive the account holders of their deposits by making multiple e-commerce transactions, even though the bank customers were not using any mobile app and they were also in possession of their ATM Cards.

The victims approached their respective bank branches to freeze their accounts and seek refund, however, they were not provided any relief by the bank on the grounds that they themselves had shared their personal banking credentials with unknown callers.

READ MORE: President Alvi rejects FBR plea in maladministration cases

Feeling aggrieved, the account holders approached the Banking Mohtasib of Pakistan (BMP), after hearing arguments on account of banking malpractices, maladministration, wrong doings, the fraudulent transactions, the corrupt and malafide practices by the Bank officials, it decided the cases in favor of the applicants.

The Bank, however, chose to further escalate the matter and filed separate representations with the President which were rejected and the Bank was directed to comply with the directions of the Banking Ombudsman.

August 21, 2022
FBR revises property valuation for Gwadar areas

In a strategic initiative aimed at enhancing tax collection and ensuring fair market valuation, the Federal Board of Revenue (FBR) has revised the valuation of properties in the Gwadar region. The move, outlined in the SRO 1271(I)/2022 dated August 01, 2022, represents a crucial step in aligning property valuations with current market dynamics.
(more…)

August 21, 2022
FBR issues new property valuation for Islamabad from August 01, 2022

The Federal Board of Revenue (FBR) has introduced new valuations for immovable properties in Islamabad, effective from August 01, 2022.
(more…)

August 20, 2022
Essential items witness inflation above 42%: Pakistan Bureau

ISLAMABAD: Pakistan Bureau of Statistics (PBS) on Friday disclosed that prices of essential items have recorded inflation above 42 per cent on year on year (YoY) basis by week ended August 18, 2022.

The bureau stated that Sensitive Price Indicator (SPI) of essential items depicts an increase of 42.31 per cent.

READ MORE: High inflation may force further monetary tightening

The essential items that recorded increase in prices during this period are included: Pulse Masoor (111.02 per cent), Diesel (108.77 per cent), Petrol (94.53 per cent), Onions (94.43 per cent), Cooking Oil 5 litre (72.96 per cent), Mustard Oil (71.08 per cent), Chicken (69.04 per cent), Vegetable Ghee 1 Kg (68.56 per cent), Vegetable Ghee 2.5 Kg (67.05 per cent), Electricity for Q1 (63.03 per cent), Washing Soap (61.92 per cent), Pulse Gram (58.93 per cent), Gents Sponge Chappal (52.21 per cent), Pulse Mash (51.51 per cent) and Garlic (36.59 per cent).

While a decrease observed in the prices of Chilies Powder (43.42 per cent), Sugar (16.55 per cent) and Gur (1.96 per cent).

READ MORE: Pakistan inflation hits 14-year high at 25% in July

The SPI for the week ended on August 18, 2022 recorded an increase of 3.35 per cent.

Increase is observed in the prices of food items, Tomatoes (20.28 per cent), Chicken (7.57 per cent), Onions (2.30 per cent), Powdered Milk (2.03 per cent), Eggs (1.63 per cent), Pulse Moong (1.42 per cent) and Potatoes (1.07 per cent), non-food items, Electricity for Q1 (6.83 per cent), Petrol (2.96 per cent) and Cigarette (1.69 per cent).

On the other hand, a decrease observed in the prices of LPG (3.46 per cent), Vegetable Ghee 1Kg (1.16 per cent), Garlic (0.94 per cent), Mustard Oil (0.71 per cent), Pulse Masoor (0.42 per cent), Pulse Gram (0.36 per cent), Vegetable Ghee 2.5Kg (0.33 per cent), Cooking Oil 5 litre (0.31 per cent), Diesel (0.18 per cent), Firewood Whole (0.16 per cent) and Sugar (0.03 per cent).

READ MORE: Pakistan hikes key policy rate by 125 basis points to 15%

During the week, out of 51 items, prices of 25 (49.01 per cent) items increased, 11 (21.57 per cent) items decreased and 15 (29.42 per cent) items remained stable.

The SPI is computed on weekly basis to assess the price movements of essential commodities at shorter interval of time so as to review the price situation in the country. SPI comprises of 51 essential items collected from 50 markets in 17 cities of the country.

READ MORE: Pakistan’s sensitive price inflation surges by 37.67%

August 20, 2022
Pakistan lifts ban on import of cars, phones, luxury items

ISLAMABAD: Pakistan on Friday lifted ban on all import of luxury and non-essential items amid serious foreign exchange crisis.

The ministry of commerce issued SRO 1562(I)/2022 for lifting the ban on luxury and non-essential items, including motor vehicles, mobile phones and home appliances.

The government on May 19, 2022 through a circular No. 598 (I)/2022 imposed the complete ban on import of such items in the wake of serious balance of payment crisis and to prevent fall in rupee value.

Despite the ban, the rupee fell to the historic low of Rs239.94 against the dollar on July 28, 2022.

It is worth mentioning that the foreign exchange reserves were drastically decreased despite imposition of ban on imported luxury items.

READ MORE: Pakistan decides to lift ban on imported goods

Pakistan’s foreign exchange reserves have increased by $52 million by week ended August 12, 2022. The foreign exchange reserves of the country have recorded at $13.613 billion by week ended August 12, 2022 as compared with $13.561 billion a week ago i.e. August 05, 2022.

The country’s foreign exchange reserves hit all-time high of $27.228 billion on August 27, 2021. Since then the foreign exchange reserves have declined by $13.615 billion.

The official foreign exchange reserves of the State Bank witnessed an increase of $67 million to $7.897 billion by week ended August 12, 2022 as compared with $7.83 billion a week ago.

READ MORE: 15% surcharge imposed for clearance of banned items

The foreign exchange reserves held by the central bank witnessed a record high at $20.146 billion by week ended August 27, 2021. Since then the official reserves of the SBP declined by $12.249 billion.

The country has taken the decision in order to fulfil the condition of International Monetary Fund (IMF) to get loans.

Addressing a press conference a day earlier alongside members of the government’s economic team, Miftah Ismail said that the import ban on non-luxury items was placed in line with the IMF’s demands.

Miftah said that after much back-and-forth, the IMF has finally announced that its board meeting will take place on August 29 — for considering Pakistan’s request for the release of the $1.17 billion tranche.

The finance minister noted that the government has also fulfilled all the pre-requisites of the lender, while the funding gap of $4 billion has also been met — after friendly countries agreed to help Pakistan financially.

He said that after the import ban, it became easier for the government to import necessary commodities, which were essential for the masses. “When we have limited dollars and we have to feed a huge population, our priority automatically becomes [the nation]. We had to choose between importing cars and wheat — that’s why we imposed a ban.”

READ MORE: Pakistan allows release of banned items stuck up at ports

The finance minister said the government was scrapping the import ban as it was an international requirement, but noted that the regulatory duty that will be imposed on the non-essential imported items will be three times higher than the current levels.

August 20, 2022