The Federal Board of Revenue (FBR) has unveiled the income tax rates applicable to petroleum products for the tax year 2022 under the Second Schedule of the Income Tax Ordinance, 2001.
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Tax rates on brokerage and commission in tax year 2022
The Federal Board of Revenue (FBR) has released the income tax rates applicable to brokerage and commission for the tax year 2022, as outlined in the Second Schedule of the Income Tax Ordinance, 2001.
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KTBA highlights issues in implementing digital payments
KARACHI: Tax practitioners have said that implementing digital payments mode for corporate entities is not possible due to various difficulties.
Karachi Tax Bar Association (KTBA) in a letter sent on Monday to the Muhammad Ashfaq Ahmed, Chairman, Federal Board of Revenue (FBR), informed that a provision of digital payment was introduced through Tax Laws (Third Amendment) Ordinance, 2021. This provisions is scheduled to implement from November 01, 2021.
Muhammad Zeeshan Merchant, President, KTBA said that the condition is remarkably in contradiction with other modes of payment through banking channels, which is historically remained in practice and is widely accepted under the provisions of the Income Tax Ordinance, 2001.
“We feel that this provision of law is antibusiness; sans due diligence and is incorporated without taking the stakeholders into confidence,” he said.
Additionally, it is not practical for many business houses, he added.
A summary explaining certain situations (and by no means a complete synopsis) is given below:
(a) You will appreciate that it is normal business practice that in lieu of advance delivery of goods, the buyer tenders its payment by way of post-dated cheques, which is normally accepted by the other party and is inherently a secured way of making the payment. We are afraid that this law of “digital mode of payment” is surely going to hamper the business activities, as it does not cater the situation and solution of such transactions.
(b) Normally, it is a practice that, the port terminal charges, wharfage charges, charges for clearance of delivery orders etc., are paid in advance through crossed cheques or pay-orders. We understand that presently, the businesses, including but not limited to Port Terminal Operators and Shipping Lines, are unaware and are not ready for implantation of this “digital mode of payment”. In our view, it needs a rigorous awareness campaign for them.
(c) Furthermore, we feel that the similar issues are likely to arise and are to be faced by the Companies for making payments to the growers of various agricultural crops such as sugar cane, rice, cotton, wheat etc. We feel that a rigorous campaign is also required for the recipients of such payments.
(d) Moreover, in our view this “digital mode of payment” is also impractical and is likely to affect the business transactions in the cases where petty cash payments, in aggregate exceed millions of rupees, which cannot be made digitally.
(e) Furthermore, we understand that various banks have fixed their own limitation on the quantity of making digital/online payments in a day and have also fixed the threshold of the amount and they do not allow to exceed the threshold limit fixed by them. In our view, this also needs a proper campaign without which the implementation of the law is not possible.
The KTBA said that the tax authorities would come across with the other impediments on the subject in times to come.
We strongly believe that, unless there is a wide off the mark in conventional banking transaction, this move is likely to create lots of trouble for the Corporate Sector.
It is, therefore, suggested that the mandatory condition of “digital mode of payment” for Companies as envisaged U/s. 21 (la) of the Income Tax Ordinance, 2001, be allowed to run simultaneously with other conventional modes of payments for at least a year so that their business is not affected and is smoothly run till they are aware of this change in the mode of payment.
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Engro Fertilizers awarded for largest taxpayer
Engro Fertilizers has been recognized as the largest tax paying company in the fertilizer sector. Engro Fertilizer is Pakistan’s premier seed-to-harvest solutions provider.
Engro Fertilizers has been recognized as the largest tax paying company in a ceremony held at the Aiwan-e-Sadr.
Nadir Qureshi, CEO of Engro Fertilizers, received the award from the Honorable President Dr. Arif Alvi, who was the chief guest on this occasion.
According to Nadir Qureshi, “For over 50 years, Engro Fertilizers has remained committed to serving the farmers of Pakistan with world-class products and solutions. Our contributions to the community and the national exchequer are a testament to our philosophy of doing good while doing well. We fully support the Government’s vision of transforming the agricultural landscape and improving the well-being of the farmers of Pakistan.”
He added: “the fertilizer industry in Pakistan operates at the highest level of transparency, with all companies listed and contributing high tax revenues to the Government. Our sector is the only sector whose contributions in taxes to the national exchequer are almost entirely equal to the income provided to the shareholders of fertilizer companies. This makes the Government of Pakistan an equal partner in the earnings of the fertilizer sector.”
Qureshi appreciated the Government for enabling the domestic fertilizer sector to provide adequate and affordable supply of urea to farmers in Pakistan, despite the steep rise in international prices. Continued support from the Government will ensure farmer well-being and even higher tax contributions from the fertilizer industry. He stated that the fertilizer industry of Pakistan is internationally competitive and can thrive in a fully deregulated environment, even without any gas subsidies.
The local industry has always provided farmers in Pakistan with urea at prices below international and is currently delivering a discount of circa Rs 5000/bag compared to the global market.
Through import substitution, the fertilizer sector will contribute more than $3 billion towards reducing the trade deficit in 2021. As a result of the significantly lower prices, the local fertilizer industry will save farmers from an additional burden of Rs 363 billion in 2021 as well.
The ceremony was organized by the Rawalpindi Chamber of Commerce and Industry (RCCI) and Federal Board of Revenue (FBR) to appreciate the contribution of leading taxpayers and business institutions in the development of economy, while also highlighting the government’s efforts to facilitate the taxpayers.
The event was also attended by the Federal Minister for Privatization Muhammad Mian Soomro, senior FBR and government officials, President RCCI Nadeem Rauf and other prominent business personalities.
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Tax rates on prize and winnings during tax year 2022
The income tax rates on prize and winnings for tax year 2022 to be applicable under Section Schedule of Income Tax Ordinance, 2001.
The Federal Board of Revenue (FBR) issued the Income Tax Ordinance, 2001 updated up to June 30, 2021. The Ordinance incorporated amendments brought through Finance Act, 2021.
Following are the rates of income tax on prize and winnings:
(1) The rate of tax to be deducted under section 156 on a prize on prize bond or cross-word puzzle shall be 15 per cent of the gross amount paid.
(2) The rate of tax to be deducted under section 156 on winnings from a raffle, lottery, prize on winning a quiz, prize offered by a company for promotion of sale, shall be 20 per cent of the gross amount paid.
Following is the text of Section 156 of the Income Tax Ordinance, 2001:
156. Prizes and winnings.—(1) Every person paying prize on a prize bond, or winnings from a raffle, lottery, prize on winning a quiz, prize offered by companies for promotion of sale, or cross-word puzzle shall deduct tax from the gross amount paid at the rate specified in Division VI of Part III of the First Schedule.
(2) Where a prize, referred to in sub-section (1), is not in cash, the person while giving the prize shall collect tax on the fair market value of the prize.
(3) The tax deductible under sub-section (1) or collected under sub-section (2) shall be final tax on the income from prizes or winnings referred to in the said sub-sections.
(Disclaimer: The text of above section is only for information. Team PkRevenue.com makes all efforts to provide the correct version of the text. However, the team PkRevenue.com is not responsible for any error or omission.)
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Tax rates on income from property during tax year 2022
The Federal Board of Revenue (FBR) has recently released the updated Income Tax Ordinance, 2001, incorporating amendments made through the Finance Act, 2021.
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Rate of tax on exports during Tax Year 2022
The Federal Board of Revenue (FBR) has provided clarity on the tax rates applicable to exports for the tax year 2022, as outlined in the First Schedule of the Income Tax Ordinance, 2001.
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Tax rates on payments for goods or services during TY22
The Federal Board of Revenue (FBR) has released the advance tax rates on payments for goods or services to non-residents for the tax year 2022.
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Tax rates on Profit on Debt during TY22
The advance tax rates on on profit on debt during tax year 2022 are under the First Schedule of the Income Tax Ordinance, 2001.
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Tax rates on payments to non-residents during TY22
In a move to streamline tax regulations and provide clarity to businesses, the Federal Board of Revenue (FBR) has released the advance tax rates on payments to non-residents for the tax year 2022.
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