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Category: Taxation

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  • TAX YEAR 2021: tax rate for profit on debt

    TAX YEAR 2021: tax rate for profit on debt

    KARACHI: Federal Board of Revenue (FBR) has updated tax rate for profit on debt to be applicable during tax year 2021 (July 01, 2020 – June 30, 2021).

    The FBR issued Income Tax Ordinance, 2001 (updated June 30, 2020) after incorporating amendments brought through Finance Act, 2020. The FBR updated following rate of tax on profit on debt.

    The rate of tax for profit on debt imposed under section 7B shall be—

    S.NOProfit on DebtRate of tax
    (1)(2)(3)
    1.Where profit on debt does not exceed Rs.5,000,00015%
    2.Where profit on debt exceeds Rs.5,000,000 but does not exceed Rs.25,000,00017.5%
    3.Where profit on debt exceeds Rs.25,000,000 but does not exceed Rs. 36,000,00020%

    The tax rate is deducted under Section 7B of Income Tax Ordinance, 2001, under which:

    Section 7B. Tax on profit on debt.—(1) Subject to this Ordinance, a tax shall be imposed, at the rate specified in Division IIIA of Part I of the First Schedule, on every person, other than a company, who receives a profit on debt from any person mentioned in clauses (a) to (d) of sub-section (1)of section 151.

    (2) The tax imposed under sub-section (1) on a person, other than a company, who receives a profit on debt shall be computed by applying the relevant rate of tax to the gross amount of the profit on debt.

    (3) This section shall not apply to a profit on debt that –

    (a) is exempt from tax under this Ordinance; or

    (b) exceeds thirty six million Rupees.

  • TAX YEAR 2021: rate of dividend tax

    TAX YEAR 2021: rate of dividend tax

    ISLAMABAD: Federal Board of Revenue (FBR) has updated income tax rate on dividend received from a company during tax year 2021 (July 01, 2020 – June 30, 2021).

    The FBR issued Income Tax Ordinance, 2001 (updated up to June 30, 2020) incorporating amendments brought through Finance Act, 2020. The FBR updated following rate of dividend tax:

    The rate of tax imposed under section 5 on dividend received from a company shall be-

    (a) 7.5 percent in the case of dividends paid by Independent Power Producers where such dividend is a pass through item under an Implementation Agreement or Power Purchase Agreement or Energy Purchase Agreement and is required to be re-imbursed by Central Power Purchasing (CPPA-G) or its predecessor or successor entity.

    (b) 15 percent in mutual funds and cases other than those mentioned in clauses (a) and (c).

    (c) 25 percent in case of a person receiving dividend from a company where no tax payable by such company, due to exemption of income or carry forward of business losses under Part VIII of Chapter III or claim of tax credits under Part X of Chapter III.

    Section 5 of Income Tax Ordinance, 2001 explains tax on dividends as:

    Section 5. Tax on dividends.— (1) Subject to this Ordinance, a tax shall be imposed, at the rate specified in Division III of Part I of the First Schedule, on every person who receives a dividend from a company or treated as dividend under clause (19) of section 2.

    (2) The tax imposed under sub-section (1) on a person who receives a dividend shall be computed by applying the relevant rate of tax to the gross amount of the dividend.

    (3) This section shall not apply to a dividend that is exempt from tax under this Ordinance.

  • TAX YEAR 2021: rate of super tax

    TAX YEAR 2021: rate of super tax

    ISLAMABAD: Federal Board of Revenue (FBR) has updated rate of super tax to be applicable for tax year 2021 (July 01, 2020 – June 30, 2021).

    The FBR issued Income Tax Ordinance, 2001 after incorporating amendment brought through Finance Act, 2020. The FBR issued the following updated rate of super tax:

    Provided that in case of a banking company, super tax for tax year 2019 shall be payable, on estimate basis, by thirtieth day of June, 2018.

    Super tax was introduced through Finance Act, 2015 by inserting Section 4B to Income Tax Ordinance, 2001.

    The section 4B is read as:

    4B. Super tax for rehabilitation of temporarily displaced persons.― (1) A super tax shall be imposed for rehabilitation of temporarily displaced persons, for tax years 2015 and onwards, at the rates specified in Division IIA of Part I of the First Schedule, on income of every person specified in the said Division.

    (2) For the purposes of this section, “income” shall be the sum of the following:—

    (i) profit on debt, dividend, capital gains, brokerage and commission;

    (ii) taxable income (other than brought forward depreciation and brought forward business losses) under section (9) of this Ordinance, if not included in clause (i);

    (iii) imputable income as defined in clause (28A) of section 2 excluding amounts specified in clause (i); and

    (iv) income computed, other than brought forward depreciation, brought forward amortization and brought forward business lossess under Fourth, Fifth, Seventh and Eighth Schedules.

    (3) The super tax payable under sub-section (1) shall be paid, collected and deposited on the date and in the manner as specified in sub-section (1) of section 137 and all provisions of Chapter X of the Ordinance shall apply.

    (4) Where the super tax is not paid by a person liable to pay it, the Commissioner shall by an order in writing, determine the super tax payable, and shall serve upon the person, a notice of demand specifying the super tax payable and within the time specified under section 137 of the Ordinance.

    (5) Where the super tax is not paid by a person liable to pay it, the Commissioner shall recover the super tax payable under subsection (1) and the provisions of Part IV,X, XI and XII of Chapter X and Part I of Chapter XI of the Ordinance shall, so far as may be, apply to the collection of super tax as these apply to the collection of tax under the Ordinance.

    (6) The Board may, by notification in the official Gazette, make rules for carrying out the purposes of this section.

  • SRB exempts sales tax on services for USAID funded programs

    SRB exempts sales tax on services for USAID funded programs

    KARACHI: Sindh Revenue Board (SRB) on Thursday granted exemption from sales tax on services for projects funded by United States Agency for International Development (USAID).

    The SRB in a statement said that with approval of the Sindh government it had exempted from the whole of the sales tax payable on such taxable services and are received or procured by the USAID or the Implementing Partners of the USAID under the Sindh Basic Education Program (SBEP) funded by way of grant-in-aid provided by the USAID under the framework of the Pakistan Enhanced Partnership Agreement (PEPA) of 2010 signed between the United States of America and the Islamic Republic of Pakistan.

    The SRB through another notification to grant exemption from the whole of the sales tax payable on such taxable services and are received or procured by the Municipal Delivery Service Program- Sindh (MSDP) funded by way of grant-in-aid provided by the USAID under the framework of the Pakistan Enhanced Partnership Agreement (PEPA) of 2010 signed between the United States of America and the Islamic Republic of Pakistan.

  • FBR signs agreement CFA Institute for regulator scholarships

    FBR signs agreement CFA Institute for regulator scholarships

    ISLAMABAD: Federal Board of Revenue (FBR) has signed an agreement with Chartered Financial Analyst (CFA) Institute for initially 10 ‘Regulator Scholarships’ for FBR’s officers and officials, said a notification issued on Thursday.

    The CFA Institute, an America-based Organization, is a global association of investment professionals. The organization offers Certifications for Chartered Financial Analyst (CFA), Investment Performance Measurement (CIPM) and Investment Foundations Certificate. Currently, CFA Institute offices are located in New York City, London, Hong Kong, Mumbai, Toronto, and Charlottesville, Virginia, USA.

    The CFA Program is a professional credential offered internationally by the CFA Institute to investment and financial professionals and is recognized as a ‘Gold Standard’ qualification in investment management. The program covers a broad range of topics relating to investment management, financial analysis, quantitative analysis, equities, fixed income and derivatives, and provides generalist knowledge of other areas of finance combined with real world skills and case studies. A candidate who successfully completes the program and meets other professional requirement is awarded the “CFA Charter” and becomes a CFA.

    Under the Scholarship, Program Enrollment Fee is waived off and exams registration fee is reduced to USD 350 compared to standard registration fee of USD 1,000.

    FBR’s workforce needs to equip itself with the modern skills and techniques involved in investment management, financial analysis and all other relevant areas to better understand the intricacies involved in financial management and income generated through various investment vehicles. Therefore, FBR’s officers/officials are encouraged to benefit from the scholarship programme to leverage the ongoing professional learning and industry network that CFA Institute and CFA Society Pakistan can provide.

    Interested candidates must apply and be awarded the scholarship before registering for an exam, so that scholarship discount will be applied at the time of payment. The process is:

    i) Candidates set up a CFA account and apply through the online system for a regulator scholarship.

    ii) Regulator approvers log in to the system and award, or decline the scholarship application.

    iii) If awarded, the candidate is notified by the CFA Institute. The scholarship is then applied to their CFA account, so that when they register for an exam the discount is applied at time of payment. All further activity is directly between the candidate and the CFA Institute.

    iv) If declined, the candidate is notified by the CFA Institute and may choose to apply for the exam as normal without the discount.

    The selection of eligible candidates would be done by International Taxes, FBR. After having gone through the selection exercise, the names of the selected candidates will be forwarded to the CFA Institute for the grant of scholarship.

  • TAX YEAR 2021: Rates of income tax for companies

    TAX YEAR 2021: Rates of income tax for companies

    ISLAMABAD: Federal Board of Revenue (FBR) has issued rates of income tax for companies to be applicable during tax year 2021.

    The FBR issued Income Tax Ordinance, 2001 (updated June 30, 2020) incorporating amendments brought through Finance Act, 2020.

    The FBR said that the rate of tax shall be 29 percent on the taxable income of a company for tax year 2021.

    As per the Income Tax Ordinance, 2001, the tax rate on corporate entities has been defined as:

    The rate of tax imposed on the taxable income of a company for the tax year 2007 and onward shall be 35 percent:

    Provided that the rate of tax imposed on the taxable income of a company other than a banking company, shall be 34 percent for the tax year 2014:

    Provided further that the rate of tax imposed on the taxable income of a company, other than a banking company, shall be 33 percent for the tax year 2015:

    Provided further that the rate of tax imposed on taxable income of a company, other than banking company shall be 32 percent for the tax year 2016, 31 percent for tax year 2017, 30 percent for tax year 2018 and 29 percent for tax year 2019 and onwards.

    Where the taxpayer is a small company as defined in section 2 of Income Tax Ordinance, 2001, tax shall be payable at the rate of 25 percent:

    Provided that for tax year 2019 and onwards tax rates shall be as set out in the following Table, namely:—

    Tax YearRate of Tax
    201924%
    202023%
    202122%
    202221%
    2023 and onwards20%
  • Tax Year 2021: income tax rates for business individuals, AOPs

    Tax Year 2021: income tax rates for business individuals, AOPs

    ISLAMABAD: Federal Board of Revenue (FBR) has issued tax rates to be applicable on business individuals and Association of Persons (AOPs) during tax year 2021.

    The FBR issued Income Tax Ordinance, 2001 (updated June 30, 2020) incorporating amendment brought through Finance Act, 2020.

    The FBR said that the rates of tax imposed on income of every individual and association of persons except a salaried individual shall be as set out in the following Table, namely:—

    S. No.Taxable incomeRate of tax
    (1)(2)(3)
    1.Where taxable income does not exceed Rs. 400,0000%
    2.Where the taxable income exceeds Rs. 400,000 but does not exceed Rs. 600,0005% of the amount exceeding Rs. 400,000
    3.Where taxable income exceeds Rs. 600,000 but does not exceed Rs. 1,200,000Rs. 10,000 plus 10% of the amount exceeding Rs. 600,000
    4.Where taxable income exceeds Rs.1,200,000 but does not exceed Rs. 2,400,000Rs. 70,000 plus 15% of the amount exceeding Rs. 1,200,000
    5.Where taxable income exceeds Rs. 2,400,000 but does not exceed Rs. 3,000,000Rs. 250,000 plus 20% of the amount exceeding Rs. 2,400,000
    6.Where taxable income exceeds Rs. 3,000,000 but does not exceed Rs. 4,000,000Rs. 370,000 plus 25% of the amount exceeding Rs. 3,000,000
    7.Where taxable income exceeds Rs. 4,000,000 but does not exceed Rs. 6,000,000Rs. 620,000 plus 30% of the amount exceeding Rs. 4,000,000
    8.Where taxable income exceeds Rs. 6,000,000Rs. 1,220,000 plus 35% of the amount exceeding Rs. 6,000,000
  • FBR abolishes regulatory duty, ACD on various imported goods

    FBR abolishes regulatory duty, ACD on various imported goods

    ISLAMABAD: Federal Board of Revenue (FBR) on Wednesday abolished regulatory duty and additional customs duty on various raw materials used by textile industry.

    The FBR issued SRO 1043(I)/2020 dated October 13, 2020 abolished regulatory duty of 8 percent on various chemicals used as raw material for textile industry.

    Besides, regulatory duty imposed at two percent on import of artificial yarn and staple fiber has also been abolished. Besides, the regulatory duty has been reduced from five percent to 2.5 percent on import of woven fabric of synthetic staple fiber.

    The FBR issued another SRO 1042(I)/2020 dated October 13, 2020 to withdraw additional customs duty (ACD) on over 100 tariff lines.

  • LTO Karachi takes measures to contain resurgence of coronavirus

    LTO Karachi takes measures to contain resurgence of coronavirus

    KARACHI: Large Taxpayers Office (LTO) Karachi has taken measures to contain the resurgence of coronavirus. In this regard, an advisory has been issued for the staff of LTO Karachi with directives of strict implementation.

    Badaruddin Ahmed Qureshi, Chief Commissioner, LTO Karachi directed all divisions including audit, enforcement and legal of the tax office in order to contain the spread and resurgence of coronavirus.

    The following advisory has been issued:

    01. No one shall enter into the premises of offices without wearing a mask.

    02. Social distancing of at least six feet must be maintained by all officers and staff.

    03. Temperature of every person will be monitored at the entrance with thermal guns.

    04. A person having flue, cough, shortness of breath and body pain shall not be allowed to enter in the premises of office.

    05. The office is declared as no smoking zone.

    06. Unauthorized persons shall not be allowed to visit offices unnecessarily and without any reason.

    07. All symptomatic and suspected employees must be identified and reported to the Chief Commissioner Inland Revenue Office.

    08. Any officer/official found violating any instruction contained in this SOPs shall be liable for action in accordance with applicable law and rules accordingly.

    09. All officers/officials/visitors should wash hands with soap and water or hand sanitizer properly and regularly. Hand sanitizer should be available at all time on the wall-mounted spray machines and in the washrooms/lavatories.

    10. The administrative officer shall ensure the provisions of thermal guns at the entrance of office for screening of body temperature of officer/officials/visitors.

    11. Administrative officer shall ensure effective disinfection of all office at regular intervals.

    12. Lifts/elevators installed in the field offices shall be used as less possible and lift operators shall be provided with antiseptic sprays and swabs to clean the buttons/knobs regularly.

    13. In order to avoid physical contact with door handle/knobs, it is advised that all office door be kept open and room window be kept open also to ensure ventilation.

    14. The CCIR Office will ensure the provision of sufficient number of face masks to all commissioner for onward distribution among the officer/officials.

  • FTO directs to enforce certificate of origin to prevent under invoicing

    FTO directs to enforce certificate of origin to prevent under invoicing

    ISLAMABAD: Federal Tax Ombudsman (FTO) has directed tax authorities to enforce certificate of origin from respective country of manufacture.

    The FTO recommended that the commerce ministry to frame and enforce rules of origin in respect of goods suspected of circumvention and import from free ports, which are not covered under preferential trade agreement (PTA).

    The FTO made these recommendations in an order dated October 01, 2020 issued in the case of M/s Poplon Pakistan (Pvt) limited, which filed complaint against the Collector, Model Customs Collectorate (MCC) Appraisement & Facilitation – East and MCC Appraisement & Facilitation – West, Karachi for failing to detect import of inorganic chrome pigments against fake certificate of origin through circumvention of origin of goods and under invoicing by various importers in respect of goods imported and cleared through Karachi Port.

    The complainant is a manufacturer of inorganic chrome pigments for use in paint, plastic and leather industries in Pakistan. The complainant alleged that after suspension of trade with India, pigment of Indian origin goods were imported through trade proxies such as M/s. Galaxy International FZC, UAE by using fake documents.

    After hearing both the parties, the FTO issued the following recommendation, that the FBR:

    To seek information from the Director General, UAE Customs under mutual legal assistance agreements for verification of origin of goods;

    To direct the Directorate General of Post Clearance Audit (PCA) to carry out post-import transaction verification of all relevant GDs so as to satisfy the accuracy and authenticity of declared import values on the basis of export documents/information obtained through commercial counselors posted in South Korea and UAE;

    To direct the Director of Customs Valuation to check accuracy of values declared by the importers and determine custom value for assessment of inorganic chrome pigments in terms of Section 25A of the Act, and

    To direct the Chief Collector (Appraisement-South), to ensure finalization of investigation expeditiously and take appropriate action in cases where mis-declaration is established; and

    To recommend to the ministry of commerce to frame and enforce rules of origin in respect of goods suspected of circumvention and import from free ports which are not covered under PTA. Also make it mandatory to furnish certificate of origin from respective country of manufacture duly verified by the respective government.