ISLAMABAD: Federal Board of Revenue (FBR) has explained taxable income for collection of tax from persons or corporate entities. The FBR issued Income Tax Ordinance, 2001 updated June 30, 2020 incorporating amendments brought through Finance Act, 2020.
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Stay updated on taxation news, tax laws, FBR policies, compliance, audits, income tax, sales tax, and fiscal developments in Pakistan.
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FBR projects 12 percent tax to GDP ratio in three years
ISLAMABAD: The Federal Board of Revenue (FBR) is projecting tax-to-GDP ratio at 12 percent in three years after slippage of the ratio to a single digit in 2019/2020, a report said.
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FBR grants tax exemption of Rs1.1 billion on gratuity payments
Islamabad – The Federal Board of Revenue (FBR) has granted a substantial exemption of Rs1.11 billion on gratuity payments during the tax year 2020.
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Temporary import allowed against bank guarantee under policy order
ISLAMABAD: The ministry of commerce has said that temporary import-cum-export of goods is allowed by the respective collectors of customs against submission of indemnity bond or bank guarantee to the satisfaction of customs authorities.
The ministry issued Import Policy Order, 2020 through SRO 902(I)/2020 dated September 25, 2020 and explained the temporary import as: temporary import-cum-export of goods in respect of the following shall be allowed by the respective Collectors of Customs against submission of indemnity bond or bank guarantee to the satisfaction of custom authorities to ensure re-export of the same within the specified period, namely: –
(a) construction companies or firms or oil and gas companies, oil exploration and production companies, mining companies, their authorized or approved contractors, sub-contractors and service companies, and refineries shall be allowed to import all plant, machinery and equipment including specialized machinery whether new or used except second-hand or used passenger vehicles, trucks, buses and static road rollers of 10-12 tons capacity, 55HP. Certification of the Chief Executive of a company of the respective sector-endorsing requirement of the contractor, sub-contractor or service companies shall be required:
Provided that permanent retention of all permissible categories of machinery or equipment imported on temporary basis by construction companies shall be allowed by the Federal Board of Revenue subject to payment of all duties and taxes to be assessed by the Customs under relevant laws;
(b) airlines and shipping lines shall be allowed to import items on import cum export basis except those mentioned in Appendix-A, B and C, unless specifically allowed under this Order;
(c) any goods manifested for a country outside Pakistan, which are bonded in Pakistan for re-export to that country;
(d) any good imported and bonded for re-export as ship stores to a country outside Pakistan without requirement of furnishing indemnity bond or bank guarantee;
(e) exhibition materials for fairs and exhibitions officially organized by the Government or Federation of Pakistan Chambers of Commerce and Industry or Chambers of Commerce and Industry shall be allowed to import items except mentioned in Appendix-A, B and C except where specifically allowed under this Order. However, giveaways, sale on payment of leviable duties, donations and wastages etc., shall be allowed:
Provided that all-Pakistan based associations and individual companies shall also be allowed to import exhibition materials for fairs and exhibitions except those mentioned in Appendix-A, B and C subject to endorsement by Trade Development Authority of Pakistan;
(f) any goods except those specified in Appendix A, B and C for demonstration, display, test or trial purpose for a limited period;
(g) second-hand tools and professional equipment imported by scientists, information technology experts, doctors, technicians, engineers etc., either imported in their own name or in the name of the company in Pakistan for which these are imported;
(h) excavation equipment and materials imported by foreign archeological missions;
(i) scientific and educational equipment imported for scientific educational, or cultural seminars in Pakistan on the recommendation of the concerned Ministry;
(j) equipment and materials imported by Pakistani as well as foreign nationals such as journalists, press photographers, members of television teams, broadcasting units, film companies, theater and circus companies, for their professional requirement, subject to endorsement on their passports;
(k) shipping containers for transportation of cargo;
(l) trucks and cargo transport vehicles registered in foreign countries carrying imported cargo through border customs stations, provided that there is a bilateral or multilateral agreement on reciprocity basis between Pakistan and the foreign country to which those vehicles belong;
(m) import of engineering goods, carpets, sports goods, surgical instruments etc., into Pakistan shall be allowed to the existing industry for the purpose of repairing in Pakistan and subsequent re-export, subject to submission of indemnity bond or bank guarantee to the customs authorities to ensure re-export of the same within the specified period;
(n) Pakistani exporters are allowed to re-import exported goods for the purpose of removing defects by way of repairing during the warranty period provided in the sales contracts against submission of indemnity bond to the satisfaction of the concerned Collector of Customs;
(o) import of goods including means of transport, excluding those mentioned in Appendix-A, B and C, shall be allowed under ATA Carnet (Istanbul Convention 1990) upon furnishing of temporary admission papers (Carnet etc.) as due security;
(p) import of goods including means of transport excluding those mentioned in Appendix-A, B and C, shall be allowed under TIR Convention subject to fulfillment of all prescribed conditions;
(q) mountaineering expeditions shall be allowed to import their equipment and materials on import-cum-export basis. In case, the equipment and material are not re-exported, they may donate such equipment and material to local mountaineering clubs and produce a certificate to the Customs from a mountaineering club to the effect that the equipment and material imported on import-cum-export basis has been donated to that club; and
(r) temporary import-cum-export of arms and ammunition by foreign hunters shall be allowed subject to NOC from the Ministry of Interior.
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Airlines’ pilots get Rs430 million tax concession on allowances
Pilots of Pakistani airlines collectively availed tax concessions amounting to Rs430 million during the tax year 2020 on allowances received from their respective employers, according to official data made available to PkRevenue.com.
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FBR not to ask source of money invested for housing projects by December 31: MTO Chief
KARACHI: Federal Board of Revenue (FBR) will not ask source of money to be invested till December 31, 2020 in a new housing projects, Abdul Hameed Memon, Chief Commissioner, Inland Revenue, Medium Taxpayers Office (MTO) said on Wednesday.
“This is a unique program announced by the Prime Minister of Pakistan. The tax rates have also been reduced under this package,” he said while addressing an event organized by Association of Builders and Developers (ABAD).
However, he said that those who availed the scheme will require to complete the project by September 2022.
He urged the ABAD members to avail the opportunity as growth in the construction sector would generate employment.
He said that the government through amendment in tax laws had announced the package for the construction sector. “The package has two types of benefits: immunity from questioning the source of investment; and reduced rate of income tax in the shape of a fixed tax regime for builders and developers.”
The chief commissioner said that the package would help in enhancing activities in the construction sector and result in significant economic growth.
Earlier, Abdul Hafeez, Commissioner Inland Revenue, MTO gave a detailed presentation to builders and developers on the immunity from Section 111 of Income Tax Ordinance, 2001. This section attracts penal action for persons who conceal assets from tax authorities.
The commissioner said that the section 111 would not apply to an individual if the person deposited the money in a new bank account up to December 31, 2020 or having ownership / title of the land invested as on April 17, 2020.
In case of a company or an Association of Persons (AOP), the section shall not apply if a single purpose company or AOP is registered between April 17, 2020 and December 31, 2020.
The commissioner outlined other exemptions and benefits under the tax package as the investors would have exemption from the requirement of withholding tax on purchase of building material except cement and steel.
They will also have exemption from the requirement of withholding tax on acquisition of services relating to construction except those from companies.
The persons, who are engaged in low cost housing projects, will be granted 90 percent reduction in fixed tax liability, the commissioner said.
Besides, dividends paid by builder or developer companies shall not be liable to tax and there shall be no withholding on the payment of these dividends, he added.
Chairman Association of Builders and Developers of Pakistan (ABAD) Fayyaz Ilyas has demanded of the Federal Government to extend date of registration for Incentive Package of Naya Pakistan Housing Scheme upto 31st December 2021 and also extend time period for the completion of housing projects under this scheme.
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Teachers, researchers avail Rs2.42 billion income tax exemption
ISLAMABAD: Teachers and researchers have availed tax exemption to the tune of Rs2.42 billion on their income during Tax Year 2020, official sources said on Tuesday.
Under Clause 1(2) of Part 3 of the Second Schedule of Income Tax Ordinance, 2001, full time teachers or researchers are entitled for reduction in tax liability since 2006 and there is no sunset clause attached to this concession.
The FBR said that the tax payable by a full time teacher or a researcher, employed in a non profit education or research institution duly recognized by Higher Education Commission, a Board of Education or a University recognized by the Higher Education Commission, including government research institution, shall be reduced by an amount equal to 25 percent of tax payable on his income from salary.
Data of teachers is taken from Pakistan Bureau of Statistics (PBS) website, for the following categories of teachers: Arts/Science colleges, professional colleges, universities, secondary vocational institutions. Teachers in secondary schools have not been considered, being relatively less paid.
Latest available data is for year 2017. For 2018, an 8 percent multiplier on number of teachers is used keeping in view increase in number of teachers over past years.
Average annual salaries for different categories of teachers have been taken as following:
– Arts/Science College: Rs. 900,000
– Professional College: Rs. 1,200,000
– University: Rs. 2,400,000
– Secondary vocational institutions: Rs. 1,800,000
Separate data for researchers is not available, the FBR said.
The FBR said that approximate 133,255 teachers and researchers had availed the tax concession.
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FBR estimates Rs69.5 billion annual tax loss on agriculture income
ISLAMABAD: Federal Board of Revenue (FBR) has estimated an amount of Rs69.5 billion annual loss of tax on agriculture income, sources said on Tuesday.
In a report the FBR said that agricultural income is exempt from income tax under section 41 of the Income Tax Ordinance, 2001.
However, it falls under the provincial domain as per the Constitution of Pakistan, and the provinces have the mandate to levy tax on agricultural incomes.
The provincial collection of income tax on agricultural income for FY 2018 is as under:
Punjab: Rs 913 million
Sindh: Rs559 million
KP: Rs100 million
Balochistan: Rs17 million
Total: Rs1.589 billionThe FBR carried out an estimate on the basis of agriculture census 2010 in order to measure the actual potential of revenue from agriculture.
The key assumption in this estimation is that the average income per acre earned by farmer has been taken at Rs. 50,000, keeping in view current year’s average price levels of commodities.
Farm sizes have been categorized as per column 2 of the table below. Farms smaller than 7.5 acres have not been consid¬ered, being of subsistence income level.
Income for each farm size (column 5) is estimated by multiplying cultivated area (acres) for each category with average income per acre (Rs50,000). If statutory slab-wise tax rates are applied on average income per farm for the six categories of farm sizes, the estimated revenue forgone due to this exemption comes to Rs69.5 billion annually.
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Withholding tax from cash withdrawal plunges by 52 percent; remains in top 10 revenue spinners
ISLAMABAD, September 15, 2024 – The Federal Board of Revenue (FBR) has reported a sharp decline in the collection of withholding tax (WHT) by 52% during the tax year 2020, following the abolishment of the tax for income tax return filers.
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Gift parcels above $5000 not allowed for export
ISLAMABAD: The ministry of commerce has recently issued Export Policy Order 2020 under which export of gift parcels of a value exceeding five thousand US dollars are not allowed.
The ministry issued SRO 901(I)/2020 dated September 25, 2020 and explained export of goods allowed under the policy.
Export of goods
(1) Export of all goods shall be allowed except those specified in Schedule-I.
(2). Notwithstanding anything contained in sub-paragraph (1), no goods should be allowed to be exported to India, except therapeutic products regulated by the Drug Regulatory Authority of Pakistan.
(3). Export of goods specified in Schedule – II shall be subject to the conditions given therein.
(4) The provisions of this Order shall not apply to-
(a) any goods constituting the stores or equipment or machinery parts and kitchenette of any outgoing vessel, conveyance or airline or the bona-fide accompanied baggage of the crew or of the passengers in such vessel or conveyance or airline:
Provided that banned or restricted items shall not be allowed unless otherwise authorized;
(b) any goods trans-shipped at a port in Pakistan after having been manifested for such trans-shipment at the time of dispatch from a port outside Pakistan:
Provided that goods mentioned in clauses (a) to (h) do not contain control lists commodities, which are subject to licence from Strategic Export Control Division, Ministry of Foreign Affairs;
(c) any goods, stores or equipment when sold abroad on Government-to-Government basis or exported under an export authorization issued by any officer authorized by the Ministry of Defense in this behalf;
(d) export of samples subject to the following conditions, namely: –
(i) that the export of such goods is not banned; and
(ii) any number of samples subject to the condition that their freight on board (F.O.B) value does not exceed twenty-five thousand US dollars or equivalent per exporter per annum except automobile manufacturers who may export samples for free on board value not exceeding one hundred thousand US dollars and pharmaceutical exporting companies which may export free samples to the extent of ten percent of the commercial exports quantity of preceding year. However, pharmaceutical exporting companies may export free samples to the extent of twenty per cent of the quantity of first consignment at the time of launch of a product:
Provided that the monetary limit of twenty-five thousand US dollars shall not be applicable if the samples are exported in a mutilated form;
(e) export of gift parcels, except banned or restricted, of a value not exceeding five thousand US dollars or equivalent in Pakistani Rupees;
(f) export of relief goods to any part of the world by National Disaster Management Authority;
(g) bona fide baggage of persons traveling outside Pakistan; and
(h) persons traveling outside Pakistan may take with them as accompanied baggage, goods without any restriction of quantity, or any requirement of encashment certificates provided that such goods do not include items listed in Schedule I and that in respect of items of Schedule II, the prescribed conditions have been met with.
(5) Transit and border trade shall be allowed under the procedure prescribed for that purpose:
Provided that items falling under export control on goods, technologies, material and equipment related to the Nuclear and Biological Weapons and Their Delivery Systems Act, 2004 (V of 2004) shall not be allowed unless authorized.