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Category: Taxation

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  • PSX proposes abolishing capital gains tax for two years

    PSX proposes abolishing capital gains tax for two years

    KARACHI: Pakistan Stock Exchange (PSX) has demanded eliminating Capital Gains Tax (CGT) for up to next two years in order to attract more foreign investment.

    The PSX in its tax proposals for budget 2020/2021 suggested the Federal Board of Revenue (FBR) to eliminate / reduce CGT for next 24 months or at a minimum align rates of capital gains tax on disposal of securities with other regional exchanges and OECD countries of the world.

    The PSX said that currently, carry forward of losses is only allowed up to a period of three years and that last year CGT collection was merely Rs1.3 billion. Moreover, with the falling market, tax collection will not be worthwhile at all.

    “Therefore, it is suggested that CGT should be eliminated for next 12-24 months.”

    This will be a big headline change, with no revenue impact, and will encourage new domestic and international investors to come into the market.

    The PSX made following proposals related to CGT:

    i. To eliminate CGT for next 12-24 months, if that is not possible then;

    ii. Since the current rate of 15 percent is very high and that too is without any benefit of holding period, therefore it is proposed to reduce this rate in line with other regional and OECD countries such as Bahrain, Hong Kong, India, Malaysia, Mauritius, Qatar, UAE, New Zealand, Hungary, Norway etc. where there is no or very low capital gain tax as compared to Pakistan.

    iii. when CGT was first introduced in the year 2011, to encourage and attract long term investment, the tax rate was:

    Less than six months: 10 percent

    More than six months but less than 12 months: 7.5 percent

    More than one year: zero percent.

    The PSX proposed rates at:

    Holding period up to twelve months: 10 percent

    Holding period more than twelve months: zero percent.

  • Sindh exempts sales tax on Ehsaas Emergency cash transfer

    Sindh exempts sales tax on Ehsaas Emergency cash transfer

    KARACHI: Sindh Revenue Board (SRB) on Wednesday exempted sales tax on services to banking transfers made to Ehsaas Emergency Program.

    In a notification, the SRB said that the Sindh government had exempted the sales tax on the amount of commission (tariff heading 9819.1300) paid by the banks to their branchless banking retailers in Sindh on account of disbursement of financial assistance under the Ehsaas Emergency Cash Transfer Program of the government of Pakistan, subject to the conditions that the amount on account of such commission or service fee is not deducted from the amount of the financial assistance so transferred to the beneficiary, receiving the financial assistance, is paid the full amount of the assistance transfer.

    The SRB said that the exemption has been granted till 23:59 hours on June 30, 2020.

  • FBR allows input tax adjustment to retailers

    FBR allows input tax adjustment to retailers

    ISLAMABAD: Federal Board of Revenue (FBR) on Wednesday allowed input adjustment of sales tax to Tier-1 retailers.

    The FBR issued SRO 344(I)/2020 to amend SRO 1190(I)/2019 dated October 02, 2019.

    The FBR allowed 95 percent input adjustment against output tax.

    The FBR through SRO 1190(I)/2019 issued fresh list of sectors to allow input adjustment by amending the Section 8B of Sales Tax Act, 1990.

    The following sectors were allowed input adjustment and refunds:

    1. Persons registered in electrical energy sector.
    2. Oil marketing companies and petroleum refineries.
    3. Fertilizers manufacturers.
    4. Persons making zero-rated supplies, including exports, provided that value of such supplies exceeds 50 percent of value of all taxable supplies in a tax period.
    5. Distributors.
    6. Gas distribution companies.
    7. Telecommunication services.
    8. Pakistan Steel, Bin Qasim, Karachi.
    9. Registered persons other than manufacturers, making supplies of items covered under the Third Schedule to the Sales tax Act, 1990, on which sales tax has been paid by the manufacturer or importer on retail price, provided that value of such supplies exceeds 80 percent of value of all taxable supplies in a tax period.
    10. Commercial importers where value of import subject to 3 percent value addition as prescribed in Twelfth Schedule to the Act exceeds 50 percent of value of all taxable purchases, including imports, in a tax period.
  • Coronavirus infects 23 FBR officials

    Coronavirus infects 23 FBR officials

    KARACHI: At least 23 tax officials posted at Regional Tax Office (RTO) Quetta have been tested positive for coronavirus.

    A senior official of RTO Quetta confirmed that officials had been tested positive for coronavirus.

    The official said that initially 14 officials were infected with the virus. Further tests increased the number to 23. More, tests are underway.

    The RTO Quetta was sealed after the identification of cases last week. However, the office was resumed with limited staff approximately five percent of workforce.

    The Federal Board of Revenue (FBR) decided to conduct tests of all the officials at the regional office.

    The FBR recently issued precautionary measures for the prevention from COVID-19. However, the officials are not following the guidelines. The FBR has made it mandatory for all the officials to use face masks and sanitizers.

  • FBR explains sealing of export TP cargo though Railways

    FBR explains sealing of export TP cargo though Railways

    KARACHI: Federal Board of Revenue (FBR) has issued procedure of sealing of export cargo under transshipment transported by Pakistan Railways.

    Sealing at focal points (Entry) for transshipment containers and dry port export cargo containers transported by Pakistan railways:

    I. The Custom Agent/carrier will lodge the TP application/ declaration in the Custom Facilitation Centre/ Transshipment Section of concerned Directorate of Transit Trade or electronically. After getting the delivery of the container, the Customs Agent/carrier will load the container on the Railways rolling stock/flat bed unit.

    II. After loading, the railway staff will inform PCCSS at relevant Focal Point Entry giving container numbers.

    III. The PCCSS officer will take the designated machine readable seal and check it for any defect. The bar code on the seal will be scanned by using the bar code reader, and in case bar code is accepted, Transport Note (single copy) in Form-A will be printed. In case the bar code is not validated, the defective seal will be returned to the box and a new seal number will be issued by the computer.

    IV. Once the input operation for all the containers to be sealed is completed, the PCCSS officer will collect the designated and validated seals and accompany the railways staff to the train alongwith the Transport notes.

    V. The PCCSS officer will place the, seal on the available slot on the door, making sure the correct number is placed on the correct container and that the container numbers correspond to the serial number of the bogie they are placed on.

    VI. The Transport Note (Form-A) will be handed over to the driver/supervisor/railway official of the Transport Unit to be carried with the Transport Unit en route.

    VII. In case the Transport Unit meets an accident en route or there is sufficient ground to believe that there is pilferage, replacement or substitution of ‘goods, the driver/carrier’s agent, or any enforcement unit of Customs, or the Collectorate of jurisdiction, ‘or any other person will inform the Incharge PCCSS, Special Checking Squads or any focal point. After checking veracity of the information, the Special Checking Squads or focal point, as the case may be, will inform the Incharge PCCSS through fax on Form-D and also on line immediately. The Incharge PCCSS will immediately record the discrepancy in register Form-C and may order stoppage of such Transport Unit and/or order any such action as deemed appropriate.

  • NA approves harsh penalties for manufacturers, retailers for obstructing tax monitoring

    NA approves harsh penalties for manufacturers, retailers for obstructing tax monitoring

    ISLAMABAD: The National Assembly has approved the law for imposition of harsh fine and penalties upon manufacturers and retailers for obstructing tax authorities in monitoring business activities.

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  • FBR notifies zero percent sales tax on services for construction industry

    FBR notifies zero percent sales tax on services for construction industry

    ISLAMABAD: Federal Board of Revenue (FBR) on Monday notified sales tax on service at zero percent for construction industry as part of incentives announced by the prime minister for construction sector.

    The FBR issued SRO 326(I)/2020 to amend Islamabad Capital Territory (Tax Services) Ordinance 2001, to reduce the sales tax on services at zero percent from five percent.

    The FBR said that services provided by property developers and promoters (including allied services) relating to low-cost housing schemes sponsored or approved by Naya Pakistan Housing and Development Authority or under Government’s Ehsaas program, the rate of tax shall be zero percent subject to the condition that no input tax adjustment or refund shall be admissible.

  • FBR exempts capital gain tax on sale of immovable properties

    FBR exempts capital gain tax on sale of immovable properties

    KARACHI: Federal Board of Revenue (FBR) has exempted capital gain tax on sale of immovable property under Tax Laws (Amendment) Ordinance, 2020.

    A new clause (114AA) has been inserted in Part I of the Second Schedule to the Ordinance, whereby exemption from tax on capital gains has been provided to a resident individual on sale of constructed residential property (a house having land area up to 500 square yards and a flat having an area up to 4000 square feet) used only for personal accommodation by the said individual, his spouse or dependents and for which any of the utility bills are issued in the name of such individual.

    The exemption shall not apply if it has been previously availed by such persons.

    No amendment has been, however, made in section 236C of the Ordinance, which implies that sale of the above properties will remain subject to collection of advance tax at 1% of sale consideration, unless the seller obtains an exemption certificate from the Commissioner.

    As per current provisions, capital gains on disposal of constructed property whose holding period exceeds four years is zero rated. Furthermore, in case such property is sold within one year of holding period, the amount of advance tax collected under section 236C at 1 percent of sale consideration is treated as minimum tax. It, therefore, appears that the purpose of this amendment is to provide an exemption from tax on capital gains on disposal of such constructed properties, which are held for less than four years.

  • FBR issues procedure for sealing of transit cargo destined for India

    FBR issues procedure for sealing of transit cargo destined for India

    KARACHI: Federal Board of Revenue (FBR) has issued procedure for sealing of transit trade cargo containers at Torkham-Peshawar and Chaman-Quetta, destined for Wahga border station for India.

    Following procedure to be adopted under Customs General Order (CGO) No. 03 of 2020 under Pakistan Customs Container Security System (PCCSS) Procedure for sealing and desealing of transshipment, safe transportation, transit and export cargo.

    (a) NON-CONTAINERIZED CARGO:

    FIRST PORTION:

    (i) After the goods, loaded in high wall Transport Unit (1st Transport Unit) of Afghanistan been processed as per rules by Torkham/Chaman Customers, the Transport Unit will be secured and covered in proper tarpaulin. The PCCSS staff Focal point (Entry) will enter the required data and apply the wire punch plomb seal or a wire seal. The container will be allowed to proceed to Peshawar/Quetta Dry Port under escort. The escort officer of Customs will carry he convoy note to Peshawar/Quetta Dry Port.

    (ii) On arrival at Customs Dryport Quetta/Peshawar, the 1st Transport Unit will be moved to the Focal Point Exit. The escort officer of customs will hand over the convoy note to the PCCSS officer.

    (iii) The PCCSS will enter the exact time and date of the arrival. In case the Transport Unit reaches within time, the PCCSS officer will inspect the truck and security of tarpaulin ad the registration number of the 1st Transport Unit and check the PCCSS wire punch plomb seal.

    (iv) After satisfying himself that the seal and container are intact and not tampered, the PCCSS officer will generate discharge note which will be given to the Customs escort officer along with the convoy note.

    (v) If the seal or container etc. is not found intact or there are reasons to doubt the integrity of cargo or seal, a discrepancy report will be filled out on the computer. The concerned PCCSS focal point will also report the matter to the Directorate of Transit Trade having jurisdiction for initiating necessary action under the law.

    (vi) The Focal Point Exit Peshawar staff will cut and collect the used plomb seals and keep in a safe disposal box. The Incharge FP (Exit) will make arrangements for the proper disposal, recycling of the plomb seals.

    (vii) The escort will return the convoy note to the Customs at Border Crossing Point.

    SECOND PORTION:

    (i) The goods will be loaded on the Pakistani trucks, hereinafter called the Second Transport Unit and released in the same as done at Border Crossing Point, with wire punch plomb seal or new wire seal by the Focal Point Entry staff at Peshawar/Quetta.

    (ii) On arrival at Wahga border station, the Second Transport Unit will be moved to the Focal Point Exit and the escort officer of Customs will hand over the convoy note to the PCCSS officer.

    (iii) The PCCSS officer will enter the exact time and date of the arrival. In case the Transport Unit reaches within time, the PCCSS officer will inspect the truck and security of the tarpaulin cover, check the registration number of the Second Transport Unit and the PCCSS wire punch plomb seal.

    (iv) After satisfying himself that the seal and container are intact and not tampered, the PCCSS- officer will generate discharge note which will be given to the Customs escort officer alongwith the convoy note.

    (v) If the seal or container etc. is not found intact or there are reasons to doubt the integrity of cargo or seal, a discrepancy report will be filled out on the computer. The concerned PCCSS focal point will also report the matter to the Directorate of Transit Trade having jurisdiction of initiating necessary action under the law.

    (vi) The Focal Point Exit Wahga staff will cut and collect the used plomb seals and keep in a safe disposal box. The In charge FP (Exit) will make arrangements for the proper disposal, recycling of the plomb seals.

  • Tax liability for 2020 to be discharged with return for builders, developers

    Tax liability for 2020 to be discharged with return for builders, developers

    KARACHI: Builders and developers are required to discharge tax liability for tax year 2020 with the tax return. Commenting on Tax Laws (Amendment) Ordinance, 2020, tax experts at PwC A Ferguson said that the annual tax liability for a project is to be computed by dividing the total liability of the project under the regime by the estimated life of the project in years (which shall not exceed 2.5 years).

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