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Category: Taxation

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  • Sales tax rate on services provided by laundries, dry cleaners

    Sales tax rate on services provided by laundries, dry cleaners

    KARACHI: Sindh Revenue Board (SRB) has issued updated working tariff for tax year 2020 and notified sales tax rate on services provided by laundries and dry cleaners.

    According to the working tariff the sales tax rate is 13 percent on services provided by laundering and dry cleaners.

    However, a reduced rate of five percent also allowed on services provided or rendered by stand-alone laundries and dry cleaners.

    Explanation: For the purpose of this notification, “Stand-alone laundries and dry cleaners” means a laundry and dry cleaner:-

    (a) which does not provide any taxable service other than the services described against tariff heading No. 9811.0000;and

    (b) which or any outlet/branch of which is not located with the building premises or precincts of a hotel, motel, guest house or club whose service are liable to tax.

    Input tax credit adjustment shall not be admissible against reduced rate of sales tax.

    The SRB also exempted the sales tax on services provided or rendered by laundries or dry cleaners for following categories:

    (a) laundries and dry cleaners located within the building premises and premises of a hotel, motel, guest house or club whose services are liable to tax;

    (b) laundries and dry cleaners which have franchisers or franchisees;

    (c) laundries and dry cleaners having any branch or more than one outlet in Sindh;

    (d) laundries and dry cleaners whose turnover exceeds 2.5 million rupees in a financial year; and

    (e) laundries and dry cleaners whose total utility (electric, gas and telephone) bills does not exceed Rs. 25,000/- in any month during a financial year.

  • Regulatory duty on cotton import withdrawn

    Regulatory duty on cotton import withdrawn

    ISLAMABAD: The government has withdrawn 3 percent regulatory duty on import of cotton, a notification said on Tuesday.

    Federal Board of Revenue (FBR) issued SRO 38(I)/2020 to withdraw 3 percent regulatory duty on import of cotton.

    Through SRO 949(I)/2019 the regulatory duty was imposed on import of cotton.

    The regulatory duty was imposed on August 22, 2019, after unfavorable weather conditions, particularly prolonged hot and dry weather conditions, coupled with massive attacks of whitefly, pink bollworm, and other pests/insects gave cotton crop heavy battering.

    Moreover, growers are increasingly losing interest in planting cotton because they are not getting any returns or profits as the production cost is rising and the market prices are falling.

    The latest withdrawal of regulatory duty was granted in pursuance to approval by Economic Coordination Committee (ECC) of Cabinet earlier this month.

    Last year on October 4, the Cotton Crop Assessment Committee projected that cotton production at the end of the year would be 10.20 million bales as against the target of 15 million bales for the fiscal year 2019-2020.

    In order to fill the gap, the commerce division had proposed duty-free import of cotton.

    But the ECC was informed that bulk of cotton would be lifted from local farmers by January 1 this year and the proposed exemption would not adversely affect the interests of local farmers.

    Both the commerce and national food divisions gave assurance that imported cotton would facilitate textile exports which are showing an upward trend.

  • FBR to issue ATL Tax Year 2019 on March 01

    FBR to issue ATL Tax Year 2019 on March 01

    KARACHI: Federal Board of Revenue (FBR) will issued Active Taxpayers List (ATL) for tax year 2019 on March 01, 2020 to enable persons filed income tax returns for the tax year availing reduced rates and other benefits.

    ATL is published every financial year on the March 01 and is valid up to the last day of February of the next financial year, the FBR said.

    For example, Active Taxpayer List for Tax year 2017 was published on March 01, 2018 and will be valid till February 28, 2019.

    Similarly, Active Taxpayer List for Tax year 2018 was published on 1st March 2019 and will be valid till February 29, 2020.

    The appearance of ATL has become more important following amendment introduced through Finance Act, 2019 under which 100 percent additional tax has been imposed on certain transactions by persons not appearing on the ATL.

    The FBR in an official memorandum said that previously the law provided for the concept of a non-filer and stipulates higher withholding rates for the same which were adjustable at the time of filing of income tax return.

    This tax regime had created a misconception that a non-filer can go scot free by choosing not to file income tax return.

    The measure was meant to increase the number of filers, however over time the focus shifted to raising additional revenue only.

    The measure had not achieved the desired results as the previous regime did not provide for any legal framework to ensure filing of return by such non filers.

    In order to remove the aforesaid misconception, the concept and the term of ‘non-filer’ is being abolished from the statute, wherever occurring.

    A separate Schedule has introduced to specifically provide a legal framework for punitive measures for persons not appearing on ATL and to ensure filing of return by such persons.

    The main attributes of this scheme are as under:-

    — Persons whose names are not appearing on the ATL will be subjected to hundred percent increased rate of tax.

    — The withholding agents will clearly specify the names, CNIC or any other identification of such persons in the withholding statement so that legal provisions to enforce return can come into effect.

    — Where a withholding agent is of the opinion that hundred percent increased tax is not required to be collected on the basis that the person was not required to file return, the withholding agent shall furnish an intimation to the Commissioner setting out the basis on which the person is not required to file return. The Commissioner shall accept or reject the contention on the basis of existing law. In case the Commissioner fails to respond within thirty days, permission shall be deemed to be granted to not deduct tax at hundred percent increased rate

    — Where the person’s tax has been deducted or collected at hundred percent increased rate and the person fails to file return of income for the year for which tax was deducted, the Commissioner shall make a provisional assessment within sixty days of the due date for filing of return by imputing income so that tax on imputed income is equal to the hundred percent increased tax deducted or collected from such person and the imputed income shall be treated as concealed income.

    — The provisional assessment shall be of no effect if the person files return within forty five days of completion of provisional assessment and the provisions of the Ordinance shall apply accordingly. Where return is not filed within forty five days of provisional assessment, it shall be treated as final assessment and the Commissioner shall initiate penalty proceedings for concealment of income.

  • NCCPL says CGT December payment due on January 29

    NCCPL says CGT December payment due on January 29

    KARACHI: National Clearing Company of Pakistan Limited (NCCPL) on Tuesday announced date for payment of capital gain tax (CGT) for the month of December 2019.

    (more…)
  • Sales tax rates issued for retailers integrated with FBR

    Sales tax rates issued for retailers integrated with FBR

    ISLAMABAD: Federal Board of Revenue (FBR) has issued sales tax rate for different categories of retailers, who integrated their sales with online system of the FBR.

    The FBR said that the rate of sales tax for items sold by integrated retailers shall be the same as for all other suppliers as provided under the Sales Tax Act, 1990.

    Only exception is for locally manufactured textile and leather items, which if sold by integrated retailers are subject to concessionary rate of 14 percent, and if sold by any other supplier are subject to 17 percent standard sales tax.

    Category-wise rates for items sold by integrated retailers is as below:

    Items falling in Sixth Schedule to the Sales Tax Act, 1990, the sales tax shall be exempted on sale of milk, rice, wheat flour, pulses, fruits & vegetables (except canned and packaged), uncooked meat, poultry, eggs, stationary items, medicines, laptops and personal computers etc

    Items falling in Eighth Schedule to the Act, the reduced rate of sales tax rate shall be as provided in the Schedule. The sale of dairy items other than milk, fat-filled milk (tea-whitener), flours other than that of wheat, if sold in retail packing under a brand name, are subject to sales tax rate of 10 percent; and prepared products of meat or meat offal, if sold in retail packing under a brand name, are subject to sales tax rate of 8 percent;

    Precious jewellery at 1.5% of value of gold, plus 0.5% of value of diamond, used therein, plus 3% of making charges

    Finished fabric, and locally manufactured finished articles of textile and textile made-ups and leather and artificial leather (See S. No. 66 of Table 1 of Eighth Schedule) shall be subject to 14 percent of sales tax.
    This will include locally manufactured garments, shoes, bags, made-ups etc of textile, leather and artificial leather.

    Mobile phones and satellite phones: Under Ninth Schedule, sales tax is to be paid by the importer and manufacturers only. No sales tax to be charged on subsequent supplies. However, suppliers may pass on the burden of sales tax charged on their purchases in their selling price.

    Items not covered above shall be liable to standard sales tax rate at 17 percent on items in Third Schedule except fertilizers, imported textile and leather items, electronic items, watches, sugar, hardware, sanitary ware, kitchenware, toys, furniture, sports goods, surgical instruments, crockery, plastic products, imitation jewellery, etc.

  • Sales tax rate on services provided by fashion designers

    Sales tax rate on services provided by fashion designers

    KARACHI: Sindh Revenue Board (SRB) issued updated working tariff for tax year 2020 and notified sales tax rate on fashion designers.

    The services provided or rendered by fashion designers shall be 13 percent. The SRB does not provide any reduced rate for this service category.

    The FBR said the services provided by race club shall be subject to 13 percent sales tax. However, the services of entry/admission the sales tax shall be charged at Rs200 per entry ticker or entry pass of the person visiting the race event.

    The SRB said that services provided or rendered by program producers and production houses shall be 13 percent. However, reduced rate of eight percent with condition that the input tax adjustment shall not be admissible.

    Similarly, service provided or rendered by corporate law consultants the tax rate shall be 13 percent. However, the reduced tax rate of eight percent is available with condition that the input tax credit shall not be admissible.

    The tax rate is 13 percent for services provided or rendered by call centers.

    The reduced rate at 3 percent is available on:

    1. Services provided or rendered by a call center from a place of business in Sindh for which the registered person receives the value of the services from a place outside Pakistan in foreign exchange through banking channels in the business bank account of the registered person in the manner prescribed by the State Bank of Pakistan.

    2. Input tax credit shall not be admissible.

  • FBR clarifies delay in track, trace system implementation

    FBR clarifies delay in track, trace system implementation

    ISLAMABAD: Federal Board of Revenue (FBR) has said that implementation of track and trace system has been stayed by a court. As soon the stay is vacated by the court the process will be implemented, said a statement issued on Monday.

    The FBR issued the clarification in response to news reports published on January 20, 2020 about delay in the implementation of FBR’s Track & Trace System to control illicit tobacco trade.

    FBR has clarified that a license has been issued to M/s NRTC on October 14, 2019 through a transparent and fair process of bidding which is strictly in accordance with the PPRA Rules, 2004 and Licensing Rules, 2019.

    However, the award of license to lowest bidder i.e. M/s NRTC was challenged by some unsuccessful bidders i.e. M/s SICPA Ink in Sindh High Court and M/s Reliance IT Solutions (Pvt) Ltd and M/s NIFT Consortium in Islamabad High Court.

    Since, the Honorable Court has granted status quo and the matter is sub-judice before the aforesaid courts, therefore, there is no delay on the part of FBR.

    The process of implementation of Track and Trace System will be resumed as and when the stay order is vacated by the Honorable Court.

  • Pension granted total income tax exemption

    Pension granted total income tax exemption

    ISLAMABAD: Pensioners are allowed total exemption from tax on income received as pension.

    Officials in Federal Board of Revenue (FBR) on Monday said that pensioners are allowed complete exemption from income tax under Income Tax Ordinance, 2001.

    They said that any pension received by a citizen of Pakistan from a former employer will be exempted from income tax, other than where the person continues to work for the employer (or an associate of the employer).

    Provided that where the person receives more than one such pension, the exemption applies only to the higher of the pensions received.

    The exemption from income tax also available on any pension –

    (i) received in respect of services rendered by a member of the Armed Forces of Pakistan or Federal Government or a Provincial Government;

    (ii) granted under the relevant rules to the families and dependents of public servants or members of the Armed Forces of Pakistan who die during service.

    Any payment in the nature of commutation of pension received from Government or under any pension scheme approved by the FBR for the purpose of this clause is also exempted.

    Any income representing any payment received by way of gratuity or commutation of pension by an employee on his retirement or, in the event of his death, by his heirs as does not exceed –

    (i) in the case of an employee of the Government, a Local Government, a statutory body or corporation established by any law for the time being in force, the amount receivable in accordance with the rules and conditions of the employee’s services;

    (ii) any amount receivable from any gratuity fund approved by the Commissioner in accordance with the rules in Part III of the Sixth Schedule;

    (iii) in the case of any other employee, the amount not exceeding three hundred thousand rupees receivable under any scheme applicable to all employees of the employer and approved by the Board for the purposes of this sub-clause; and

    (iv) in the case of any employee to whom sub-clause (i), (ii) and (iii) do not apply, fifty per cent of the amount receivable or seventy-five thousand rupees, whichever is the less:

    Provided that nothing in this sub-clause shall apply –

    (a) to any payment which is not received in Pakistan;

    (b) to any payment received from a company by a director of such company who is not a regular employee of such company;

    (c) to any payment received by an employee who is not a resident individual; and to any gratuity received by an employee who has already received any gratuity from the same or any other employer.

  • Sales tax rate on services provided by stock brokers

    Sales tax rate on services provided by stock brokers

    KARACHI: Sindh Revenue Board (SRB) has updated working tariff for tax year and notified tax rates for services provided or rendered by specified persons or businesses.

    According to updated working tariff, the sales tax rates shall be applicable for following services:

    Stock brokers and commodity brokers shall pay sales tax at 13 percent on services provided or rendered by them.

    Underwriters shall be sales tax at the rate of 13 percent on services.

    Indenters are also required to pay 13 percent sales tax on services. However, services provided by indenters are subject to reduced rate of three percent sales tax on:

    1. Services provided or rendered by an indenter from a place of business in Sindh for which the registered person receives the value of the services from a place outside Pakistan in foreign exchange through banking channels in the business bank account of the registered person in the manner prescribed by the State Bank of Pakistan.

    2. Input tax credit/adjustment shall not be admissible.

    The sales tax rate shall be 13 percent on services provided by commission agents.

    Similarly, the rate of sales tax shall e 13 percent on services provided or rendered by packers and movers.

    Money changers are required to pay 13 percent sales tax on services However, there is exemption available on service provided or rendered by money changers in consideration of ‘spread’ charges as permitted by the State Bank of Pakistan in relation to the buying and selling of foreign currencies.

  • Draft return, wealth statement forms for traders finalized

    Draft return, wealth statement forms for traders finalized

    ISLAMABAD: Federal Board of Revenue (FBR) has finalized simple income tax return and wealth statement for small traders, sources said on Sunday.

    The FBR has not issued officially the draft returns and wealth statement forms for traders but sources said that the draft had been finalized and would be issued soon.

    The draft income tax return form has been simplified. The form is one-page with 15 entries to be filled.

    The traders are required to basic information including name, address, business assets and number of employees and bank account number.

    The description in required fields to be filed are included: turnover/receipts; cost of sales; opening stock; purchases; closing stock; other direct expenses; gross profit; overhead expenditure; net profit/taxable income; income from all other sources; tax chargeable; minimum tax; tax payable whichever is higher; tax already paid; net tax payable/refundable.

    The wealth statement form has also been simplified with small amount of required information.

    Draft income tax return form for traders:

    Draft wealth statement form for traders: