KARACHI: The share market of Pakistan Stock Exchange (PSX) experienced a wave of selling pressure on the final trading day of the week, with the benchmark KSE-100 index falling by 136 points. The market closed at 40,030 points, down from 40,166 points.
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FBR to get information of banking deposits, payments, profit on debt
ISLAMABAD: Federal Board of Revenue (FBR) to obtain information of deposits, payments and profit on debt of account holders from banking companies.
According to news rules proposed through SRO 686(I)/2020 issued a day earlier, to be inserted into Income Tax Rules, 2020, the banks shall be required to furnish information in the manner as specified in account holders’ deposits statement, credit card payments statements, cash withdrawal statement and profit on debt statement.
The new draft rules the FBR notified four different forms to obtain information of deposits, withdrawals, payment through credit cards and persons receiving profit on debt.
The rules would help in obtaining information from banks under Section 165A of Income Tax Ordinance, 2001
As per the amendment the banks shall provide information included: a list of persons containing particular of cash withdrawal aggregating to Rs one million or more during a month; list of persons depositing Rs10 million or more in a month; persons making payment through credit/debit card above Rs250,000 in a month.
Under the new rules, the banks shall provide details of persons making deposits, withdrawal included: CNIC/NTN, name, address, account opening date, IBAN, resident/non-resident status etc.
Under the new rules the banks shall be required to provide such information of deposits, withdrawal and payment through credit/debit cards on a monthly basis.
However, the information of recipients of profit on debts shall be furnished within three months from the end of the financial year.
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Authorities made duty bound to allow real-time access: FBR
ISLAMABAD: Federal Board of Revenue (FBR) has said that after amendments made to sales tax and federal excise laws various authorities and organizations have been made duty bound to allow real-time access to tax authorities for preventing tax evasion.
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CNIC made mandatory for recipient of services
ISLAMABAD: Federal Board of Revenue (FBR) has said that buyer’s CNIC (Computerized National Identity Card) detail is now mandatory on the invoice issued by seller for providing service in order avail credit.
The FBR in its explanation of Sales Tax and Federal Excise through Circular No. 01 of 2020, stated the word “services” has been added along with goods to enlarge the scope of disallowance of input tax on account of non-mentioning of CNIC of the buyer by the seller on the invoice as required under section 23 of the 1990 Act.
Resultantly, input tax claimed against goods as well as services shall be disallowed on pro rata basis if supplies have been made to persons without obtaining their CNIC/ NTN subject to the conditions mentioned in the law.
The measure is expected to optimally broaden the sales tax base.
The FBR explained that Following two changes have been made in subsection (7) of Section 3: The expression “by the buyers” has been omitted and after the word “persons” the expression “being purchaser of goods or services” has been added”.
The first change is only clarificatory/consequential, however, the second change enlarges the scope of sales tax withholding by including purchase of services in the ambit of sales tax withholding regime.
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Pakistan’s foreign exchange reserves up by $651 million
KARACHI: The liquid foreign exchange reserves of the country increased by $651 million by week ended July 30, 2020 owing to foreign inflows, State Bank of Pakistan (SBP) said on Thursday.
The total foreign exchange reserves of the country increased by $651 million to $19.563 billion by week ended July 30, 2020 as compared with $18.912 billion a week ago.
The official foreign exchange reserves of the SBP increased by $566 million to $12.542 billion by week ended July 20, 2020 as compared with $11.976 billion a week ago.
The SBP attributed the increase to the inflows from multilateral and bilateral agencies including US$ 505.5 million received from World Bank.
The foreign exchange reserves held by commercial banks registered $85 million increase to $7.021 billion by week ended July 30, 2020 as compared with $6.936 billion a week ago.
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Rupee recovers 10 paisas on improved export receipts
KARACHI: The Pak Rupee recovered 10 paisas against dollar on Thursday after ease in demand for import payments and report of improved export receipts.
The rupee ended Rs168.13 to the dollar from previous day’s closing of Rs168.23 in interbank foreign exchange market.
Currency experts said that improved inflows of export receipts and remittances helped the rupee to make recovery.
The rupee fell by around Rs1.25 against dollar during first three trading days of the current week.
The experts said that the rupee likely to improve in coming days due to improved inflows of export receipts and workers remittances.
The exports of the country increased by 25 percent in July 2020 as compared with the previous month owing to enhance in economic activities after ease in lockdown, according to data released by Pakistan Bureau of Statistics (PBS) a day earlier.
The country’s exports were at $2 billion in July 2020 as compared with $1.59 billion in June 2020.
The rise in exports may be attributed to ease in lockdown and resumption of economic activities during July 2020. The lockdown was imposed since March 2020 to prevent the spread of coronavirus.
The import bill during July 2020 fell by 2 percent to $3.64 billion as compared with $3.72 billion in June 2020.
The trade deficit shrank by 22.64 percent to $1.64 billion in July 2020 as compared with deficit of $2.12 billion in June 2020.
The exports in July 2020 registered an increase of 6.04 percent when compared with $1.88 billion in July 2019.
The import bill in July 2020 fell by 2 percent when compared with $3.7 billion in July 2019.
The trade deficit reduced by 10.24 percent in July 2020 when compared with deficit of $1.82 billion in July 2019.
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SBP allows opening foreign currency accounts on declared assets abroad
KARACHI: The State Bank of Pakistan (SBP) on Thursday introduced a separate category of foreign currency account for non-resident and resident Pakistanis, who have assets abroad and declared with the tax authorities.
The SBP in a circular said that in order to facilitate the non-resident Pakistanis as well as resident Pakistanis, who have assets abroad duly declared with Federal Board of Revenue (FBR), for investment in foreign currency denominated government registered debt securities on repatriable basis, it has been decided to introduce a separate category of foreign currency account.
The SBP amended foreign exchange manual to introduce the new facilitation.
According to the amendment:
8A. Foreign Currency Value Account (FCVA)
(i) Authorized Dealers [banks, financial institutions] may open ‘ Foreign Currency Value Account’ of the following:
a) A non-resident individual Pakistani;
b) A resident individual Pakistani who has duly declared assets held abroad, as per wealth statement declared in latest tax return with Federal Board of Revenue (FBR).
Operations of Foreign Currency Value Account shall be governed by the regulations set out below:
ii) General Operations
ADs shall clearly mark the account as resident or non-resident at the time of account opening.
ADs shall allow operations in the account through the digital channels e.g. internet/mobile banking, ATM/ Debit cards. The ADs may also issue cheque book to the account holder, if required.
ADs may issue supplementary ATM/Debit cards as per applicable laws /regulations.
The resident individual desirous to open FCVA shall have to provide the declaration of his/her assets held abroad, including latest wealth tax statement filed with the FBR.
The ADs are encouraged to provide online real time convertibility from FCY to PKR based on the request made by the account holder digitally for the eligible debits from the account. For the sake of transparency, the ADs shall indicate the exchange rate applicable to the transaction.
ADs may allow non-resident Pakistanis to open the account jointly with other residents/non-residents, as per applicable laws/banking practices. These accounts should, however, be treated as non-resident accounts. However, a resident Pakistani, having foreign assets declared with FBR, may be allowed to open the account jointly with a resident only.
In case the account becomes dormant due to non-operation, ADs shall devise a mechanism, aligned with applicable regulations, to reactivate the account digitally, in case of non-resident account. However, for resident FCVA, the ADs may reactivate the account digitally or otherwise in compliance with the applicable regulations and their own policy.
Authorized Dealers will ensure ongoing monitoring of these accounts to mitigate ML/FT risk.
iii) Credits to the Foreign Currency Value Account.
Remittances received from abroad through banking channels.
Transfer of funds from his/her own NRP Rupee Value Account (NRVA) with the same AD.
Profit/interest on the permissible investments made from the account
Dis-investment proceeds from the permissible investments made from the account.
Reversal of any incorrect debit in the account.
iv) Debits to the Foreign Currency Value Account.
Investment in permissible securities, provided that the relevant laws/regulations permit such investment, as under:
1. Government of Pakistan’s registered debt securities denominated in FCY only.
2. Term deposit/remunerative product scheme, denominated in FCY, of the same AD.
The funds for the above investments shall be transferred by the ADs only in the eligible products, through the instructions received from the account holder in this behalf.
Transfer of funds to account holder’s own NRP Rupee Value Account (NRVA) with the same AD.
Transfer to other FCY, PKR account and non-resident Rupee account – non-repatriable with any bank in Pakistan.
Remittances and payments outside Pakistan to the extent of balances available in the account, without any prior approval from the bank or the State Bank.
Cash withdrawal in foreign currency and equivalent local currency.
Any payment in PKR to any person resident in Pakistan. However, any amount so paid shall not be allowed to be credited back into the account.
Reversal of any incorrect /wrong credit entry.
ADs shall submit a consolidated monthly statement of transaction(s) executed from FCVA on the attached format (Annexure-A) to [email protected] through their head/principle office by 7th of the ensuing month for each reference month.
The ADs are encouraged to make necessary arrangement in their system to facilitate non-resident Pakistanis in opening and operating this account remotely through digital channels.
ADs shall comply with all other applicable rules and regulations.
ADs are advised to bring the above instructions to the knowledge of all their constituents for meticulous compliance.
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FBR updates withholding tax rate on payment for goods, services
ISLAMABAD: Federal Board of Revenue (FBR) has updated withholding tax rates on payments for goods and services during tax year 2021.
The FBR updated withholding tax card 2020-2021 after incorporating amendments made to Income Tax Ordinance, 2001 through Finance Act, 2020.
Under Section 153 of Income Tax Ordinance, 2001 every prescribed person shall collect withholding tax from resident person; Resident Person; and Permanent Establishment in Pakistan of a Non-Resident at the time the amount is actually paid for goods & services
Under Section 153(1)(a) the tax rate for sale of rice, cotton seed oil and edible oil shall be 1.5 percent of the gross amount and the tax rate shall be increased by 100 percent in case persons are not on the Active Taxpayers List (ATL).
The tax rate for supply made by distributors of fast moving consumer goods:
In case of company 2 percent of gross amount
Other than company the tax rate shall be 2.5 percent of gross amount
The tax rate shall be increased by 100 percent in case persons are not on the ATL.
Tax rate for supply made to Utility Stores Corporation of Pakistan:
Persons (other than company) 1.5 percent of gross amount and the tax rate shall be increased by 100 percent in case persons are not on the ATL.
Provided that the payment shall be made only in respect of supply of tea, spices, salt, dry milk, sugar, pulses wheat flour and ghee for the period commencing from the 7th day of April, 2020 and ending on 30th day of September, 2020
Provided that this clause shall not be applicable to supply of tea, spices, salt and dry milk which are sold under a brand name.
Provided further that this clause shall not be applicable where rate of tax under clause (a) of sub-section (1) of section 153 is less than 1.5% of the gross amount of payment under any provisions of the ordinance
For sale of any other goods:
In case of a company the tax rate shall be 4 percent of the gross amount.
Other than company the tax rate shall be 4.5 percent of the gross amount
The tax rate shall be increased by 100 percent in case persons are not on the ATL.
The FBR said that in case of goods:
No deduction of tax where payment is less than Rs. 75,000/- in aggregate during a financial year [S.153(1)(a)]
The tax shall be minimum tax for all except in the following cases where it shall not be minimum tax on sale or supply of goods, by:
(i) a company being manufacturers of such goods or
(ii) Public company listed on registered Stock Exchange in Pakistan.
Under Section 153(1)(b)
Ever prescribed person shall collect withholding tax from resident person; Resident Person; and Permanent Establishment in Pakistan of a Non-Resident at the time the amount is actually paid
i. Transport services, freight forwarding services, air cargo services, courier services, man power outsourcing services, hotel services, security guard services, software development services, IT Services and IT enabled services as defined in clause (133) of Part I of the Second Schedule, tracking services, advertising services (other than by print or electronic media), share registrar services, engineering services, car rental services, building maintenance services, services rendered by Pakistan Stock Exchange Ltd. & Pakistan Mercantile Exchange Ltd. , inspection, certification, testing & training services.;
The tax rate shall be 3 percent of the gross amount and the rate shall be 6 percent in case persons not on the ATL.
ii. In case of rendering or providing of services other than as mentioned at (i) above;
a) In case of company 8 percent of the gross amount
b) In any other case 10 percent of the gross amount
c) In respect of persons making payment to electronic & print media for advertising services 1.5 percent of the gross amount
The tax rate shall be increased by 100 percent in case persons are not on the ATL.
The FBR said that in case of services:
No deduction of tax where payment is less than Rs. 30,000/- in aggregate during a financial year [S.153(1)(b)]
The tax shall be minimum tax.
Under Section 153(1)(c)
Every prescribed person shall collect / deduct withholding tax from resident person; Resident Person; and Permanent Establishment in Pakistan of a Non-Resident at the time the amount is actually paid.
Execution of Contracts
i) In case of sportsperson 10 percent
ii) In the case of companies : 7 percent
iii) In the case of persons other than companies 7.5 percent
The tax rate shall be increased by 100 percent in case persons not on the ATL.
Minimum Tax for all whereas it will remain adjustable where payments are received on account of execution of contracts by Public Company listed on registered Stock Exchange in Pakistan
Under Section 153(2)
Every exporter/export house shall collect/deduct withholding tax from resident person; Resident Person; and Permanent Establishment in Pakistan of a Non-Resident at the time of making the payment.
Every Exporter or Export House shall deduct Tax on payments in respect of services of stitching, dying, printing etc. received/provided.
1 percent of the gross amount and the rate shall be increased by 100 percent in case persons not on the ATL.
The tax shall be minimum tax.
Under Section 153B
Every person paying an amount of royalty, in full or in part including by way of advance shall collect/deduct withholding tax from resident person at the time of making gross payment of royalty, in full or in part including by way of advance (including Federal Excise Duty and provincial sales tax, if any)
Tax to be deducted on payment of royalty to resident person at 15 percent of the gross amount payable (including FED & Provincial Sales Tax, if any).
The tax rate shall be increased by 100 percent in case persons not on the ATL.
The tax withheld shall be adjustable.
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Indemnity bond to be made mandatory for international transshipment facility
ISLAMABAD: Federal Board of Revenue (FBR) on Wednesday issued draft rules to make indemnity bond mandatory for shipping lines intending to use facility of international transshipment cargo within Pakistani sea ports.
The FBR issued draft rules through SRO 685(I)/2020 to amend Customs Rules, 2001.
According to the draft rules, shipping lines intending to use the facility of international transshipment would require to furnish an indemnity bond for an amount equal to the approximate value of goods expected to be imported in thirty days as security to ensure exit of goods outside the country within 30 days from the berthing of inward vessel.
The FBR said that the indemnity bond would be forfeited apart from other consequential penal action under the Customs laws, if the shipping line misuses the facilitation of international transshipment.
If goods still remain on the port after the expiry date including extended time allowed under the law, the shipping line would be responsible to remove the goods immediately unless the delay was attributed to the port authorities, the FBR added.
According the draft rules the shipping lines would also liable to submit complete details of Import General Manifest (IGM).
The shipping lines would require providing details, such as: port of loading; name of transshipment port of Pakistan; port of destination (final port of discharge at foreign destination); bill of lading number; name of foreign exporter; name of foreign importer; weight; seal number; and container number.
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Exports surge by 25 percent: PBS
ISLAMABAD: The exports of the country increased by 25 percent in July 2020 as compared with the previous month owing to enhance in economic activities after ease in lockdown, according to data released by Pakistan Bureau of Statistics (PBS) on Wednesday.
The country’s exports were at $2 billion in July 2020 as compared with $1.59 billion in June 2020.
The rise in exports may be attributed to ease in lockdown and resumption of economic activities during July 2020. The lockdown was imposed since March 2020 to prevent the spread of coronavirus.
The import bill during July 2020 fell by 2 percent to $3.64 billion as compared with $3.72 billion in June 2020.
The trade deficit shrank by 22.64 percent to $1.64 billion in July 2020 as compared with deficit of $2.12 billion in June 2020.
The exports in July 2020 registered an increase of 6.04 percent when compared with $1.88 billion in July 2019.
The import bill in July 2020 fell by 2 percent when compared with $3.7 billion in July 2019.
The trade deficit reduced by 10.24 percent in July 2020 when compared with deficit of $1.82 billion in July 2019.