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  • Withholding tax rates on dividend income updated for tax year 2021

    Withholding tax rates on dividend income updated for tax year 2021

    ISLAMABAD: Federal Board of Revenue (FBR) has updated withholding tax card for dividend income to be applicable during Tax Year 2021 (2020-2021).

    The FBR issued the withholding tax card 2020-2021 (updated up to June 30, 2020) after incorporating amendments made to Income Tax Ordinance, 2001 through Finance Act, 2020.

    Under Section 150 of Income Tax Ordinance, 2001, every person paying dividend shall collect/deduct withholding tax at prescribed rates from recipient of dividend at the time the dividend is actually paid.

    The tax shall be final under section 5 read with section 8 of the Income Tax Ordinance, 2001.

    According to the updated withholding tax card:

    Tax shall be deducted on the gross amount of dividend paid:

    (a) In the case of dividend paid by Independent Power Purchasers (IPPs) whereas such dividend is a pass through item under an Implementation Agreement or Power Purchase Agreement or Energy Purchase Agreement and is required to be reimbursed by Central Power Purchasing Agency (CPPA-G) or its predecessor or successor entity:

    The tax rate shall be 7.5 percent and 15 percent for persons not appearing on Active Taxpayers List (ATL).

    (b) In mutual funds and cases other than mentioned at (a) above and (ba) below

    The tax rate shall be 15 percent and 30 percent for persons not appearing on the ATL.

    (ba) In case of person receiving dividend from a company where no tax is 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.

    The tax rate shall be 25 percent and the rate shall be increased by 100 percent in case the person is not on the ATL.

    Return on Investment in Sukuk under Section 150A

    Special Purpose Vehicle, Company shall collect / deduct withholding tax at prescribed rates from Sukuk holders on payment of gross amount of return on investment at the time of actual payment

    The tax shall be final under section 5AA read with section 8 of the Income Tax Ordinance, 2001.

    On Payment of return on investment in Sukuks:

    a) In case the Sukuk- holder is a company the tax rate shall be 25 percent and it shall be increased by 100 percent in case persons are not on the ATL.

    b) In case the Sukuk – holder is an individual or an association of person, if the return on investment is more than one million, the tax rate shall be 12.5 percent and the rate shall be doubled in case persons not appearing on the ATL.

    c) In case the Sukuk – holder is an individual and an association of person, if the return on investment is less than one million, the tax rate shall be 10 percent and will be doubled in case person is not on the ATL.

  • FBR updates withholding tax card for salary income

    FBR updates withholding tax card for salary income

    ISLAMABAD: Federal Board of Revenue (FBR) has issued updated withholding tax card for salary income to be prevailed during Tax Year 2021 (2020-2021).

    The FBR issued the withholding tax card 2020-2021 (updated up to June 30, 2020) after incorporating amendment made to Income Tax Ordinance, 2001 through Finance Act, 2020.

    According to the withholding tax card, every person responsible for paying salary to an employee shall deduct tax from the amount paid under Section 149 of Income Tax Ordinance, 2001 as per given rates:

    Salary slabsTax Rates on salary slabs
    01. Where taxable income does not exceeds Rs600,0000 percent
    02. Where taxable income exceeds Rs600,000 but does not exceed Rs1,200,0005 percent of the amount exceeding Rs600,000
    03. Where taxable income exceeds Rs1,200,000 but does not exceeds Rs1,800,000Rs30,000 plus 10 percent of the amount exceeding Rs1,200,000
    04. Where taxable income exceeds Rs1,800,000 but does not exceed Rs2,500,000Rs90,000 plus 15 percent of the amount exceeding Rs1,800,000
    05. Where taxable income exceeds Rs2,500,000 but does not exceed Rs3,500,000Rs195,000 plus 17.5 percent of the amount exceeding Rs2,500,000
    06. where taxable income exceeds Rs3,500,000 but does not exceed Rs5,000,000Rs370,000 plus 20 percent of the amount exceeding Rs3,500,000
    07. Where taxable income exceeds Rs5,000,000 but does not exceed Rs8,000,000Rs670,000 plus 22.5 percent of the amount exceeding Rs5,000,000
    08. where taxable income exceeds Rs8,000,000 but does not exceeds Rs12,000,000Rs1,345,000 plus 25 percent of the amount exceeding Rs8,000,000
    09. Where taxable income exceeds Rs12,000,000 but does not exceed Rs30,000,000Rs2,345,000 plus 27.5 percent of the amount exceeding Rs12,000,000
    10. Where taxable income exceeds Rs30,000,000 but does not exceed Rs50,000,000Rs7,295,000 plus 30 percent of the amount exceeding Rs30,000,000
    11. Where taxable income exceeds Rs50,000,000 but does not exceed Rs75,000,000Rs13,295,000 plus 32.5 percent of the amount exceeding Rs50,000,000
    12. Where taxable income exceeds Rs75,000,000Rs21,420,000 plus 35 percent of the amount exceeding Rs75,000,000

    The FBR further said that under Section 149(3) of the Ordinance, every person responsible for making payment for directorship fee for fee for attending board meeting or such fee by whatever name called shall deduct 20 percent of the gross amount paid.

  • Banks to observe normal working hours from August 03

    Banks to observe normal working hours from August 03

    KARACHI: State Bank of Pakistan (SBP) has said that the banks will observe normal working hours from August 03, 2020.

    In a statement issued a day earlier, the central bank said that the SBP will revert to normal office timings from Monday, August 03, 2020.

    The timings shall be:

    Monday to Thursday: 09:00am to 05:30pm (with prayer/lunch break from 01:30pm to 02:15pm)

    Friday: 09:00am to 06:00 pm (with prayer / lunch from 01:00pm to 2:30pm).

    The SBP directed all banks, development financial institutions (DFIs) and Microfinance Banks to ensure compliance of the above mentioned timings in letter and spirit.

    The bank timings were reduced due to coronavirus pandemic. However, shrinking number of infections in the country the official timings are reverting to normal.

  • FBR issues updated withholding tax rates for imported goods

    FBR issues updated withholding tax rates for imported goods

    ISLAMABAD: Federal Board of Revenue (FBR) has issued updated withholding tax rates for imported goods. The FBR issued withholding tax card 2020-2021 after incorporating amendment made to Income Tax Ordinance, 2001 through Finance Act, 2020.

    The FBR issued updated withholding tax rates applicable for imported goods under Section 148 of Income Tax ordinance, 2001.

    The withholding tax shall be collected by collector of customs from importer of goods at the same time and manner as the customs duty is payable in respect of the goods imported.

    The following category of importers shall pay withholding tax rate at one percent of the import value as increased by customs duty, sales tax and federal excise duty and two percent on those importers on appearing on the Active Taxpayers List (ATL):

    (i) Persons importing goods classified in Part-I of the Twelfth Schedule

    (ii) Industrial undertaking importing remeltable steel (PCT Heading 72.04) and directly reduced iron for its own use;

    (iii) Persons importing potassic of Economic Coordination Committee of the Cabinet’s decision No. ECC-155/12/2004 dated the 9th December, 2004

    (iv) Persons importing Urea;

    (v) Manufactures covered under Notification No. S.R.O 1125(I)/2011 dated the 31st December, 2011 and importing items covered under S.R.O 1125(I)/2011 dated 31st December, 2011.

    (vi) Persons importing Gold; and

    (vii) Persons importing Cotton

    (viii) Persons importing LNG

    Two percent of the import value as increased by Custom duty, sales tax and federal excise duty and four percent on persons not appearing on ATL shall apply on (ix) persons importing goods classified in Part-II of the Twelfth Schedule.

    5.5 percent of the import value as increased by Custom duty, sales tax and federal excise duty and 11 percent on persons not appearing on ATL on (X) persons importing goods classified in Part-III of the Twelfth Schedule.

    Industrial undertaking importing Plastic raw material (PCT Heading 39.01 to 39.12) for its own use shall pay 1.75 percent withholding tax of the import value as increased by Custom-duty, sales tax and federal excise duty and 3.5 percent for persons not appearing on the ATL.

    1. In case of manufacturers covered under rescinded Notification No. S.R.O 1125(I)/2011 dated the 31st December, 2011 as it stood on the 28th June, 2019 on import of items covered under the aforementioned S.R.O. The tax rate shall be one percent and two percent in case persons not appearing on the ATL.
    2. In case of persons importing finished pharmaceutical products that are not manufactured otherwise in Pakistan, as certified by the Drug Regulatory Authority of Pakistan. Such persons shall pay four percent and 8 percent in case persons not appearing on the ATL.
    3. Persons Importing Pulses shall pay 2 percent of the import value as increased by Custom-duty, sales tax and federal excise duty and four percent in case persons not appearing on the ATL.
    4. Commercial importers covered under Notification No. S.R.O 1125(I)/2011 dated the 31st December, 2011 and importing items covered under S.R.O 1125(I)/2011 dated the 31st December, 2011 shall pay 3 percent of the import value as increased by custom-duty sales tax and federal excise duty and six percent in case persons not appearing on the ATL.

    Commercial Importer importing Plastic raw material (PCT Heading 39.01 to 39.12) for its own use shall pay 4.5 percent of the import value as increased by Custom-duty, sales tax and federal excise duty and 9 percent in case persons not appearing on the ATL.

    1. Persons importing coal shall pay 4 percent and 8 percent in case persons not appearing on the ATL.
    2. Persons importing finished pharmaceutical products that are not manufactured otherwise in Pakistan as certified by the Drug Regulatory of Pakistan shall pay 4 percent and 8 percent in case persons not appearing on the ATL.
    3. Ship breakers on import of ship shall pay 4.5 percent and 9 percent in case persons not appearing on the ATL.
    4. Industrial undertakings not covered under S.No 1 to 6 shall pay 5.5 percent and 11 percent in case persons not appearing on the ATL.
    5. Companies not covered under S. Nos 1 to 9 shall pay 5.5 percent and 11 percent in case persons not appearing on the ATL.
    6. Persons not covered Under S.Nos1 to 10 shall pay 6 percent and 12 percent in case persons not appearing on the ATL.

    On Import of Mobile Phones by any Person (individual, AOP, Company):

    Withholding Tax Regime

    C&F Value In CBUIn CKD/SKD in USD ($) )
    Up to 30 except smart phonesRs70Rs0
    Exceeding 30 and up to 100 and smart phones up to 100Rs100Rs0
    Exceeding 100 and up to 200Rs930Rs0
    Exceeding 200 and up to 350Rs970Rs0
    Exceeding 350 and up to 500Rs3,000Rs5,000
    Exceeding 500Rs5,200Rs11,500

    Persons not appearing in the Active Taxpayers’ List :The applicable tax rate is to be increased by 100% (Rule-1 of Tenth Schedule to the Ordinance).

    Section 148(7)

    The tax required to be collected under this section shall be minimum tax on the income of importer arising from the imports subject to sub-section (1) of this section and this sub-section shall not apply [i.e Adjustable] in the case of Import of:

    a. Raw material, plant, equipment & parts by an industrial undertaking for its own use;

    b. motor vehicle in CBU condition by manufacturer of motor vehicle.

    c. Large import houses as defined / explained in 148(7)(d)

    d. A foreign produced film imported for the purposes of screening and viewing.

    The tax collected under this section at the time of import of ships by ship-breakers shall be minimum tax. Section 148(8A).

  • Inland Revenue officers empowered to recover non-tax revenue

    Inland Revenue officers empowered to recover non-tax revenue

    ISLAMABAD: The officers of Inland Revenue have been empowered to recover non-tax revenue by invoking provisions of Income Tax Ordinance, 2001.

    The finance ministry has issued Public Finance Management Act, 2019, which was amended up to June 30, 2020 through Finance Act, 2020.

    According to Section 40E of the Act, a commissioner of Inland Revenue has been empowered to make recovery of non-tax revenue.

    “40E. Recovery of non-tax revenue by Commissioner (Inland Revenue).-

    (1) If the amounts as per sections 40B and 40D are not paid within ninety days of having been due, the Finance Division, in consultation with the concerned Division may refer any defaulter’s case to the Commissioner (Inland Revenue) concerned for recovery as it were an arrear of income tax.

    (2) The Commissioner (Inland Revenue) shall recover the arrear in accordance with the provisions of the Income Tax Ordinance, 2001(XLIX of 2001) and deposit the receipt in the Federal Consolidated Fund as per section 40C.”

    Section 40B. Levy and collection.

    (1) Non tax revenue shall be levied and charged in accordance with the provisions of relevant laws and such other applicable instruments.

    (2) Notwithstanding anything to the contrary contained in any other law for the time being in force, public entities as defined under section 36 shall pay non tax revenue representing-

    (a) mark up on loans lent by the Government, as per the amortization schedule attached with the financing agreement;

    (b) dividend against the Government’s equity investments as declared by the respective board of directors out of accrued profits of the entity:

    Provided that if public entity is wholly or substantially owned by the Government, proposals with regard to declaration of dividend and allocation for reserve fund, capital requirements etc shall be examined by the controlling Division in consultation with the Finance Division before deliberations and decision in the board of directors.

    (c) surplus profits as per the provisions of relevant laws; and

    (d) any other amount owed to the Government as accrued:

    Provided that the public entities shall pay accrued amounts of non-tax revenue as per clauses (a) to (d) being the first charge on their gross revenues or profits, as the case may be.

    (3) Non tax revenue representing foreign grants and payments, receipts from provision of services, rents, recovery of over-payments, sale of property etc shall accrue on completion of the prescribed process.

    (4) The revenue collection offices shall be responsible for collection of all the accrued amounts of non tax revenue from liable public entities, individuals, firms, companies etc as per the time specified in the relevant laws and rules. Finance Division shall prescribe procedures for monitoring and reporting of non tax revenue by the revenue collection offices.

    Section 40D. Late payment surcharge.-

    (1) Notwithstanding anything to the contrary contained in any other law for the time being in force, an amount equal to monthly weighted financing cost of Government’s domestic borrowings shall be payable during the period of default, in addition to the amount due under section 40B, if not paid within the stipulated time.

    (2) Finance Division may prescribe procedure for levy and collection of the surcharge under sub-section (1).

  • Eid-ul-Azha Mubarak

    Eid-ul-Azha Mubarak

    PkRevenue.com wishes Happy Eid-ul-Azha Mubarak to all valuable readers.

  • Petrol price increases to Rs103.97 per liter

    Petrol price increases to Rs103.97 per liter

    ISLAMABAD: The government has increased prices of petroleum products effective from August 01, 2020. The price of petrol has been increased by Rs3.86 per liters.

    According to a statement issued on Friday, the government decided to revise the existing prices of petroleum products in view of the rising oil prices trend in the global market.

    The new prices effective from August 01, 2020 are as follows:

    The price of MS (Petrol) has been increased by Rs3.86 per liter to Rs103.97 from Rs100.11.

    The price of High Speed Diesel (HSD) has been increased by Rs5 per liter to Rs106.46 from Rs101.6.

    The price of kerosene oil has been increased by Rs5.97 per liter to Rs65.29 from Rs59.32.

    The price of light diesel oil has been increased by Rs6.62 per liter to Rs62.86 from Rs56.24.

  • Weekly Review: market likely to stay positive

    Weekly Review: market likely to stay positive

    KARACHI: The stock market likely to stay positive during the next week due to improved inflows and stability of in Pak Rupee against the US Dollar, analysts said.

    Analysts at Arif Habib Limited hoped the market to remain positive in the upcoming week.

    With continuation of result season, certain scrips are expected to remain under limelight.

    While stability in Pak Rupee against USD given inflow of foreign funds may also keep the risk appetite of investors in-check.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 7.3x (2021) compared to Asia Pac regional average of 13.2x and while offering DY of ~6.2 percent versus ~2.7 percent offered by the region.

    The market commenced on a positive note this week continuing positive streak from last week. During the week commercial banks remained attractive on anticipation of robust results.

    Furthermore, three month low COVID-19 cases were reported which improved investor sentiment. Moreover, loans worth USD 505 million received during the week with the Pak Rupee/Parity settling at PKR 166.98/USD, also kept the momentum high.

    Along with this, PKR 168 billion were raised in Treasury bill auction, with yields going up due to postponement in SBP’s monetary policy to Sep’20. The market closed at 39,258 points, gaining 1,650 points (+4.4 percent) WoW.

    Sector-wise positive contributions came from i) Commercial Banks (482 points), ii) Cement (285 points), iii) Power Generation & Distribution (113 points), iv) Technology & Communication (111 points), and v) Automobile Assembler (109 points). Whereas negative contributions came from Food & Personal Care (12 points) and Vanaspati (1 points). Scrip-wise positive contributions were led by LUCK (148 points), BAHL (103 points), HBL (99 points), TRG (95 points), and HUBC (77 points).

    Foreign selling continued this week clocking-in at USD 9.7 million compared to a net sell of USD 9.3 million last week. Selling was witnessed in E&P (USD 5.1 million) and Power & Distribution (USD 1.0 million). On the domestic front, major buying was reported by Mutual Funds (USD 11.3 million and Companies (USD 2.2 million).

    Average volumes settled at 390 million shares (down by 6 percent WoW) while average value traded clocked-in at USD 101 million (up by 4 percent WoW).

  • Tax collection from salaried persons surges by 68 percent

    Tax collection from salaried persons surges by 68 percent

    KARACHI: The collection of income tax from salaried persons registered 68 percent growth during July – March 2019/2020 due to upward revision in tax rates on various salary slabs, State Bank of Pakistan (SBP) reported in its Third Quarterly Report on Pakistan Economy issued on Thursday.

    The collection under this head increased to Rs89.7 billion during July – March 2019/2020 as compared with Rs53.5 billion in the corresponding period of the preceding fiscal year.

    The SBP attributed the rise in tax collection from salary to upward revision in tax rates on various salary slabs.

    The central bank said that the Federal Board of Revenue (FBR) collected Rs41.3 billion as advance tax on telephone/mobile phones during July – March 2019/2020 showing around 7-time higher than the collection of Rs5.3 billion in the corresponding period of the preceding fiscal year.

    The advance tax collection was remained suspended in 2018/2019 which resulted in nominal collection in the same year. However, after the resumption of collection granted by the court resulted in phenomenal growth.

    The advance tax collection from imports registered negative growth of 8 percent to Rs155 billion during July – March 2019/2020 as compared with Rs168.2 billion in the corresponding period of the preceding fiscal year.

    The decline in revenue collection was mainly due to slowdown in the economy in the start of the fiscal year 2019/2020 which resulted in fall in country’s import bill during the period. However, this impact was further worsened following the coronavirus pandemic.

    The FBR also witnessed 52.5 percent decline in advance tax collection from cash withdrawal during the period under review. The revenue authority collected Rs12.7 billion during first nine months of the fiscal year 2019/2020 as compared with Rs26.8 billion in the corresponding period of the preceding fiscal year.

    The SBP report stated that with the abolishment of advance tax on banking transaction for filers in Finance Supplementary (Second Amendment) Bill, 2019, the collection from cash withdrawal declined by 52.5 percent during Jul-Mar FY20 as compared to a rise of 7.8 percent in the review period.

    Collection from contracts grew by 5.5 percent during Jul-Mar FY20 in contrast to a decline of 15.3 percent in the corresponding period last year.

    This is largely due to higher PSDP releases during the period under review.