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  • Taxpayers should file true declarations to avoid 100 percent penalty

    Taxpayers should file true declarations to avoid 100 percent penalty

    KARACHI: The tax laws have explained that any false or misleading statement will liable to penalty of 100 percent of the amount of tax short paid.

    Officials at the Federal Board of Revenue (FBR) said that taxpayers should ensure correct and true entries in their income tax returns and wealth statement while filing their income tax returns for tax year 2019.

    The last date for filing income tax returns for tax year 2019 is December 16, 2019.

    According to Income Tax Ordinance, 2001, any person who –

    (a) makes a false or misleading statement to an Inland Revenue Authority either in writing or orally or electronically including a statement in an application, certificate, declaration, notification, return, objection or other document including books of accounts made, prepared, given, filed or furnished under this Ordinance;

    (b) furnishes or files a false or misleading information or document or statement to an Income Tax Authority either in writing or orally or electronically;

    (c) omits from a statement made or information furnished to an Income Tax Authority any matter or thing without which the statement or the information is false or misleading in a material particular.

    Such person shall pay a penalty of twenty five thousand rupees or 100 percent of the amount of tax shortfall whichever is higher:

    Provided that in case of an assessment order deemed under section 120, no penalty shall be imposed to the extent of the tax shortfall occurring as a result of the taxpayer taking a reasonably arguable position on the application of this Ordinance to the taxpayers’ position.

  • Weekly Review: market likely to continue positive momentum

    Weekly Review: market likely to continue positive momentum

    KARACHI: The stock market likely to continue its positive momentum next week on the back of continuous improvement in the macroeconomic situation of the country.

    Analysts at Arif Habib Limited said that foreign interest in the equity as well as debt markets posits healthy signs for overall investment climate going forward.

    The KSE-100 index is currently trading at a PER of 7.1x (2020) compared to Asia Pac regional average of 13.4x and while offering DY of around 7.9 percent versus around 2.6 percent offered by the region.

    Trading in the green continued this week as the index continued its bullish momentum as the banking sector led the charge this week.

    The current week saw Moody’s changing its outlook on Pakistan from “Negative” to “Stable” on account of improving external account position of the country on the back of the government’s corrective measures.

    This was followed by up-gradation of outlook to “stable” for the Big 5 banks, spurring buying activity in the banking sector.

    Trade deficit data came this week as well which once again saw an improvement, declining 36 percent YoY during November 2019.

    Consolidation of the country’s reserves continued, as SBP reserves touched an 8 month high at USD 9.1 billion. The KSE-100 Index settled at 40,732 points (up 1445 points WoW).

    Sector-wise positive contributions came from i) Commercial banks (645 points), ii) Oil & Gas Marketing (131 points), and iii) Power Generation & Distribution (97 points) iv) E&P (84 points), and v) Insurance (79 points). Scrip-wise positive contributions were led by HBL (155 points), MCB (144 points), UBL (87 points), BAFL (78 points) and HUBC (75 points).

    Foreign buying was witnessed this week clocking-in at USD 1.1 million compared to a net sell of USD 8.1 million last week. Buying was witnessed in Fertilizer (USD 8.4 million) and OMCs (USD 2.2 million).

    On the domestic front, major selling was reported by Banks / DFIs (USD 22.3 million) and Other Organization (USD 3.3 million). Average Volumes settled at 465 million shares (up by 34 percent WoW) while average value traded clocked-in at USD 105 million (up by 31 percent WoW).

  • FTO committee expresses distress over tax recovery from bank accounts

    FTO committee expresses distress over tax recovery from bank accounts

    ISLAMABAD: The advisory committee of the Federal Tax Ombudsman (FTO) has expressed distress over attachment of bank accounts and coercive recovery by Federal Board of Revenue (FBR) from bank accounts of taxpayers.

    A meeting of the advisory committee of the FTO was held recently and discussed various issues related to refunds and coercive recovery of the FBR from bank accounts of taxpayers, according to the FTO new letter issued last month.

    The committee expressed great distress about the attachment of bank accounts and coercive recoveries. The participants suggested that attachment of accounts may be affected only after Tribunal’s decision.

    On the issue of refunds, the participants observed following:

    Delayed refund is a serious issue which continuously poses challenge to the survival of business community.

    Refund amount should be paid after two stages of appeals in favor of taxpayer, even if department then goes to reference before the higher court.

    An online system for tracking of refund by claimants should be put in place by FBR.

    A system of adjustment of refund in the next return should be devised to get rid of the chronic issue of delayed refund.

    Even after verification of claim, cheques are not issued in time.

    The refund payment system ought to be dovetailed with magnitude of amount as 70-75 percent of refunds fall in the category of up to Rs100,000 only and need automated settlement.

    Compensation for delayed refunds should be ensured as delayed has its own cost.

    Regarding assessment by the tax officials, the FTO advisory committee observed following:

    Arbitrary, coercive and malafide assessment is the root cause of all subsequent tax maladministration and victimization of business community.

    There is no accountability on arbitrary, coercive and malafide assessment.

    There should be some check on the quality of assessment made by an assessing officer.

    At times undated orders are issued.

  • SECP issues qualified capital criteria for NBFCs

    SECP issues qualified capital criteria for NBFCs

    ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) on Friday issued criteria for qualified capital and its terms and condition for Non-Banking Finance Companies (NBFCs).

    The criteria have been issued for those NBFCs which exclusively in the business of issuance of guarantees to enhance the quality debt instruments issued to finance infrastructure projects in Pakistan, namely:

    Qualified capital means the aggregate of callable capital and contingent capital (including any drawdown threunder);

    Explanation: For the purpose of this clause the expressions:

    i. Callable Capital means share capital that, in terms of written agreement entered into between the NBFC and sponsor, shareholder and/or investor, as the case may be, is agreed to be subscribed on the following terms and conditions:

    a. the shares shall be fully subscribed over a period of 24 months from the date of the written agreement;

    b. during the subscription period specified in sub-clause (a), the obligation to subscribe to shares shall be irrevocable and on demand, at the sole discretion of the NBFC; and

    c. the subscription obligation shall be secured by a bank guarantee or standby letter for credit from a commercial bank rated AAA or higher by a credit rating agency registered with the commission;

    ii. Contingent Capital means long term commitment for finance that, in terms of a written agreement entered into between the NBFC and a Qualified Financial Institution(s), is provided as a second loss facility on the following terms and conditions:

    a. at any time, the contingent capital, in aggregate, shall not exceed one and a half times of the sum of paid up share capital and callable capital of the NBFC;

    b. the commitment shall, in accordance with the terms thereof, be irrevocable, confirmed and fully committed;

    c. the long term commitment and the finance thereunder shall be available on a revolving basis;

    d. the finance under the commitment shall be callable and demand upon a capital event and the sole discretion of the NBFC or on a direction by the Commission (after giving the NBFC a reasonable opportunity of a hearing), which shall be binding on the NBFC; and

    e. the commitment shall be replaced by the NBFC if the financing entity ceases to be a qualified financial institution;

    iii. Qualified Financial Institution means a local or a international or multilateral financial institution rated AAA by a credit rating agency registered with the Commission;

    iv. Capital Event means the depletion of the equity (after the callable capital has been completely drawn down by the NBFC) of the NBFC.

    Terms and Conditions:

    i. The NBFC shall not take any exposure against the qualified capital unless it has obtained a certificate from its statutory auditor that all the requirements have been complied with;

    ii. The certificate shall be supported by a legal opinion from a reputed law firm and a copy of the certificate along with the legal opinion shall be submitted to the commission: and

    iii. With regard to its qualified capital, the NBFC, in relevant notes to its financial statements, shall make disclosures, which are necessary for the users to understand its salient features.

  • FBR notifies transfers, postings of BS-20 IRS officers

    FBR notifies transfers, postings of BS-20 IRS officers

    ISLAMABAD: Federal Board of Revenue (FBR) on Friday notified transfers and postings of BS-20 officers of Inland Revenue Service (IRS) with immediate effect until further orders.

    The FBR notified transfers and postings of following officers:

    01. Muhammad Farrukh Majid (Inland Revenue Service/BS-20) has been transferred and posted as Commissioner Inland Revenue Inland Revenue (Appeals-V), Lahore from the post of Commissioner, (HRM) Corporate Regional Tax Office, Lahore.

    02. Ms. Irum Sarwar (Inland Revenue Service/BS-20) has been transferred and posted as Commissioner Inland Revenue (Appeals-VI), Lahore from the post of Commissioner, (HRM) Large Taxpayers Unit, Lahore.

    03. Ms. Ayesha Imran Butt (Inland Revenue Service/BS-20) has been transferred and posted as Commissioner Inland Revenue (Appeals-VII), Lahore from the post of Commissioner, (IP/TFD/HRM) Regional Tax Office II, Lahore.

    The FBR said that the officers who are drawing performance allowance prior to issuance of this notification shall continue to draw this allowance on the new place of posting.

  • SBP announces incentives for banks to make remittance transactions attractive

    SBP announces incentives for banks to make remittance transactions attractive

    KARACHI: State Bank of Pakistan (SBP) on Friday made attractive the inflow of home remittances through formal channels and announced incentives for banks.

    (more…)
  • FBR announces implementation of agreement with traders from next week

    FBR announces implementation of agreement with traders from next week

    ISLAMABAD: Federal Board of Revenue (FBR) on Friday announced implementation of agreement with traders from next week.

    FBR chairman Syed Shabbar Zaidi in a tweet message said that committees represented by the traders of each area/ market, covering the whole country will be notified.

    “Traders and FBR will work together for registration,” the chairman said and termed it a new beginning for taxation history of Pakistan.

    The FBR and trade community were at odd on the implementation of some of initiatives for documentation of economy, especially the introduction of CNIC.

    However, on October 30, 2019 an agreement was signed between FBR and traders.

    Following is the 11-point agreement between the tax authorities and traders associations:

    01. The tax rate shall be lowered to 0.5 percent from 1.5 percent for traders having turnover up to Rs100 million.

    02. No liability on a trader having up to Rs100 million to collect / deposit withholding tax on transactions.

    03. Threshold of annual electricity bill of Rs600,000 for mandatory sales tax registration has been increased to Rs1.2 million.

    04. Turnover tax for sectors having lower returns will be revisted with consultation with traders associations.

    05. Tax issues of jewelers will be resolved in consultation with jewelers associations.

    06. The renewal license fees on middlemen will be revisited.

    07. To resolve traders taxation issues a desk at FBR headquarters will be set up with immediate effect. A BS-20/21 officer will be designated to resolve the traders’ problems.

    08. For new registration of traders a simple income tax return form in Urdu Language will be introduced. Trade associations will cooperation in FBR’s registration drive.

    09. Which trader will be exempted from registration having 1000 square feet shop will be decided by traders committees.

    10. The registration of those retailers engaged in wholesale business will be decided in consultation with traders community.

    11. The FBR will take no action on sales transactions without CNIC information till January 31, 2020.

  • Exporters perturb over part of tax refund claims disallowed without reason

    Exporters perturb over part of tax refund claims disallowed without reason

    KARACHI: Pakistan Hosiery Manufacturers Association (PHMA) on Friday pointed out reduction in refund amount against original claim.

    The PHMA in a letter sent to Ms. Seema Shakil, Member Inland Revenue (Operations), Federal Board Revenue (FBR), informed that it is regretfully informed that against the 100 percent claimed sales tax refunds amount, FBR has cleared 60 percent to 80 percent of 100 percent refund amount and the exporters are unaware why the FBR had withhold the remaining refund amount which has created unrest and spread dissatisfaction among our member exporters.

    With utmost concern we want to learn as to why 100 percent payment of Sales Tax Refund is not made and why some part payment has been deferred / withheld without informing any reason.

    Kindly look into this matter and inform us how to check the reason of withhold amount against sales tax refund claims in Annexure H under FASTER.

    Upon review of the outcome of the refund claims and feedback of our individual members through their professional team we have observed that rejection of the refund claim is largely attributed to the objection of “Risky” and “No amount is admissible for refund”.

    These objections by and large are issuing to refund claimants having a substantial amount of carried forward in their sales tax return and RMS particularly in the month of Jun 2019 but not appearing in RPO of the Jun 2019. You may appreciate in the past electronically rejected claims were processed by local RTO and subsequently RPO’s were generated with lapse of considerable time by processing officer.

    The carry forward amount in those RPOs are though appearing in RMS but due to skip of sequence the same were not incorporated in subsequent months electronic claims and therefore the carry forward amount in electronically issued RPO of Jun 2019 is not tallied with sales tax return or carried forward amount available in RMS.

    You are therefore requested to kindly look into the matter and issue the necessary instructions for incorporating verified carried forward amount appearing in RMS into FASTER and reprocess such refund claims which were rejected due to this technical constraint.

    Objections namely “Risky” and “No amount is admissible for refund” are not understandable, since all the Purchases are made from registered supplier & exporters for export purposes. Why would system not refund a Single Penny.

    Some of the exporters in the first month i.e. July 2019 has opted to carry forward the excess input tax. According to the refund rules the annex ‘H’ is only requires to be filed by person claiming refund.

    The question arises if the annex ‘H’ is not filed by the person opted for carry forward in accordance with the refund rules, how could their carried forward amount be transferred into the brought forward value of next month in the absence of this figure in their RPO of July 2019?

    How it is possible that one month claim is approved by the FASTER and the very next month claim is rejected by the FASTER without giving any reason. Therefore, FASTER should be equipped to define the reason of rejection. “Risky” and “No amount is admissible for refund.

    It has been observed the FASTER system runs once a month due to which large number of claims are rejected. It is proposed that FASTER system should run preferably once a week to avoid rejection of large number of claims.

    The time limit of 120 days for filing of Annex ‘H’ in this background is also needs to be extended. It is proposed to extended time limit for at-least another 60days for submission of Annex ‘H’ for the months of July, 2019 and August, 2019, so that genuine amount of refund claims due to this shift of regime and technical problems should not be lapsed.

  • Stock market gains 91 points amid selling pressure

    Stock market gains 91 points amid selling pressure

    KARACHI: The stock market gained 91 points on Friday amid selling pressure witnessed in the market.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 40,732 points as against 40,641 points showing an increase of 91 points.

    Analysts at Arif Habib Limited said that the market opened on a positive note, closed the first session +176 points and went as high as +347 points.

    MoC faced selling pressure, bringing the index down and closing +91 points. Sectors performing E&P and O&GMCs.

    Selling pressure, on the other hand was largely witnessed in Banking sector, which have so far seen massive rally and faced profit booking.

    Cement sector also saw selling pressure. Cement sector led the volumes table with 84.8 million shares, followed by Vanaspati (53.5 million) and Technology (35.2 million).

    Among scrips, UNITY saw volumes of 53.5 million shares followed by FCCL (31.9 million) and MLCF (18.6 million).

    Sectors contributing to the performance include E&P (+64 points), Food (+30 points), Insurance (+21 points), Fertilizer (+23 points) and Chemical (+15 points).

    Volumes declined from 507.9 million shares to 416.1 million shares (-18 percent DoD). Average traded value also declined by 25 percent to reach US$ 97.7 million as against US$ 129.8 million.

    Stocks that contributed significantly to the volumes include UNITY, FCCL, MLCF, FFL and MLCFR1, which formed 32 percent of total volumes.

    Stocks that contributed positively include PPL (+34 points), BAHL (+30 points), HUBC (+26 points), EFERT (+23 points) and OGDC (+23 points). Stocks that contributed negatively include PSO (-27 points), HBL (-21 points), SEARL (-15 points), KAPCO (-14 points), and LUCK (-14 points).

  • Rupee gains for fourth consecutive day on improved inflows

    Rupee gains for fourth consecutive day on improved inflows

    KARACHI: The Pak Rupee made gain against dollar for the fourth consecutive day on Friday owing to improved inflows.

    The rupee ended Rs155.07 to the dollar from previous day’s closing of Rs155.10 in interbank foreign exchange market.

    Currency experts said that the sentiments in the market were remained positive owing to news of inflows of 190 million UK Pounds and more expected from National Crime Agency of the UK.

    The foreign currency market was initiated in the range of Rs155.02 and Rs155.17. The market recorded day high of Rs155.08 and low of Rs155.06 and closed at Rs155.07.

    The rupee maintained a continuous gain after falling to Rs155.34 on December 02, 2019.

    The exchange rate in open market witnessed unchanged value in rupee. The buying and selling of dollar was recorded at Rs154.80/Rs155.10, the same previous day’s closing, in cash ready market.