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FBR chairman warns non-compliant immovable property, motor vehicle owners of penal action

ISLAMABAD: Syed Shabbar Zaidi, Chairman, Federal Board of Revenue (FBR) has warned of taking penal action against non-compliant persons own immovable properties and motor vehicles.

The chairman in a tweet message on Monday urged taxpayers to avail extension in income tax return filing date up to December 16, 2019.

He said that every person owning a car above 1000CC and house measuring 500 square yards or above is required to file income tax return.

The FBR on November 29, 2019 granted third extension in date for filing income tax returns for tax year 2019.

Under Section 114 of Income Tax Ordinance, 2001 following classes of persons and companies are required to file annual income tax returns:

114. Return of income.

(1) Subject to this Ordinance, the following persons are required to furnish a return of income for a tax year, namely:–

(a) every company;

(ab) every person (other than a company) whose taxable income for the year exceeds the maximum amount that is not chargeable to tax under this Ordinance for the year;or

(ac) any non-profit organization as defined in clause (36) of section 2;

(ad) any welfare institution approved under clause (58) of Part I of the Second Schedule;

(b) any person not covered by clause (a), (ab), (ac) or (ad) who,—

(i) has been charged to tax in respect of any of the two preceding tax years;

(ii) claims a loss carried forward under this Ordinance for a tax year;

(iii) owns immovable property with a land area of five hundred square yards or more or owns any flat located in areas falling within the municipal limits existing immediately before the commencement of Local Government laws in the provinces; or areas in a Cantonment; or the Islamabad Capital Territory;

(iv) owns immoveable property with a land area of five hundred square yards or more located in a rating area;

(v) owns a flat having covered area of two thousand square feet or more located in a rating area;

(vi) owns a motor vehicle having engine capacity above 1000 CC;

(vii) has obtained National Tax Number; or

(viii) is the holder of commercial or industrial connection of electricity where the amount of annual bill exceeds rupees five hundred thousand;

(ix) is a resident person registered with any chamber of commerce and industry or any trade or business association or any market committee or any professional body including Pakistan Engineering Council, Pakistan Medical and Dental Council, Pakistan Bar Council or any Provincial Bar Council, Institute of Chartered Accountants of Pakistan or Institute of Cost and Management Accountants of Pakistan; or

(x) every resident person being an individual required to file foreign income and assets statement under section 116A.

(1A) Every individual whose income under the head ‘Income from business’ exceeds rupees three hundred thousand but does not exceed rupees four hundred thousand in a tax year is also required to furnish return of income from the tax year.

December 3, 2019
Salary income to include all allowances for tax determination

KARACHI: Federal Board of Revenue (FBR) has said that for determination of tax the salary income shall include the value of all perquisites, allowances and benefits received by employees.

FBR officials said on Tuesday that the salaried persons should include all such income while filing their annual income tax returns, if their employers had not deducted tax on such prerequisites.

For the purposes of computing the income chargeable to tax under the head ‘salary’, the value of all perquisites, allowances and benefits provided by the employer to the employee shall be included in the said income.

The value of accommodation provided by an employer to the employee shall be taken equal to the amount that would have been paid by the employer in case such accommodation was not provided.

Provided that the value taken for this purpose shall, in any case, not be less than forty five percent of the minimum of the time scale of the basic salary or the basic salary where there is no time scale.

Provided further that where House Rent Allowance is admissible at the rate of thirty percent, the value taken for the purpose of this rule shall be an amount not less than thirty percent of minimum of the time scale of basic salary or the basic salary where there is no time scale.]

The value of conveyance provided by the employer to the employee shall be taken equal to an amount as below:- (i)

Partly for personal and partly for official use

The tax rate shall be five percent of:

(a) the cost to the employer for acquiring the motor vehicle; or,

(b) the fair market value of the motor vehicle at the commencement of the lease, if the motor vehicle is taken on lease by the employer;

For personal use only

The tax rate shall be 10 percent of:

(a) the cost to the employer for acquiring the motor vehicle; or,

(b) the fair market value of the motor vehicle at the commencement of the lease, if the motor vehicle is taken on lease by the employer; and

For the purpose of this part, “employee” includes a director of a company.

December 3, 2019
Stock market gains sharply on Moody’s positive rating

KARACHI: The stock exchange has registered significant gain of 837 points on Monday on upgrade of credit rating of Pakistan to stable from negative.

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 40,124 points as against 39,287 points showing an increase of 837 points.

Analysts at Arif Habib Limited said that the market finally crossed 40,000 level today, which was last seen in February 2019.

Trading volumes also increased significantly to 557 million shares. International Ratings Agency, Moody’s has reportedly upgraded Pakistan’s outlook from Negative to Stable and affirmed B3 rating.

This further gave confidence to investors carrying the bull run witnessed from 36,000 level. Banking sector continued upbeat performance on the bourse with volumes crossing 110 million shares, followed by Cement (64.7 million) and Power (47 million). Among scrips, BOP led the volumes with 74.9 million shares, followed by KEL (40.8 million) and UNITY (37.7 million).

Sectors contributing to the performance include Banks (+516 points), Power (+73 points), O&GMCs (+53 points), Cement (+52 points), Textile (+36 points).

Volumes increased significantly from 431.8 million shares to 557.3 million shares (+29 percent DoD). Average traded value also increased by 14 percent to reach US$ 106.1 million as against US$ 93.2 million.

Stocks that contributed significantly to the volumes include BOP, KEL, UNITY, FFL and PAEL, which formed 34 percent of total volumes.

Stocks that contributed positively include HBL (+119 points), MCB (+92 points), UBL (+89 points), BAHL (+59 points) and HUBC (+51 points). Stocks that contributed negatively include OGDC (-49 points), PPL (-24 points), POL (-19 points), MTL (-8 points), and COLG (-7 points).

December 2, 2019
Rupee ends down by five paisas on import, corporate payments

KARACHI: The Pak Rupee ended down by five paisas against dollar on Monday owing to high demand for import and corporate payments.

The rupee closed at Rs155.29 to the dollar from last Friday’s closing of Rs155.24 in interbank foreign exchange market.

Currency experts said that the market was initiated after two weekly holidays which escalated the demand for the greenback.

The foreign currency market was initiated in the range of Rs155.30 and Rs155.35. The market witnessed day high of Rs155.34 and low of Rs155.29 and closed at Rs155.29.

The exchange rate in open market witnessed appreciation in rupee value. The buying and selling of dollar was recorded at Rs155.20/Rs155.40 from last Friday’s closing of Rs155.40/Rs155.70 in cash ready market.

December 2, 2019
Moody’s changes Pakistan’s rating to stable from negative

SINGAPORE: Moody’s Investors Service on Monday affirmed Pakistan’s outlook rating to stable from negative.

In a statement the Moody’s said that the change in outlook to stable is driven by Moody’s expectations that the balance of payments dynamics will continue to improve, supported by policy adjustments and currency flexibility. Such developments reduce external vulnerability risks, although foreign exchange reserve buffers remain low and will take time to rebuild.

Moreover, while fiscal strength has weakened with higher debt levels largely as a result of currency depreciation, ongoing fiscal reforms, including through the country’s International Monetary Fund (IMF) programme, will mitigate risks related to debt sustainability and government liquidity.

The rating affirmation reflects Pakistan’s relatively large economy and robust long-term growth potential, coupled with ongoing institutional enhancements that raise policy credibility and effectiveness, albeit from a low starting point.

These credit strengths are balanced against structural constraints to economic and export competitiveness, the government’s low revenue generation capacity that weakens debt affordability, fiscal strength that will remain weak over the foreseeable future, as well as political and still-material external vulnerability risks.

Concurrently, Moody’s has affirmed the B3 foreign currency senior unsecured ratings for The Second Pakistan Int’l Sukuk Co. Ltd. and The Third Pakistan International Sukuk Co Ltd. The associated payment obligations are, in Moody’s view, direct obligations of the Government of Pakistan.

Pakistan’s Ba3 local currency bond and deposit ceilings remain unchanged. The B2 foreign currency bond ceiling and the Caa1 foreign currency deposit ceiling are also unchanged. The short-term foreign currency bond and deposit ceilings remain unchanged at Not Prime.

These ceilings act as a cap on the ratings that can be assigned to the obligations of other entities domiciled in the country.

Narrowing current account deficits, in combination with enhancements to the policy framework including currency flexibility, lower external vulnerability risks in Pakistan. However, foreign exchange reserve adequacy will take time to rebuild.

Moody’s expects Pakistan’s current account deficit to continue narrowing in the current and next fiscal year (ending June of each year), averaging around 2.2 percent of GDP, from more than 6 percent in fiscal 2018 (the year ending June 2018) and around 5 percent in fiscal 2019.

December 2, 2019
Limits of US Dollars taking out of Pakistan

KARACHI: State Bank of Pakistan (SBP) has categorized age limits for taking out of Pakistan US Dollars or equivalent amount of foreign exchange.

According to updated foreign exchange manual the SBP granted general permission to any person to take out of Pakistan US Dollars or equivalent thereof in other foreign currencies as per the following limit:

Up to five years $1,000 or annual ceiling per person $6,000

From 5 years to 18 years $5,000 or annual ceiling per person $30,000

Above 18 years $10,000 or annual ceiling of $60,000

In pursuance of sub-section (2) of Section 8 of the Act, the State Bank has issued Notification No. F.E.2/98-SB dated July 21st, 1998 granting general permission to: –

(a) Authorized Dealers to send out of Pakistan, cheques, drafts or bills of exchange which have been acquired by them in the normal course of their business and within the terms of their authorization.

(b) Any person maintaining an account expressed in a foreign currency, and held under any permission, general or otherwise, granted by the State Bank of Pakistan to take or send out of Pakistan, cheques or drafts drawn on such account.

(c) Any person, other than a person to whom foreign exchange is issued for travelling purposes only, to send out of Pakistan foreign exchange issued to him by an Authorized Dealer.

(d) Any person to take out of Pakistan foreign exchange issued to him by an Authorized Dealer in Pakistan and endorsed on his passport and

(e) Any person not ordinarily resident in Pakistan, to take out of Pakistan the unspent amount of foreign currency brought by him into Pakistan, provided the period of his continuous stay in Pakistan does not exceed three months.

As an exception, NGOs, UN/Other Donor Agencies would be able to draw foreign currency from their accounts without any limit for taking it to Afghanistan to the extent of such remittances.

Authorized Dealers would issue Certificates to these entities in duplicate, one copy of which would be submitted to Customs Authorities and the second would be kept by the concerned NGO/agency which would, however, be stamped by Customs Authorities as ‘Amount allowed to be taken out’.

The record of all such transactions would be kept by Authorized Dealers for SBP inspection.

December 2, 2019
Pakistan’s trade deficit narrows by 34.42pc in July – November

ISLAMABAD: Pakistan’s trade deficit has narrowed by 34.42 percent during first five months (July – November) of current fiscal year owing to improvement in exports, said Abdul Razak Dawood, Adviser to Prime Minister of Pakistan for Commerce, Textile, Industry & Production and Investment, on Sunday.

In a tweet message, he said that as a result of the same policies of the government, the increasing EXPORTS are contributing to improvement in our Balance of Payments position and stabilization of the economy.

The trade deficit reduced to $9.496 billion during July – November of current fiscal year as compared with the deficit of $14.479 billion in the corresponding period of the last fiscal year.

The country’s exports registered five percent growth during the period under review. The exports grew to $9.55 billion during first five months of the current fiscal year as compared with $9.11 billion in the same period of the last fiscal year.

However, the import bill of the country sharply fell by 19.27 percent during the period. The import bill declined to $19.04 billion during July – November of the current fiscal year as compared with $23.59 billion in the corresponding period of the last fiscal year.

December 1, 2019
Locally manufactured two-, three electric wheelers proposed 1pc sales tax for seven years

ISLAMABAD: All two and three wheelers manufactured under Electric Vehicle Policy will sold at less than one percent sales tax for next seven years to bring the purchase price of EVs down, according to the policy.

However, all two and three-wheeler EV’s imported shall be sold at one percent sales tax for the next five years.

EVs will be exempted from registration fees and annual token tax to encourage prospective buyers and the FBR shall evolve a policy to evolve tax incentives for prospective buyers of the two-wheeler and three wheelers.

All existing incentives of the Auto Development Policy 2016-2021 will remain intact, according to EV Policy 2019.

The policy said that Pakistan had a large market of two and three wheelers. More than twenty million such vehicles are already on roads in Pakistan.

Their local production has reached indigenization of more than 90 percent. Therefore, the need is to incentivize the already available manufacturing expertise for converting to e-bikes and e-rickshaws.

Moreover, a new category of low speed electric vehicles have emerged that is added into this category.

The policy said that EV specific parts and components, not being manufactured locally compliant to UNECE 1958 Agreement ‘WP.29’ standards as well as equivalent international standard applied by the United States, European Union and other major EV manufacturers, will be allowed import at one percent customs duty and one percent sales tax for the next two years.

Registration number plates of EVs will have a distinct color/design to create EV specific zones in high density areas. The registration number plates will be different from other typical vehicles to distinguish between two, three and low speed four wheel electric vehicles and other vehicles segments.

A special provision for import of swappable battery-based three wheelers is being introduced to help both introduction of such vehicles and charging infrastructure.

Those manufacturers or consortia who demonstrate setup of manufacturing of these units and battery swapping infrastructure of running of these vehicles will be allowed to import a cumulative number of 20,000 completely built units (CBU) along with the charging infrastructure at one percent customs duty and can sell these units at one percent sales tax.

December 1, 2019
Property tax collection sharply rises by 214 percent

KARACHI: The collection of property tax witnessed unprecedented growth of 214 percent owing to back to back increase in valuation of immovable properties by Federal Board of Revenue (FBR), sources said.

The quarterly data released by the finance ministry revealed that the provinces had collected property tax to the tune of Rs7.8 billion during first quarter (July – September) 2019/2020 as compared with Rs2.48 billion in the corresponding period of the last fiscal year.

The sources attributed the significant rise in property tax to increase in FBR valuation which was introduced in August 2016 and increased by 20 percent in February 2019 and further increased with the same ratio in July 2019.

The provinces have jurisdiction over the collection of property tax in the shape of rented properties in their respective localities.

The sources said that with the increase of FBR valuation the provinces could able to increase their revenue because the rent agreements are being made on the basis of existing valuation.

On the other hand the valuations of immovable properties notified by the provinces are very low comparing the open market values. However, under the proposed reform program funded by the World Bank the provinces may review their valuations of immovable properties.

The major increase in property tax comes from Punjab as the province collected Rs6 billion during first quarter of the current fiscal year.

It was followed by Sindh, which collected Rs1.5 billion, Khyber Pakhtoonkhwa collected Rs243 million and Balochistan collected Rs89 million.

The sources said that digitalization of property record and effective measures of documentation would further help the provinces to increase the revenue collection under the head of property tax.

December 1, 2019
SRB suspends sales tax registration of rice mill

KARACHI: Sindh Revenue Board (SRB) has suspended sales tax registration of a rice mill for defaulting payment and non-compliance of return filing.

The SRB through a notice suspended the registration of sales tax of M/s. Abdullah Lakhair Rice Mill for failure to deposit due amount of Sindh Sales Tax of Rs502,400.

Besides, the rice mill also failed to file its monthly returns for the tax periods from August 2017 to December 2017 and from January 2019 to October 2019.

The SRB asked the mill that the suspension of the registration would only be revoked if it ensures compliance by December 03, 2019.

The SRB said that in case of non-satisfactory response to take remedial measures the case would be further proceeded for cancellation of registration with SRB.

December 1, 2019