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Tag: budget 2020-2021

  • Finance ministry issues strategy for release of funds for development budget

    Finance ministry issues strategy for release of funds for development budget

    ISLAMABAD: The finance ministry on Wednesday issued strategy for release of funds for development budget during fiscal year 2020/2021.

    The undersigned is directed to refer to the subject mentioned above and to state that keeping in view the Public Finance Management Act (PFM) Act, 2019, the following strategy for release of funds relating to Development Budget for Financial Year 2020-21 shall be followed with immediate effect and until further orders:-

    a) Funds for Development Budget shall be released by Finance Division at the level of 20 percent for the 1st Quarter, 30 percent each for 2nd and 3rd Quarter and 20 percent for 4th Quarter.

    b) Ministry of Planning, Development and Special Initiative s shall devise project-wise/Division-wise strategy for release of funds for Public Sector Development Program (PSDP) within the appropriations approved by the National Assembly and included in the Schedule of Authorized Expenditure in terms of Article 83 of the Constitution.

    c) All payments shall be made through the pre-audit system of the Accountant General Pakistan Revenue (AGPR)/ Military Accountant General (MAG)/ Accounting Offices/ Sub-Offices, or through Assignment Account procedure issued by the Finance Division. No direct payment through the State Bank of Pakistan shall be made, except with the prior approval of the Finance Secretary.

    d) No authority shall incur or commit any expenditure from the “Federal Consolidated Fund” until the same has been sanctioned by the National Assembly and the expenditure has been provided for the financial year through (a) schedule of authorized of expenditure in terms of Article 83 of the Constitution, or (b) supplementary grant or technical supplementary grant as per Article 84 of the Constitution has been approved by the Federal Government, or (c) re-appropriation as per Sections 2(u) and 11 of the Public Finance Management Act, 2019.

    e) There shall be no requirement of ways and means clearance from Budget Wing and endorsement of sanction letters by Expenditure Wing, Finance Division for the fund releases for PSDP approved projects.

    f) All the sanctions for expenditure (in all forms) shall be issued and entered into SAP system by the Principle Accounting Officers (PAOs) before making payment by the Accounting Offices.

    g) AGPR and other Accounting Offices shall not enter the sanction letters issued by the PAO into the SAP system and shall process the payments on verification of budget, fund release and sanction letter.

    h) The provisions of Public Finance Management Act, 2019 shall be strictly adhered to by all the PAOs and the Accounting Offices.

    i) The instructions with regard to all forms of supplementary grants shall be issued by the Budget Wing, Finance Division, separately.

    j) The Development Wing of Finance Division shall coordinate and oversee the matters relating to release of funds for development of budget and other ancillary matters.

  • Commissioner IR empowered to amend assessment without definite information

    Commissioner IR empowered to amend assessment without definite information

    KARACHI: Commissioners of Inland Revenue have been empowered to amend assessment on the basis of best judgment and make dis-allowances without specific supporting evidence.

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  • Cash withdrawal should be exempted from withholding tax; Senate recommends key changes in Finance Bill 2020

    Cash withdrawal should be exempted from withholding tax; Senate recommends key changes in Finance Bill 2020

    ISLAMABAD: The Senate of Pakistan has recommended the government to abolish withholding tax on cash transactions from banks. In its key tax recommendations for finalizing budget 2020/2021, the Senate recommended that the government should abolish all kinds of withholding tax chargeable on cash transactions from banks.

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  • Senate advises salary increase by 10 percent

    Senate advises salary increase by 10 percent

    ISLAMABAD: The Senate of Pakistan has recommended increase in salary of government employees by at least 10 percent for fiscal year starting July 01, 2020.

    As per the general consensus recommendations of the upper house after the debate on budget 2020/2021, it is recommended that salary of government employees should be enhanced at least 10 percent.

    The upper house further recommended that the federal government should double the budget for education and health sectors.

    It is recommended that all important debt agreements must be placed before the parliament for scrutiny immediately.

    The budget allocation for ministry of national health services, regulations and coordination must be enhanced to a minimum five percent as per WHO recommendations.

    The 11 percent cut imposed on the share of the provinces in violation of National Finance Commission (NFC) Award must be revised immediately.

    The Senate of Pakistan recommended to the National Assembly that the allocation for Ministry of Education must be increased by 20 percent.

    It is recommended that salaries of the medical and para-medical staff working in ICT should be enhanced reasonably.

    The Senate recommended that the government should allocate more funds for management of rain water reservoirs. A special fund should also be allocated for construction of new small/mini dams.

    Budgetary allocation of Higher Education Commission (HEC) should be enhanced to Rs100 billion.

    The upper house recommended that the government should allocate funds for improvement in the aviation sector and to upgrade airports all over the country.

    The government should expedite the process of loss making projects in a transparent manner.

    The government should raise the amount of funds allotted for locust control in 2020/2021, from Rs4 billion to Rs8 billion keeping in view of the losses suffered by small farmers in locusts affected areas.

    It is recommended to raise at least 50 percent in the corona stimulus package for fertilizer subsidy, loan remission and other relief to the farmers, keeping in view of covid-19 situation and food insecurity on account of locusts attacks.

  • Senate recommends tobacco must be treated as crop, exempted from duty/taxes

    Senate recommends tobacco must be treated as crop, exempted from duty/taxes

    ISLAMABAD: The Senate of Pakistan has recommended a significant policy shift, advocating for tobacco to be treated as a crop and exempted from duties and taxes. This recommendation was made in the context of the Finance Bill 2020, reflecting the upper house’s stance on the agricultural status of tobacco.

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  • Tax collection target of Rs4.96 trillion for 2020/2021 achievable

    Tax collection target of Rs4.96 trillion for 2020/2021 achievable

    ISLAMABAD: Hammad Azhar, Minister for Industries and Production, has said that the tax collection target of Rs4.96 trillion assigned to Federal Board of Revenue (FBR) during next fiscal year is achievable.

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  • Banks to provide information of all recipients of profit on debt

    Banks to provide information of all recipients of profit on debt

    In a decisive move to bolster transparency in financial transactions, the Federal Board of Revenue (FBR) is set to require all banks to provide detailed information on individuals receiving profit on debt, effective from July 1, 2020.

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  • Tax deduction allowed on salary up to Rs25,000 paid in cash

    Tax deduction allowed on salary up to Rs25,000 paid in cash

    KARACHI: The Finance Bill 2020 has proposed major changes related to tax deduction in order to provide relief to business community. Under the proposed amendments the threshold amount has been increased up to Rs25,000 for tax deduction in case salary is paid.

    According to interpretation of the Finance Bill 2020 by BDO Pakistan, the Finance Bill proposed amendments to Section 21 of the Income Tax Ordinance, 2001.

    (l) The Bill seeks to enhance threshold of deduction for cash payment against business income under single account head from Rupees fifty thousand to Rupees two hundred and fifty thousand per annum.

    This proposal seeks to relieve businesses from making transactions through banking channel, as it is difficult for business to make every transaction through banking channel.

    Further The Bill seeks to increase the threshold of expenditure liable to be disallowed as a business expense if the same is not made through a crossed banking instrument/ online transfer of payment from Rs.10,000/- to Rs.25,000/ per transaction.

    Furthermore, The Bill seeks to enhance threshold from Rs.15,000/- to Rs.25,000/- as allowable deduction against business income if the salary is paid in cash.

    (p) & (q) The Bill seeks to add two new clauses to regulate limit of expenditure on account of utility bill and sales made to persons required to be registered but not registered under the Sales Tax Act, 1990 as an admissible deduction against business income where sales equal to or exceed Rs. 100 million per person. However, the disallowance of expenditure shall not exceed 20 percent of total deduction claimed.

  • Senate committee rejects taxpayers profiling, real-time access to information

    Senate committee rejects taxpayers profiling, real-time access to information

    ISLAMABAD: The Standing Committee on Finance, Revenue and Economic Affairs, in a meeting, has rejected new clauses of taxpayers profiling and real-time access to information.

    The committee strongly rejected the amendments to the taxpayers profile, appeal to appellate tribunal, offences and penalties and power to enter and search premises.

    Clauses related to real time access to Information and databases have been disapproved as well, said a statement.

    The standing committee meeting was held last week took up the Finance Bill 2020, containing the Annual Budget statement presented in the House on 12 June, 2020. Review of the Income Tax Ordinance, 2001 and Federal, Excise Provisions of Finance Bill, 2020 was completed.

    Amendments recommended by the Committee in the Public Finance Management Act 2019 were carried out and shared with the Committee.

    Chaired by Senator Farooq Hamid Naek, the meeting was attended by Senator Mohsin Aziz, Senator Zeeshan Khanzada, Senator Musadik Masood Malik, Senator Mian Muhammad Ateeq Sheikh, Senator Senator Talha Mehmood, Senator Ayesha Raza Farooq, and senior officers from the Ministry for Finance, Revenue and Economic Affairs, Ministry of Commerce and Federal Board Revenue.

    The Committee deliberated over Restriction on deduction of profit on debt payable to associated enterprises. Agreements for the avoidance of double taxation and prevention of fiscal evasion were discussed as well.

    Special concessions have been awarded to items that are essential during COVID 19 Pandemic.

    The Committee appreciated the measures taken by the FBR to deal with vast consequences of the Pandemic.  Omission of collection of advance tax from dealers, commission agents and arhatis etc., by market committees was welcomed.

    This is an important measure to promote agriculture in the country.

    Advance tax on education related expenses has been omitted as well.

    In an attempt to discourage the use of caffeinated drinks FED has been increased from 13 percent to 25 percent.

    Imported cigarettes, cheroots, cigarillos, cigars of tobacco and tobacco substitutes have been subjected to FED at 100 percent.

  • Amendments to taxability on payments for goods, services and contracts

    Amendments to taxability on payments for goods, services and contracts

    KARACHI: The Finance Bill 2020 has proposed changes to taxability on payments made for goods, services and contracts.

    According to explanation to amendments made to Section 153 of Income Tax Ordinance, 2001 through Finance Bill 2020 by BDO Pakistan Audit Consultancy and Tax Advisory Firm:

    (1a): The bill seeks to include toll manufacturing to be treated as sale of good for the purpose of withholding under this subsection. This inclusion clarifies the taxability of this segment and it will be minimum tax.

    (3): The bill seeks to treat taxes withheld at source as minimum tax on payment of goods, services and execution of contracts.

    (4): The tax deducted at source is adjustable for the Company being manufacturer and the Public Listed Company registered on stock exchange. This inclusion will result in expansion of tax collection by the board.

    The Bill seeks that the Commissioner shall respond to application for the issuance of exemption certificate related to withholding of taxes against goods, services and execution of contracts to facilitate the public listed companies registered in stock exchange, within fifteen days.

    Where not responded, the IRIS may issue exemption certificate provided that the advance tax under section 147 was paid by the taxpayer.

    The Commissioner retains the power to revoke the automatically issued certificate by IRIS on the basis of reasons to be recorded in writing after providing an opportunity of being heard.

    (7) The Bill has sought following amendments in the requirement of the prescribed person defined as withholding agent.

    Existing Description:

    Individuals and association of person having turnover of fifty million rupees

    Proposed Description:

    Individuals and association of person having turnover of one hundred million rupees. Persons registered under Sales Tax Act, 1990 only are now required to meet turnover of one hundred million rupees or more in any preceding tax years to qualify as withholding agent.