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Tag: budget 2021-2022

  • Penalty imposed for non-declaration of business bank account

    Penalty imposed for non-declaration of business bank account

    ISLAMABAD: The Federal Board of Revenue (FBR) has been authorized to impose penalty on taxpayers who fail to declare their bank accounts.

    According to budget 2021/2022 commentary issued by KPMG Taseer Hadi & Co. the Finance Bill 2021 proposed a new definition of “business bank account” to mean a bank account utilized by the taxpayer for business transaction declared to the Commissioner through original or modified registration form prescribed under section 181.

    The form under section 181is available on IRIS wherein the taxpayer is required to declare bank account which would be treated as business bank account.

    The Bill proposes to beef-up the documentation of taxpayer by prescribing specific penalty and prosecution provisions on non-declaration of bank account.

    Where any person fails to declare business bank account(s), in his registration application or fails to amend his registration profile to declare existing business bank account(s), such person shall pay a penalty of Rs. 10,000 for each day of default since the date of submission of application for registration or date of opening of undeclared business bank account whichever is later subject to minimum penalty of Rs.100,000 per undeclared bank account. This provision is proposed to be effective from 1st October 2021.

  • Sindh announces 20 percent increase in salary

    Sindh announces 20 percent increase in salary

    KARACHI: The Sindh government on Tuesday announced a 20 percent increase in basic salary of all government employees.

    Sindh Chief Minister Syed Murad Ali Shah while presenting the provincial budget 2021/2022, said that the output of the government is directly related to the performance of every individual employee.

    For next financial year 2021/2022, the government is proposing an increase on 20 percent in the basic salary of all employees.

    For the welfare of the labor class and in line with increase in pay of government employees, the minimum wage rate is also being increased from Rs.17,500 to Rs.25,000 per month

    In order to remove discrepancy and bridge the gap between gross salary and minimum wages i.e Rs.25,000, a Personal Allowance is proposed for employees of Government of Sindh in BPS-01 to BPS-05. The fixed rate of Personal Allowance will be as under

     BPS-01 Rs.1900/- per month

     BPS-02 Rs.1500/- per month

     BPS-03 Rs.900/- per month

     BPS-04 Rs.250/- per month

     BPS-05 Rs.250/- per month

    Moreover, 10 percent increase in pension is also proposed for next financial year 2021-22 for employees of Government of Sindh

  • Sindh presents Rs1.477 trillion budget for 2021/2022

    Sindh presents Rs1.477 trillion budget for 2021/2022

    KARACHI: Chief Minister Sindh Syed Murad Ali Shah on Tuesday presented provincial budget for fiscal year 2021/2022. The total outlay of the budget is Rs1.477 trillion with a deficit of Rs25.7 billion.

    The provincial government announced an increase of 20 percent in government employees and 10 percent increase in pension. Besides, minimum wage has been increased to Rs25,000 from Rs17,500.

    Murad Ali Shah said that the total budget outlay for financial year 2021-22 has been estimated at Rs.1.477 trillion, as against budget estimate of Rs.1.241 trillion for the outgoing financial year, showing overall increase of 19 percent.

    The current expenditure of the province is projected at Rs.1.14 trillion, which includes current revenue expenditure of Rs.1.089 trillion and current capital expenditure of Rs.59.49 billion.

    “This is 78 percent of total expenditure of the province and shows an increase of 14 percent over estimates of Rs.1 trillion for last year,” he said.

    It is important to highlight here that for the next financial year; the provincial government has tried to align development as well as non-development expenditure priorities in line with the post COVID-19 situation, he added.

    The chief minister said that the total receipts of province for Financial Year 2021-22 have been estimated at Rs.1.452 trillion as against budget estimate of Rs.1.22 trillion for CFY, showing overall increase of 19 percent.

    Receipts from Federal Government on account of revenue assignment, straight transfers and grants are estimated at Rs.869.68 billion, which constitute 72.5% of total receipts of the province.

    It is an increase of 12.6%, over estimates of Rs.760.3 billion last year. However, the budget estimates of straight transfers for next FY have decreased substantially by approximately 20.6% to Rs.49.5 billion from the budget estimates of Rs.62.34 billion of current financial year. Receipts of Federal PSDP are estimated at Rs.5.37 billion. Receipts on account of Foreign Project Assistance (FPA), budgetary support loans and grants are estimated at Rs.71 billion. Receipts from provincial own sources on account of tax and non-tax receipts are estimated at Rs.329.033 billion, which constitute 27.5% of total receipts. This is an increase of 4.8% over estimates of Rs.313.4 billion of CFY.

    The development expenditure of the province is estimated at Rs.329.032 billion, which include Rs.222.5 billion for Provincial Annual Development Plan (ADP) and Rs.30 billion for districts ADP, foreign project assistance of Rs.71.16 billion and Rs.5.4 billion from Federal PSDP Grant for schemes being executed by the government of Sindh.

    Murad Ali Shah said that in financial year 2021-22, around 1033 schemes have been identified for completion in first and second quarter and maximum resources will be provided for their timely completion.

    On-Going schemes with remaining throw-forward up to Rs.100 million have been fully funded for completion by June, 2022. On-Going Schemes where 70 percent expenditure is made have been fully funded for completion by June 2022.

    He said that the output of government is directly related to the performance of every individual employee. “All the employees of the provincial government have my gratitude,” he added.

    For next financial year we are proposing an increase on 20 percent in the basic salary of all employees. For the welfare of the labor class and in line with increase in pay of government employees, the minimum wage rate is also being increased from Rs.17,500 to Rs.25,000 per month

  • Punjab allows stamp duty incentive worth Rs40 billion to promote construction sector

    Punjab allows stamp duty incentive worth Rs40 billion to promote construction sector

    LAHORE: The Punjab government has granted an incentive in stamp duty worth Rs40 billion during fiscal year 2021/2022 to encourage new investment in construction sector.

    The provincial government announced incentives at the budget 2021/2022 that was presented on Monday.

    The provincial minister announced tax concessions worth Rs50 billion during the fiscal year starting from July 01, 2021.

    The minister said that an amount of Rs40 billion would be granted as tax incentive for construction sector during the next fiscal year. This concession would be available by maintaining stamp duty at one percent during the next fiscal year.

    The provincial government decided to continue reduced rate of sales tax on services from 16 percent to five percent during the next fiscal year. The reduced rate of sales tax would be available on services included small hotels, guest houses, marriage halls, lawns, caterers, IT services, tour operators, jims, property dealers, rent a car service, cable tv oprators, treatment of textile and leather, commission agent of commodity operation, auditing accounting and tax consultancy services, photography and parking services etc.

    In addition to mentioned above services, the provincial government decided to add more 10 services into reduced rate of tax regime. The government allowed reduced rate of sales tax on services from 16 percent to 5 percent to beauty parlor, fashion designers, home chefs, architects, laundries and drycleaners, supply of machinery, warehouse, dress designers and rental bulldozers etc.

    The government decided to reduced sales tax rate from 19 percent to 16 percent on call centers.

  • Punjab allocates Rs560 billion for annual development program

    Punjab allocates Rs560 billion for annual development program

    LAHORE:  The Punjab government has allocated Rs560 billion for Annual Development Plan (ADP) for fiscal year 2021/2022, which is 66 percent higher when compared with Rs337 billion of the outgoing fiscal year.

    The provincial government issued following details related to allocation for the development projects:

    Housing and Public Health Engineering

    • Waste water treatment plant at Babu Sabu Lahore – Rs35.1 billion
    • Provision of clean drinking water through Punjab Aab-e-Pak Authority to more than 70 million population in all districts of Punjab – Rs11.6 billion
    • Construction of flyovers and underpasses in Lahore – more than Rs10 billion

    Irrigation

    • Construction of Jalalpur Canal – Rs32.72 billion
    • Remodeling of SMB Link Canal & enhancing capacity of Mailsi Syphon – Rs 4.03 billion
    • Disaster & Climate Resilience project – Rs10.7 billion
    • Trimmu Brrage, Punjnad Headworks – Rs16.8 billion

    Social Welfare & Bait ul Maal

    • Panagahs at all divisional headquarters in Punjab – Rs793 million
    • Violence against women centers at DG Khan, Rawalpindi and Lahore – Rs425.5 million
    • Disabled person management information system – Rs196.4 million

    Public Private Partnership Projects

    • Lai Expressway, Rawalpindi to Islamabad – Rs55 billion
    • Okara – Satgara – Syedwala – Jaranwala – Chak Jhumra Expressway Road – Rs25.4 billion
    • Sialkot Ring Road – Rs15.9 billion
    • Installation of Water Meters in Lahore – Rs10.4 billion
    • Multan Vehari Road – Rs12.01 billion

    Forest

    • Ten billion tree Tsunami Program (Phase – I) – Rs13.1 billion
    • Establishment of Dargai Gill Gorest Park – Rs398 million
    • Development at Pabbi National park – Rs150 million

    Law & Order and Emergency Services

    • Prison Management Information System for all prisons – Rs290 million
    • Rescue 1122 Service in all Districts of Punjab – Rs683 million
    • Motorbike Ambulance Service in remaining 27 districts of Punjab – Rs984 million

    Transport

    • Procurement of 200 Eco friendly urban buses for major cities of Punjab – Rs3.4 billion
    • Construction of 200 bus stops/shelters including bus information system in Lahore – 498 million
    • Centralized Auomtaed Fare Collection and Bus Scheduling System – Rs312 million

    Energy

    • Renewable energy sector program – 12.86 billion
    • Establishment of Punjab Grid Company
    • Punjab Ujala Program for School Solarization – Rs1.53 billion
    • Solarization of 303 schools (for differently abled children) – Rs250 million

    Enivornment

    • Installation of air quality monitoring system across Punjab
    • Installation of water quality monitoring system across Punjab

    Agriculture & Food Security

    • Punjab irrigated agriculture productivity improvement – Rs41.7 billion
    • National program for improvement of watercourses phase – II- Rs18.33 billion
    • Agriculture Transformation plan – Rs51.9 billion]
    • Subsidy of Agriculture inputs – Rs4 billion
  • Punjab presents Rs2,653 billion outlay budget 2021/2022; salary and pension increased by 10 percent

    Punjab presents Rs2,653 billion outlay budget 2021/2022; salary and pension increased by 10 percent

    LAHORE: The Punjab government on Monday presented a total outlay of Rs2,653 billion provincial budget for fiscal year 2021/2022, which is 18 percent higher than the outgoing fiscal year.

    Punjab Finance Minister Makhdoom Hashim Jawan Bakht presented the budget in the provincial assembly. He announced an increase of 10 percent in salary and pension of all provincial government employees. Besides, the provincial government also announced a 25 percent increase as special allowance for those employees between grade – 1 to grade -19, who were never granted any type of allowance in the past.

    The Punjab government also announced to increase monthly minimum wage from Rs17,500 to Rs20,000.

    Giving details of the budget 2021/2022, the provincial minister said that the province would get Rs1,684 billion under National Finance Commission (NFC) Award, which would be 18 percent from the outgoing fiscal year.

    He said that the provincial revenues have been estimated at Rs405 billion for the next fiscal year, which is 28 percent higher than the outgoing fiscal year.

    The Punjab government allocated Rs560 billion for annual development plan (ADP) for next fiscal year, which is 66 percent higher than the outgoing fiscal year.

    The provincial minister announced tax concessions worth Rs50 billion during the fiscal year starting from July 01, 2021.

    The minister said that an amount of Rs40 billion would be granted as tax incentive for construction sector during the next fiscal year. This concession would be available by maintaining stamp duty at one percent during the next fiscal year.

    The provincial government decided to continue reduced rate of sales tax on services from 16 percent to five percent during the next fiscal year. The reduced rate of sales tax would be available on services included small hotels, guest houses, marriage halls, lawns, caterers, IT services, tour operators, jims, property dealers, rent a car service, cable tv oprators, treatment of textile and leather, commission agent of commodity operation, auditing accounting and tax consultancy services, photography and parking services etc.

    In addition to mentioned above services, the provincial government decided to add more 10 services into reduced rate of tax regime. The government allowed reduced rate of sales tax on services from 16 percent to 5 percent to beauty parlor, fashion designers, home chefs, architects, laundries and drycleaners, supply of machinery, warehouse, dress designers and rental bulldozers etc.

    The government decided to reduced sales tax rate from 19 percent to 16 percent on call centers.

  • Bill withdraws income tax exemptions, concessions under Second Schedule

    Bill withdraws income tax exemptions, concessions under Second Schedule

    ISLAMABAD: A bunch of income tax exemptions and concessions has been proposed through Finance Bill, 2021, which will be implemented from July 01, 2021.

    (more…)
  • Tax officers empowered to arrest persons for concealing income

    Tax officers empowered to arrest persons for concealing income

    ISLAMABAD: The Federal Board of Revenue (FBR) has introduced a significant amendment to the Income Tax Ordinance, 2001, through the Finance Bill, 2021, empowering tax officers to arrest individuals in cases of income concealment.

    (more…)
  • Capital gain on immovable properties above Rs5 million to be taxed at normal rate

    Capital gain on immovable properties above Rs5 million to be taxed at normal rate

    KARACHI: The government has taken taxation measures on capital gains from disposal of immovable properties and introduced normal tax regime on gains on immovable properties above Rs5 million.

    According to commentary on budget 2021/2022 and Finance Bill, 2021 released by PwC A. F. Ferguson & Co. Chartered Accountants, under the existing provisions, gains on disposal of immovable properties are taxed at special (reduced) slab rates along with reduction in gain based on holding period.

    Gains on disposal of immovable properties held for more than four years are effectively non-taxable.

    The proposed amendment at the outset seeks to clarify that this regime for immovable properties is not applicable on persons habitually engaged in transaction of sale and purchase of properties or where sale is adventure in the nature of trade or business.

    Income of such persons would be taxable under the head of business with consequential effect that no benefit of holding period and special rate of tax would apply.

    Furthermore, it is proposed that gains up to Rs 5 million will be taxed at a special rate of 5percent as against the existing rate of 2.5 percent.

    The gains exceeding Rs 5 million will be taxed at normal rate though the benefit of holding period in computation would continue to apply as per existing provisions given below:

    1. Where the holding period of an immovable property does not exceed one year: the calculation for tax shall be

    A = Consideration minus cost

    2. Where the holding period of an immovable property exceeds one year but does not exceed two years: the calculation shall be A x 3/4

    3. Where the holding period of an immovable property exceeds two years but does not exceed three years: the calculation shall be A x 1/2

    4. Where the holding period of an immovable property exceeds three years but does not exceed four years: the calculation shall be A x 1/4

    5. Where the holding period of an immovable property exceeds four years: the calculation shall be Zero

    In case of disposal of a depreciable immovable property at a consideration higher than its cost, the provisions of law deem consideration as cost of such property, thus, resulting into recoupment of tax deprecation only.

    The rationale for such provision was that the Federal Government did not have powers under the Constitution of Pakistan to tax gain on disposal of an immovable property.

    However, the 18th amendment to the Constitution was construed by the Federal Government to have given them jurisdiction to tax such gains.

    Consequently, specific provisions were introduced for taxation of gains on immovable properties, but no such amendment was made for depreciable immovable assets.

    An amendment is now proposed to tax the aforesaid ‘excess’ as capital gains under section 37. As a result, in case of depreciable immovable assets, the excess should be dealt in the same manner as applicable for other immovable properties particularly with the concept of holding period.

    The placement and language of the proposed amendment contradicts section 22(8) thus resulting in anomalous situation, which should be reconsidered.

  • Uniform taxation for property income introduced

    Uniform taxation for property income introduced

    KARACHI: A major shift in taxation on property income has been introduced through Finance Bill, 2021 and all taxpayers shall be subject to uniform taxation on net-income basis at the applicable rates.

    According to commentary on budget 2021/2022 and Finance Bill, 2021, by PwC A. F. Ferguson & Co. Chartered Accountants, at present, Individuals and Association of Persons (AOPs) can opt for their property income to be chargeable to tax on gross rent without any deductions, at specified (lower) tax rates.

    Companies’ property income, however, is subject to tax after certain admissible deductions at applicable corporate rate.

    Through the proposed amendments, property income for all taxpayers shall henceforth be subject to uniform taxation on net-income basis at the applicable rates.

    Withholding tax rates applicable to the property income of Individuals and AOPs are also proposed to be revised as under:

    1.  Where the gross amount of rent does not exceed Rs300,000: No tax shall be levied

    2. Where the gross amount of rent exceeds Rs. 300,000 but does not exceed Rs. 600,000: the tax shall be 5 per cent of the gross amount exceeding Rs. 300,000

    3. Where the gross amount of rent exceeds Rs. 600,000 but does not exceed Rs. 2,000,000: the tax shall be Rs15,000 plus 10 per cent of the gross amount exceeding Rs. 600,000

    4. Where the gross amount of rent exceeds Rs. 2,000,000: the tax shall be Rs155,000 plus 25 per cent of the gross amount exceeding Rs. 2,000,000.

    Further, the adjustment of property income for a tax year against loss under any other head of income is proposed to be reinstated.

    The adjustment of such losses could give rise to a situation where effectively no tax is payable on property income.

    In order to give full effect to this amendment, the Government may, therefore, consider introducing enabling provision for issuance of exemption / reduced rate certificates in eligible cases.