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Tag: budget proposals

  • KCCI proposes single digit sales tax rate

    KCCI proposes single digit sales tax rate

    KARACHI: Business community has recommended to bring the sales tax rate to a single digit in order to incentivize documentation and improve compliance.

    Karachi Chamber of Commerce and Industry (KCCI) in its proposals for budget 2021/2022 said that the rate of sales tax at 17 percent in Pakistan is among the highest in the region.

    “Realistically such high rate of Sales Tax is in fact a disincentive to documentation and compliance.”

    Mostly the indirect taxes at such high rate at source encourage smuggling, evasion, under-invoicing and mis-declaration. It has been a disincentive to documentation of supply chain and has only burdened a narrow base of registered manufacturers, importers and traders.

    The chamber proposed that the rate of sale tax should be reduced to a single digit on all sectors to reduce cost of inputs and provide support to reduce prices of consumer goods as well as the cost of exports.

    Giving rationale, it said that industry / economy will boost up, raise in the tax base, promote the documented & registered economy, and will generate revenue with growth.

    Smuggling, under-invoicing and mis-declaration will be curtailed. Fake and Flying invoices eliminated.

  • FBR urged to withdraw CNIC condition under sales tax law

    FBR urged to withdraw CNIC condition under sales tax law

    KARACHI: Federal Board of Revenue (FBR) has been urged to withdraw the mandatory requirement of Computerized National Identity Card (CNIC) on buying and selling under Sales Tax Act, 1990 till the time a sufficient number gets register for sales tax.

    Karachi Chamber of Commerce and Industry (KCCI) has highlighted the issue as by amendment to Section 8 (Sub-Sec.1, Clause M) of Sales Tax Act, and addition of 10th Schedule, it is mandatory to provide CNIC number of Unregistered person in the invoice. Similar statute has been added U/S.19A of Federal Excise Act, Sec.216A to ITO and Sec.156A of Customs Act.

    Moreover 3 percent further tax is also charged on sales to unregistered buyers even if the CNIC number is provided, which is totally unjust and tantamount to penalizing the registered persons who have to bear the burden of 3 percent further tax.

    The chamber said that rather than generating more revenue, this provision has resulted in proliferation of undocumented cash transactions.

    With hardly 45000 registered entities in Sales Tax Regime, it is very hard to find a registered buyer. This has affected the entire supply chain including manufacturers, importers and traders in Documented Sector and has led to greater advantage for smugglers and undocumented sectors as they do not have to face any such condition. Many registered person are now forced to issue flying invoices to registered persons to overcome CNIC condition and avoid 3 percent Further Tax.

    The chamber recommended that requirement of CNIC should not be mandatory till the time that number of registered persons in Sales Tax regime has substantially increased.

    Providing CNIC number should be optional and may be treated at par with STRN if provided in the Sales Tax Return.

    Further Tax on supplies to unregistered buyer should not be charged if CNIC number is provided in Sales Tax Return.

    In case CNIC number of unregistered buyer of Raw Materials is not provided, VAT may be charged at 1.7 percent on sellers of Raw Material.

    Giving rationale, the chamber said that it will discourage cash economy and encourage documentation by placing the trust in registered persons.

    Discourage Fake and Flying invoices which are issued to avoid 3 percent further tax.

    Enhance business transactions through banking channels and promote growth.

  • FBR invites sales tax proposals for budget 2021/2022

    FBR invites sales tax proposals for budget 2021/2022

    ISLAMABAD: Federal Board of Revenue (FBR) on Friday invited sales tax proposals for the federal budget 2021/2022 and directed the stakeholders to submit their suggestions by March 10, 2021.

    In a letter sent to chambers, association and other stakeholders, the FBR advised that the proposals should focus on broadening of the tax base and increase in revenue.

    The businessmen have been advised to give proposals to amend in following laws/rules:

    Sales Tax Act, 1990

    Federal Excise Act, 2005

    Sales Tax Rules, 2006

    Federal Excise Rules, 20052

    ICT (Sales Tax on Services) Ordinance, 2001.

    The FBR said that amendments should be suggested with a view to achieve simplification, remove difficulties and anomalies, and to abolish any outdated/obsolete provisions.

    “FBR would welcome proposals for eliminating tax fraud, fake and flying invoices, plugging loopholes if any, facilitating genuine taxpayers and making the procedures transparent,” it added.

    The proposals should be made keeping in view the consequences for the other related trade groups which might be adversely affected by the proposed measure.

  • SRB starts preparation for provincial budget 2021/2022; invites proposals

    SRB starts preparation for provincial budget 2021/2022; invites proposals

    KARACHI: Sindh Revenue Board (SRB) has started preparation for the provincial budget 2021/2022 and in this regard asked all the association and chambers and other stakeholders to submit their tax proposals by February 15, 2021.

    In a communication sent to all chambers, associations, tax bars, Institute of Chartered Accountants of Pakistan (ICAP), Institute of Cost and Management Accountants of Pakistan (ICMAP) and other stakeholders to submit their proposals in relation to the Sindh Sales Tax on Services Act, 2011 and the rules and notifications issued thereunder.

    The SRB said that it was in the process of formulating budgetary measures for Sindh Budget 2021/2022 in relation to taxation and procedural provisions of Sindh Sales Tax on Services Act, 2011, the Sindh Sales Tax on Services Rules, 2011, the Sindh Sales Tax Special Procedure (Withholding) Rules, 2014, the Sindh Sales Tax Special Procedure (Transportation or carriage of Petroleum Oil through Oil Tankers) Rules, 2018, and the Sindh Sales Tax Special Procedure (Services provided or rendered by cab aggregator and the services provided or rendered by owners or drivers of the motor vehicles using the cab aggregators services) Rules, 2019 and the various notifications issued under the said Act, 2011.

    The SRB further said it has been policy of the provincial revenue board to consult all chambers, associations, groups, stakeholders and taxpayers before finalizing the budget proposals.

    “With this end in view, the SRB requests all persons (including the chambers of commerce and industry, business councils, trade associations, tax bars, Institute of Chartered Accountants, Institute of Cost and Management Accountants, taxpayers, etc.) to send their written proposals in the prescribed format so as to reach latest by Monday, February 15, 2021.

    The SRB provided a format for proposals which included: name of the Act/Rules/Notification proposed to be amended; Section No., Schedule No., Tariff Heading No., Rule No., Para No., involved; existing provisions/rates of tax; proposed provisions/rates of tax; reasons and rationale for the proposal; revenue effect etc.

  • FBR invites customs proposals for budget 2021/2022

    FBR invites customs proposals for budget 2021/2022

    The Federal Board of Revenue (FBR) has opened the floor for customs duty proposals as part of the preparations for the federal budget for the fiscal year 2021/2022.

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  • FBR invites income tax proposals for budget 2021/2022

    FBR invites income tax proposals for budget 2021/2022

    ISLAMABAD: Federal Board of Revenue (FBR) on Wednesday invited income tax proposals for budget 2021/2022 and asked stakeholders to submit the same by February 15, 2021.

    The FBR asked the tax offices, including Large Taxpayers Offices (LTOs), Medium Tax Offices (MTOs), Corporate Tax Offices (CTOs) and Regional Tax Offices (RTOs), and trade and industries that the proposals should focus on broadening the tax base for a wide participation in revenue generation efforts.

    The FBR advised that suggestions should in the following policy areas:

    Broadening of tax base for a wider participation in revenue generation efforts;

    Taxation of real income on progressive basis;

    Phasing out of tax concessions and exemptions;

    Removal of tax distortions and anomalies;

    Facilitation of taxpayers and ease of doing business;

    Promoting equity in taxation by introducing measures where incidence of tax is higher on affluent classes.

    The stakeholders have been asked to provide proposals in a prescribed formation that should include relevant sections/clauses or rules where amendment is sought. The proposals related to any section of Income Tax Ordinance, 2001 or any rule to Income Tax Rules, 2002 should be presented along with rationale and revenue impact.

  • FBR suggested to reduce customs duty to 5 percent on steel products

    FBR suggested to reduce customs duty to 5 percent on steel products

    The Karachi Chamber of Commerce and Industry (KCCI) has proposed a significant reduction in customs duty on steel products in its budget proposals for 2020/2021.

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  • Tax officials’ power to select income tax return for audit should be withdrawn

    Tax officials’ power to select income tax return for audit should be withdrawn

    Tax practitioners have called for a significant reform in the income tax audit process, urging that the Federal Board of Revenue (FBR) alone should have the authority to select income tax returns for audit, withdrawing this power from the commissioners.

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  • Online verification of tax withheld should be available

    Online verification of tax withheld should be available

    KARACHI: Tax practitioners have urged the Federal Board of Revenue (FBR) to ensure verification of tax withheld on the IRIS portal in order to facilitate taxpayers in making adjustment or claiming refunds.

    Pakistan Tax Bar Association (PTBA) submitted proposals for budget 2020/2021 saying that withholding tax regime should be simplified by reducing the categories of withholding taxes and the rates thereon.

    It said that the withholding agent should be facilitated through robust IRIS; wherein the visibility of tax deduction should be provided to the taxpayer instead of relying on the withholding agents’ certificates.

    The rates of tax for all withholding taxes under one provision of law should be minimized and the differentiation should be on the basis of Active and Non-Active Taxpayer only.

    Withholding agents should be given incentive in the form of tax credit for facilitating the Government withholding/collecting taxes and in identifying potential tax evaders.

    The withholding tax challans should be made available on the IRIS to every registered person, instead of collecting the same from registered person(s) deducting and depositing the tax.

    The concept of Minimum Tax should be done away with for all the corporate Sector companies, who file their tax returns and pay tax on actual income regular basis.

    The government departments including defence should pay the tax withheld on FBR IRIS instead of book adjustment.

    Sales tax (including provincial sales tax on services) and other government levies should be excluded for the purpose of withholding collection of tax.

    A ‘Small Company’ including company having similar business and turnover should be brought at par with an Individual or AOP having turnover limit up to Rs 50 million.

  • CNIC should be made mandatory for purchase of moveable, immovable properties

    CNIC should be made mandatory for purchase of moveable, immovable properties

    KARACHI: Federal Board of Revenue (FBR) has been proposed to make computerized national identity card (CNIC) mandatory for purchase of movable and immovable properties for bringing potential taxpayers into the tax net.

    A presentation made on behalf of Pakistan Tax Bar Association (PTBA) for submission of proposals for budget 2020/2021, it is highlighted that Pakistan has a lower tax-to-GDP ratio as compared to regional and other countries, which is causing serious disparity between various sectors of the Economy.

    All the segments of the society are not contributing their due share of tax on their income in accordance with their contribution in the GDP.

    The number of Active Taxpayers are substantially low, as such broadening of tax base at fast pace is the needed.

    For broadening the tax base and to improve the tax to GDP ratio following recommendations are made:-

    FBR should extract information from withholding statements, details of government supplies and maintain a database of above third party information. Conduct the data mining and data analysis to generate complete profile for cross verification of data of the existing taxpayers as well as discovery of new taxpayers;

    CNIC/NICOP/Passport should be made mandatory for purchase of any moveable or immovable properties, assets and major expenditure;

    Relevant organizations, departments, institutions including utility companies, banks, NADRA and information obtained related to offshore transactions should submit prescribed information on quarterly basis to the FBR.

    Exemption under Section 111(4) of the Income Tax Ordinance, 2001 may be allowed only to the foreign remittance brought into Pakistan through proper banking channel for investment for Balancing, Modernization and Replacement (BMR) of existing industrial undertakings or for making fresh investment in industrial undertakings;

    Effective enforcement should be ensured for compliance of filing of Return of Income under section 114 of the Ordinance, 2001;

    Atleast for five years jurisdiction (other than LTUs, CRTOs) should be made and fixed on territorial basis to avoid slippages of potential taxpayers.