The Federal Board of Revenue (FBR) in Pakistan issued a sales tax notification, SRO 1501(I)/2021, on Monday, formalizing the government’s decision to exempt the sales tax on the import of most Afghan fruits.
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FBR allows tax exemption on import of Chinese drones
The Federal Board of Revenue (FBR) has announced income tax exemption on the import of drones donated by the Chinese Ministry of Agriculture and Rural Affairs.
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Tax exemption allowed on import of 30 million face masks
In a proactive move to support the ongoing efforts in the fight against the COVID-19 pandemic, the Federal Board of Revenue (FBR) has granted a significant tax exemption on the import of 30 million face masks.
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FBR explains exemption withdrawal not new tax
ISLAMABAD: The Federal Board of Revenue (FBR) on Monday explained that withdrawal of exemption and concession does not mean imposition of new taxes.
Clarifying to a news report, the FBR said that withdrawal of exemption and reduced rates should not be confused with imposition of new taxes.
It is very clearly and candidly informed that the present budget proposals do not contain any new item for taxation of pensions or major components of salary as initially discussed.
Omission of Clause (39) of Part I of Second Schedule to the Income Tax Ordinance, 2001 is only of technical nature. This clause provided exemption to re-imbursement of expenditure incurred by employee on behalf of the employer organization.
This type of transaction cannot form part of the salary in any circumstances. The omission has been made only because there were some interpretations of the courts that were not in accordance with the actual purpose of this clause.
The clause has accordingly been omitted to avoid multiple interpretations or confusions. The figures of revenue generation of Rs.1.82 billion reported by the Express Tribune in this regard are absolutely unwarranted and misleading.
The clause has accordingly been omitted to avoid multiple interpretations or confusions. The figures of revenue generation of Rs.1.82 billion reported by the Express Tribune in this regard are absolutely unwarranted and misleading.
However, profit on debt or markup component on provident fund has been proposed to be taxed @ 10% as a separate block of income only if such markup exceeds Rs.500, 000 in a tax year.
FBR firmly believes that this change will not result in any significant burden on taxpayers.
Slight changes on account of traveling allowance of newspapers employees, free supply of food or other perquisites etc. and salary of seafarers that was wholly exempt have been proposed for rationalization of salary tax regime rather than as revenue generation measure.
Tax rate on capital market transactions has been lowered from 15% to 12.5% in order to encourage ordinary people to invest their savings in the stock market tradable securities.
This change will result in enhanced savings and investment in an activity that will lead to industrial expansion and economic growth.
Needless to highlight, an enhanced confidence in stock market ultimately translates into raising funds/money by initial public offerings (IPOs) by existing companies or new companies joining the field.
The incentive has been offered for promoting sustainable and inclusive economic growth.
Ministry of Finance and FBR are always open to positive critique for making changes if any required in the proposals, however, take a strong exception to undue, unwarranted and unjustified criticism.
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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.
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FBR notifies duty exemption on cotton yarn import
ISLAMABAD: Federal Board of Revenue (FBR) on Thursday notified exemption of customs duty on import of cotton yarn till June 30, 2021.
The FBR issues SRO 533(I)/2021 to comply with the decision of Economic Coordination Committee of the Cabinet (ECC) to exempt whole of customs duty on import of cotton and cotton yarn.
The ECC on April 14, 2021 approved the withdrawal of customs duty to ensure smooth supply of cotton and cotton yarns to the value-added industry, while bridging the gap between domestic production and overall demand for the inputs.
The FBR allowed duty exemption on cotton yarn on import of following categories:
— Cotton Yarn (other than sewing thread), containing 85 percent or more by weight of cotton, not put up for retail sale.
— Cotton Yarn (other than sewing thread), containing less than 85 percent by weight of cotton, not put up for retail sale.
— Cotton Yarn (other than sewing thread) put up for retail sale.
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Duty, tax exemption on tea export grossly misused: PTA
KARACHI: Pakistan Tea Association (PTA) on Saturday pointed out gross misuse of duty and tax exemption granted on tea re-export by importers of tea as raw material.
The office bearers of the association pointed out the SRO 450 which is meant for re export of tea after value addition, the importers who have exemption of this particular SRO, this is observed they are misusing this exemption and selling teas to various cities across country without any documents.
Though the teas imported meant for re-export, these teas are imported at zero rated duties and taxes ,this is noticed these teas are not even going to specific warehouses and cities, these malpractices causing huge loss to revenue and discouraging the importers who are paying full duties, they added.
PTA office bearers Muhammad Aman Paracha, Chairman and Zeeshan Maqsood, Sr. Vice Chairman and Convener, FPCCI Standing Committee on Tea Trade on the occasion expressed their views that tea is common men drink and shall be treated essential and common men drink rather than luxury, tea is the only traditional product being consumed by elite class & poor people.
Revised duties and taxes are suggested for the upcoming federal budget 2021/2022: “Custom Duty 5 percent, sales tax 7 percent, withholding tax 2 percent and additional customs duty at 0 percent.”
Chairman said that the tea is a raw imported from various countries blended and processed and available to the end users. Therefore, this shall be treated as raw material rather giving incentives to selected importers.
Besides, tea importers are also paying 30 percent value addition at port stage as a retail/end user tax on the basis of minimum retail price.
In light of above it is requested that fool proof system shall be adopted by the relevant authorities of Federal Board of Revenue (FBR) and shall be strictly monitored, whether teas are going to their respective registered cities/areas? And re exported as per directions in this specific SRO.
PTA representatives showed fear if the options/exemptions highlighted above will be continued than legitimate business will come to halt & everyone will try to get such exemptions, this could be serious threat to state revenue & revenue loss will start escalating.
Further few importers successfully obtained various tax exemptions for PATA/FATA & Azad Kashmir etc which is also being misused, this is observed that teas imported under said exemptions are also going to other cities rather than to specific areas, this must be monitored strictly as well.
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FBR exempts sales tax on local supply of imported sugar
ISLAMABAD: Federal Board of Revenue (FBR) on Monday exempted 17 percent sales tax on domestic sale of imported sugar.
The FBR issued SRO 1038(I)/2020 to comply with the government decision to allow tax free import of sugar in order to reduce the price of the commodity in the local market.
The Economic Coordination Committee (ECC) allowed the import of 300,000 metric tons of sugar by Trading Corporation of Pakistan (TCP) without imposition of sales tax at the import stage. The FBR issued SRO 751(I)/2020 dated August 20, 2020 to comply with the decision.
FBR sources said that although the commodity was allowed exemption from sales tax on import of sugar but there was an ambiguity that subsequent sale of such sugar remained subject to sales tax on supply to the domestic market.
To remove this ambiguity the FBR now issued the SRO 1038(I)/2020 dated October 12, 2020 and streamline the supply of sugar to the local market.
The FBR sources believed that this would help in reducing the prices in the local market. The price of sugar in the local market had gone up to above Rs100 per kilogram.
On the other hand, industry sources said that the decision to allow sales tax exemption on local supply of imported sugar would be discriminatory against local sugar manufacturers.
The local sugar mills are subject to 17 percent sales tax on a per kilo price fixed by the government.
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FBR grants tax exemption of Rs1.1 billion on gratuity payments
Islamabad – The Federal Board of Revenue (FBR) has granted a substantial exemption of Rs1.11 billion on gratuity payments during the tax year 2020.
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Teachers, researchers avail Rs2.42 billion income tax exemption
ISLAMABAD: Teachers and researchers have availed tax exemption to the tune of Rs2.42 billion on their income during Tax Year 2020, official sources said on Tuesday.
Under Clause 1(2) of Part 3 of the Second Schedule of Income Tax Ordinance, 2001, full time teachers or researchers are entitled for reduction in tax liability since 2006 and there is no sunset clause attached to this concession.
The FBR said that the tax payable by a full time teacher or a researcher, employed in a non profit education or research institution duly recognized by Higher Education Commission, a Board of Education or a University recognized by the Higher Education Commission, including government research institution, shall be reduced by an amount equal to 25 percent of tax payable on his income from salary.
Data of teachers is taken from Pakistan Bureau of Statistics (PBS) website, for the following categories of teachers: Arts/Science colleges, professional colleges, universities, secondary vocational institutions. Teachers in secondary schools have not been considered, being relatively less paid.
Latest available data is for year 2017. For 2018, an 8 percent multiplier on number of teachers is used keeping in view increase in number of teachers over past years.
Average annual salaries for different categories of teachers have been taken as following:
– Arts/Science College: Rs. 900,000
– Professional College: Rs. 1,200,000
– University: Rs. 2,400,000
– Secondary vocational institutions: Rs. 1,800,000
Separate data for researchers is not available, the FBR said.
The FBR said that approximate 133,255 teachers and researchers had availed the tax concession.