The Federal Board of Revenue (FBR) has granted income tax exemptions totaling Rs27 billion during the tax year 2020 to power generation companies operating in Pakistan. These exemptions were extended to 73 companies, underlining the government’s efforts to support the energy sector.
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FPCCI expresses concerns over grant of huge exemptions to FTAs, PTAs
KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has expressed concerns over huge amount of exemptions, concessions granted under Free Trade Agreements (FTAs) and Preferential Trade Agreements (PTA).
The apex trade body urged the government to redesign the FTAs and PTAs with a view to promote the domestic industry of Pakistan, as the government has suffered revenue loss of over Rs45 billion during FY 2019-20 due to these agreements signed with different countries.
Moreover, the general exemption on imports from China under this agreement has caused revenue loss of Rs 26.86 billion during this period.
FPCCI President Mian Anjum Nisar suggested that Pakistan should have entered into Free Trade Agreements and Preferential Trade Agreements with only those countries where it has a clear and mutual competitive advantage.
He recommended the government to include maximum finished goods which can be exported to China on tariff line offered by China to ASEAN countries.
He demanded that the concerned stakeholders should also be taken on board while framing and finalizing the recommendations in this regard.
Referring to the data of the Federal Board of Revenue, he stated that the government has suffered revenue loss of Rs 45.020 billion during current fiscal year due to the FTAs and PTAs signed with different countries.
According to the reports, figures reveal that the general exemption on import from SAARC countries caused revenue loss of Rs 231 million during this period.
The general exemption on import from SAARC countries under SAFTA Agreement has revenue impact of Rs1.602 billion.
Similarly, the general exemption on import from SAARC countries under SAFTA Agreement caused revenue loss of Rs 15 million.
The general exemption on import from China under the FTA has revenue impact of Rs6.911 billion during 2019-20.
The general exemption on import from Malaysia under PTA caused revenue loss of Rs 2.517 billion during this period. Under the exemption on import from Indonesia under Pak-Indonesia PTA caused revenue loss of Rs3.65 billion.
Mian Anjum Nisar suggested the government to devise a strategy in the light of impact on domestic industry, convincing other countries to liberalize their import policy by reducing tariff lines and easing sensitive list for Pakistan merchandise.
He said that during the first phase of FTA with China, Pakistan’s trade deficit had improved from 2.9 billion dollar to over 12 billion dollars over the last decade.
He suggested that Pakistan should have entered into Free Trade Agreements and Preferential Trade Agreements with only those countries where it has a clear and mutual competitive advantage.
FPCCI President said that local cost of production is already high on account of high tariff of electricity and gas, coupled with import duties on inputs, making the local production uncompetitive.
He said that Free Trade Agreements signed with different countries without taking the real stakeholders onboard, are damaging the local industry, as imports of several products under FTA with these countries are subject to zero percent import duty.
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FBR grants Rs45 billion customs duty exemption under free trade agreements
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FBR exempts customs duty on oxygen gas, cylinder import
In response to the ongoing COVID-19 pandemic, the Federal Board of Revenue (FBR) announced on Wednesday an exemption from customs duty on the import of oxygen gas and oxygen gas cylinders. This measure aims to ensure the availability of these essential supplies as the country battles the spread of the virus.
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FBR grants Rs30 billion as tax concession to new business entities
ISLAMABAD: Federal Board of Revenue (FBR) has granted Rs30 billion as initial allowance to new business entities during fiscal year 2019/2020.
The concession of allowance has been granted under Section 23 of Income Tax Ordinance, 2001.
As per Section 23 the allowance has been granted as:
Section 23. Initial allowance.—
Sub-Section (1): A person who places an eligible depreciable asset into service in Pakistan for the first time in a tax year shall be allowed a deduction (hereinafter referred to as an “initial allowance”) computed in accordance with sub-section (2), provided the asset is used by the person for the purposes of his business for the first time or the tax year in which commercial production is commenced, whichever is later.
Sub-Section (2): The amount of the initial allowance of a person shall be computed by applying the rate specified in Part II of the Third Schedule against the cost of the asset.
[The rate of initial allowance under section 23 shall be 25 percent for plant and machinery.]
Sub-Section (3): The rules in section 76 shall apply in determining the cost of an eligible depreciable asset for the purposes of this section.
Sub-Section (4): A deduction allowed under this section to a leasing company or an investment bank or a modaraba or a scheduled bank or a development finance institution in respect of assets owned by the leasing company or the investment bank or the modaraba or the scheduled bank or the development finance institution and leased to another person shall be deducted only against the leased rental income derived in respect of such assets.
(5) In this section, “eligible depreciable asset” means a depreciable asset other than —
(a) any road transport vehicle unless the vehicle is plying for hire;
(b) any furniture, including fittings;
(c) any plant or machinery that has been used previously in Pakistan; or
(d) any plant or machinery in relation to which a deduction has been allowed under another section of this Ordinance for the entire cost of the asset in the tax year in which the asset is acquired.
The FBR granted a sum of Rs36.43 billion as allowances including the initial allowance during fiscal year 2019/2020.
Under Section 23A an amount of Rs335 million has been granted as first year allowance under the head of industrial undertaking set up in specified rural and under developed areas or engaged in the manufacturing of cellular mobile phones.
An amount of Rs477 million has been granted concessions under Section 60 of the Income Tax Ordinance, 2001 for persons paying Zakat.
The FBR granted concession of Rs2.45 billion under Section 60A for persons paying Workers’ Welfare Fund. Another amount of Rs2.72 billion has been granted as allowance under Section 62B for persons paying workers’ participation fund.
An amount of Rs285 million has been granted as allowance under Section 60C for individuals paying profit or share in rent and share in appreciation for value of house on loan by banks etc.
The FBR granted Rs154 million as deductible allowance for education expenses under Section 60D.
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FBR grants Rs45 billion customs duty exemption under free trade agreements
In a significant move to bolster trade and economic relationships, the Federal Board of Revenue (FBR) has granted Rs45 billion in customs duty exemptions and concessions on imports under various Free Trade Agreements (FTAs) and Preferential Trade Agreements (PTAs) for the fiscal year 2019/2020.
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Sindh exempts sales tax on life insurance service
KARACHI: Sindh government has exempted sales tax on services provided by life insurance companies for full fiscal year i.e. July 01, 2019 to June 30, 2020.
Sindh Revenue Board (SRB) issued notification No. SRB-3-4/13/2020 dated June 22, 2020 stated that the Sindh government had granted exemption to the life insurance services (other than its related re-insurance services), classified under tariff heading 9813.1500 of the Second Schedule to the Sindh Sales Tax on Services Act, 2010, from whole of the sales tax payable thereon, as were provided or rendered during the period from July 01, 2019 to June 30, 2020.
However, the relaxation is subject to following conditions:
(a) the person providing or rendering life insurance services commences e-depositing, in the Sindh government’s head of account in the prescribed manner, the amount s of Sindh sales tax due, on such services for the tax periods from July 2020 onward; and
(b) the amounts of Sindh sales tax charged or collected, if any, on such services during the period from the 1st day of July, 2019 to the 30th June, 2020, are e-deposited, by the person providing or rendering such services, in Sindh Government’s head of account “B-02384” in the prescribed manner by the 15th day of July, 2020.
This notification shall not entitle any person, whether a service provider or a service recipient, to any refund or adjustment of tax, the SRB added.
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FBR exempts sales tax on import of 61 medical equipments
ISLAMABAD: Federal Board of Revenue (FBR) on Friday announced sales tax exemption on import of 61 medical equipments, which are important to fight against COVID-19.
The FBR issued SRO 555(I)/2020 to grant exemption on the medical equipments for a period of three months. Previously, the FBR granted exemption on various medical equipments through SRO 237(I)/2020 dated March 20, 2020.
Following goods are exempted from whole of sales tax at import stage:
01. Real-time PCR system (standard 96-well plate and
0.2ml tubes format, 5 channel)
02. Biosafety Cabinet
03. Auto Clave 50 Liter Capacity
04. Multi channel pipette (0.5-10 pi)
05. Single channel pipette a) 2 pi b) 10 pi c) 200 pi d) 1000 pi
06. Muti channel pipette 20-200 ml
07. Vacuum fold
08. Micro Centrifuge (Non-refrigerated, Rotor capacity: 12 x 1.5 / 2.0 ml vessels, 2 x PCR strip, Max. speed: 12,100 x g (13,400 rpm))
09. PCR Cabinet (FIEPA filter system, UV and white light)
10. Real-time PCR kit for the detection of Coronavifus (SARS-CoV2)
11. Viral RNA Extraction Kit and machine (Automatic Extractors)
12. VTM (Viral Transport Medium)
13. Dr Oligo Synthesizer
14. Refrigerator/freezer (-20 °C)
15. Vortex Machine
16. Refrigerated Centrifuge Machine (Rotor capacity 1.5ml x 24 max. speed 14000 rpm)
17. UPS (6 KVA)
18. Tyvek Suits
19. N-95
20. Biohazard Bags (18 Liters)
21. PARR (Powdered Air Purifying respirators)
22. Multimode ventilator with air compressor
23. Vital sign monitor with 2IBPand ETco2 two Temp.
24. ICU motorized patient bed with side cabinet and over bed table
25. Syringe infusion pump
26. Infusion pump
27. Electric suction machine
28. Defibrillator
29. X-Ray Mobile Machine
30. Simple Nebulizer
31. Ultrasound machine
32. Noninvasive BIPAP
33. ECG Machine
34. Pulse Oximeters
35. Ripple mattress
36. Blood gas analyzer
37. AMBU Bag
38. Nitrile Gloves
39. Latex Gloves
40. Goggles
41. Face Shields
42. Gum Boots
43. Mackintosh bed sheets
44. Surgical Masks
45. Air Ways
46. Diaflow
47. Disposible Nebulizer Mask Kit
48. EGG Electrodes
49. ETT Tube (Endotracheal Tubes) All sizes
50. Humidifier Disposable Flexible
51. IV Cannula all sizes
52. IV Chambers
53. Oxygen Recovery Kit
54. Padded Sheets
55. Stomach Tube
56. Stylet for Endotracheal Tube
57. Suction Tube control valve
58. Tracheostomy Tube 7, 7.5, 8
59. Ventilator Circuit
60. Ventury Masks
61. Disposable shoes cover (water proof)
This notification shall take effect from the June 20, 2020 and shall remain effective for a period of three months.
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FBR allows Rs9.4 billion regulatory duty exemption on vehicle import
ISLAMABAD: Federal Board of Revenue (FBR) has allowed exemption from regulatory duty to the tune of Rs9.4 billion on import of vehicles during outgoing fiscal year.
According to official documents, the revenue body granted exemption from regulatory duty under SRO 640(I)/2018 and SRO 1265(I)/2018 on import of vehicles by new entrants.
The FBR allowed regulatory duty exemption of Rs6.46 billion under SRO 1265(I)/2018. The FBR issued details of the exemption of regulatory duty under this SRO granted under Para 2 of SRO for import under SRO678-2004, Fifth Schedule, Chapter 99, SRO 492-2009, 565-2006, import of vehicles by new entrants.
Another amount of Rs2.93 billion granted as exemption from regulatory duty under SRO 640(I)/2018. Giving description, the FBR said that exemption of RD was given under Para 2 of the SRO for imports under SRO 678-2004, Fifth Schedule, Chapter-99, SRO 492-2009, 565-2006, import of Vehicles by new entrants, etc.
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Duty, taxes up to Rs5,000 exempted on imported goods
ISLAMABAD: An amount up to Rs5,000 has been exempted in case minimum total duty and taxes on imported goods.
An amendment to Customs Act, 1969 has been introduced through Finance Bill, 2020 issued on Thursday.
Through the amendment the minimum duty and taxes that is not demanded by the customs authorities have been increased to Rs5,000 from existing Rs1,000.
Through the bill Section 19C of the Customs Act, 1969 has been substituted.
Finance Bill proposed following amendment to the Customs Act:
“19C. Minimal duties not to be demanded.- Where the value of imported goods does not exceed five thousand rupees, no duties and taxes shall be demanded, subject to conditions and restrictions as may be prescribed by the Board under the rules.”
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Income tax exemptions surge by 166pc to Rs378bn
ISLAMABAD: Despite massive shortfall in revenue collection the Federal Board of Revenue (FBR) granted Rs378 billion as income tax exemption during current fiscal year, which is 166.2 percent higher than the last fiscal year.
According to Pakistan Economic Survey 2019/2020 released on Thursday the FBR granted provisionally Rs378 billion as income tax exemption and concession during the outgoing fiscal year as compared with Rs142 billion in the last fiscal year.
The FBR granted around Rs212 billion as exemption from total income during the outgoing fiscal year. While another Rs104.5 billion concessions were granted as tax credit. An amount of Rs36.43 billion was exempted for allowances.
It is pertinent to mention here that the FBR was assigned Rs5.55 trillion as collection target for the current fiscal year. However, slowdown in economy and COVID-19 outbreak the target was revised downward to Rs3.9 trillion.
However, grant of exemption and concession fell 13.21 percent to Rs519 billion under the head of sales tax during current fiscal year as compared with Rs598 billion in the last fiscal year.
The FBR granted sales tax exemption of Rs255.84 billion on imports. An amount of Rs74 billion granted exemption/concession as reduced rates of two percent under Eight Schedule of Sales Tax Act, 1990.
Further, an amount of Rs35 billion has been granted as exemption/concession as reduced rates of 10 percent under Eight Schedule.
The authorities granted Rs23.15 billion sales tax concession on cellular mobile phones under Ninth Schedule.
The FBR granted exemption of Rs54.87 billion on local supplies during the fiscal year 2019/2020.
The exemption and concessions under customs duty cost an amount of Rs253 billion to the revenue authority during outgoing fiscal year, which is 8.58 percent higher when compared with Rs233 billion the last fiscal year.
Around Rs95 billion has been granted as duty exemption / concession to automobile sector, E&P companies and projects under CPEC. While an amount of Rs87 billion granted as exemption and concessions under Fifth Schedule of Customs Act, 1969.
The concessions granted under Free Trade Agreement (FTA) and Preferential Trade Agreement (PTA) was around Rs45 billion during the current fiscal year.
The FBR allowed exemption and concession an aggregate amount of Rs1150 billion during fiscal year 2019/2020 as compared with Rs972 billion in the last fiscal year.