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Tag: Finance Act 2019

  • Sindh notifies new motor vehicle tax rates

    Sindh notifies new motor vehicle tax rates

    KARACHI: The Sindh government has notified new rates of motor vehicle tax effective from July 01, 2019 amendment through Provincial Finance Act, 2019 for the year 2019/2020.

    The provincial government increased the rate of tax for higher engine capacity motor vehicles to Rs150,000 and Rs75,000.

    Further rates are modified in following manner:

    1. (a) (i) Motorcycles/Scooter not already registered not more than 149CC: Rs1800/once for all

    (ii) Motorcycle/scooter 150cc and above: Rs3000/ once for all.

    (b) Motorcycle/Scooter already registered and since first registration, the vehicle-

    (i) has not completed 5 years; Rs600/ once for all or Rs80 per annum

    (ii) has completed 5 years but not completed 10 years: Rs300/ once for all or Rs80 per annum

    (iii) has completed 10 years but has not completed 15 years: Rs100/once for all or Rs80 per annuam.

    (c) (i) Motor cars/jeeps etc. (Non-commercial having engine capacity up to 1000cc not already registered.: Rs20,000 once for all.

    (ii) Motor cars/ jeeps etc. (Non commercial having Engine Capacity up to 1000cc already, registered having up to date tax payment and since first registration vehicles-

    (a) Has not completed five years Rs15,000 once for all

    (b) Has completed five years but not completed 10 years: Rs10,000 once for all.

    (c) After completion of 10 years: Rs8,000 once for all.

    2. Motor vehicles not exceeding 250kgs in un-laden weight adopted and used for invalids: not tax

    3. Vehicles (trucks/trailer / Delivery vans/ Mini Buses and pick-ups etc. used for transport or haulage of goods or materials.

    (a) Electrical propelled vehicles not exceeding 1250 kgs in un-laden weight: Rs750/ per annum

    (b) Vehicles with maximum laden exceeding 1250 but not exceeding 4060 kgs. Rs1200 per annum

    (c) Vehicles with maximum laden capacity exceeding 4060 kgs but not exceeding 8120 kgs: Rs3000 per annum

    (d) Vehicles with maximum laden capacity exceeding 8120kgs but not exceeding 16000 kgs. Rs9000 per annum

    (e) Vehicles with maximum laden capacity exceeding 16000 kgs: Rs12000 per annum

    (f) All types of cranes: Rs3000 per annum

    4. Vehicle plying for hire and ordinarily used for transport of passengers (taxis and buses)

    (i) Tricycle propelled by mechanical power (rickshaws cabs) with seating capacity of not more than 3 percents: Rs600 per annum

    (ii) Motor vehicles with a seating capacity of more than 20 persons plying for hire exclusively within the limit of a corporation, municipality or cantonment or partly within and partly outside such limit with sixty percent of the total length of the route falling within the limits of a corporation, municipality or cantonment: Rs150 per seat.

    (iii) Mini buses with a seating capacity of not more than 20 percents plying for hire exclusively within the limit of corporation, municipality or cantonment: Rs240 per seat

    Explanation: For the purpose of this clause, the seating capacity shall not include the seats meant for driver and conductor.

    (iv) Motor vehicles with seating capacity of more than 20 persons plying for hire within or outside the limits of corporation, municipality

    (a) Air Conditioned: Rs225 per seat

    (b) Non Air Conditioned: Rs150 per seat

    (v) Other vehicles with a seating capacity:

    (a) Not more than 4 percent: Rs780 per annum

    (b) More than 4 persons but not more than 6 persons: Rs900 per annum

    (c) More than 6 persons: Rs300 per seat

    5. Motor vehicles (motor cars/jeeps other than those mentioned above and having-

    (a) Seating capacity of not more than three person: Rs500

    (b) Seating capacity of more than three persons but not more than six persons-

    (i) With engine power not exceeding 1000CC: Rs1,500 per annum

    (ii) With engine power exceeding 1000cc but not exceeding 1300cc: Rs2000 per annum

    (iii) With engine power exceeding 1300cc but not exceeding 1600cc: Rs4000 per annum

    (iv) With engine power exceeding 1600cc but not exceeding 2000cc: Rs4500 per annum

    (v) With engine power exceeding 2000cc but not exceeding 2500cc: Rs5000 per annum

    (vi) With engine power exceeding 2500cc: Rs7000 per annum.

    Provided that the tax in respect of the motor vehicle referred to in clauses (a) and (b) other than the commercial vehicles shall, on completion of ten years and fifteen years of the payment of the tax since first registration of the vehicles, be paid at the rate of seventy five percent and fifty percent of the tax respectively.

    6. (i) tractor without trailer: Rs200

    (ii) if trailer is attached with tractor: Rs300

  • No immunity to concealed income invested in immovable properties

    No immunity to concealed income invested in immovable properties

    ISLAMABAD: People purchasing immovable properties are now required to make true declaration as immunity to such investment has been withdrawn.

    Sources in Federal Board of Revenue (FBR) told PkRevenue.com that an amnesty to undeclared amount was available for making investment in real estate business.

    The amnesty was granted through Income Tax (Fourth Amendment) Act, 2016 dated December 2, 2016 during Nawaz Sharif government and people took huge benefit from this scheme to whiten their money.

    The government has proposed to withdraw this provision through Finance Bill, 2019 as part of budget 2019/2020, presented on Tuesday. The proposal was accepted by the parliament and it has become part of Finance Act, 2019.

    The FBR in its income tax salient features said that 3 percent tax for not explaining the source of investment is being withdrawn.

    Section 236W was introduced to Income Tax Ordinance, 2001 through Income Tax (Fourth Amendment) Act, 2016 dated December 02, 2016.

    This section was granted immunity from declaring source of investment for the purchase of immovable properties.

    The FBR said that in Pakistan the Real Estate sector is one of the biggest sources of money laundering and is used as a parking lot for untaxed as well as ill-gotten money.

    In view of this a wide range of steps have been taken to restructure the taxation of this sector.

    The various steps being taken are as under:-

    (i) At present, the Board has issued valuation tables of immovable properties in 21 major cities wherein such properties are valued at a value higher than the DC rates. The purchasers are also required to pay 3 percent tax on the difference between the DC value and FBR value of property to explain the source of investment to the extent of differential between FBR value and DC value. The rates notified by the Board are still considerably lower than actual market value.

    It is therefore intended that FBR rates of immovable properties would be taken closer to or about 85 percent of actual market value.

    (ii) As the increase in FBR values of immovable property is going to increase the incidence of tax on genuine buyers and sellers, the rate of withholding tax on purchase of immovable property is being reduced from 2 percent to 1 percent.

    (iii) under the immunity, withholding tax on purchase of property was attracted only if the value of property is more than four million rupees. The threshold of four million rupees is being abolished and withholding tax on purchase is to be collected irrespective of the value of property.

    (iv) Under the immunity, there was no withholding tax on sale of property if the property is held for a period of more than three years. Since capital gain is to be taxed under normal tax regime even beyond the period of three years, withholding tax on sale of property would be collected where the holding period is up to five years.

    (v) Previously the law imposed restriction on registration or transfer of property having fair market value exceeding rupees five million in the name of a non-filer. The aforesaid restriction placed on purchase of immovable property has been withdrawn.

  • FBR directs banks to provide details of depositors receiving Rs500,000 as profit on debt per year

    FBR directs banks to provide details of depositors receiving Rs500,000 as profit on debt per year

    KARACHI: Federal Board of Revenue (FBR) has directed banks to provide details of all those persons receiving interests above Rs500,000 in a year on their deposits.

    The FBR sources said that an amendment has been introduced to Section 165A of Income Tax Ordinance, 2001 through Finance Act, 2019 and tightened laws regarding information providing by banks about their depositors.

    Prior to amendment the clause (d) of the Ordinance, the banks were required to provide a list of persons receiving profit on debt exceeding Rs1 million for filers and Rs500,000 for non-filers and tax deduction thereon during preceding financial year.

    However, after the amendment, now the banks are required to provide list of all those persons receiving profit on debt exceeding Rs500,000 – irrespective of filers and non-filers – and tax deduction thereon during preceding financial year.

    Through the Finance Act, 2019 the term non-filers has been abolished and a new Tenth Schedule has been introduced under which persons appearing on Active Taxpayers List (ATL) would be subject to reduced rate of withholding tax rates.

    Another amendment has been made through the Finance Act, 2019 to clause (a) of Section 165A of the Income Tax Ordinance, 2001, under which the banks are now required to provide a list of persons containing particulars of cash withdrawals exceeding Rs50,00 in a day and tax deducted thereon aggregating to Rs1 million or more during each preceding calendar month.

    The amendment deleted the words ‘for filers and non-filers’ due to elimination of term ‘non-filers’.

    However, banks would remain required to provide the details under clause (b) of Section 165A of the Ordinance, including a list containing particulars of deposits aggregating rupees ten million or more made during the preceding calendar month.

    Meanwhile under clause (c), the banks are required to provide a list to FBR of payments made by any person against bills raised in respect of a credit card issued to that person, aggregating to rupees two hundred thousand or more during the preceding calendar month.

  • Consumers may not able to get 5pc sales tax rebate till FBR notification

    Consumers may not able to get 5pc sales tax rebate till FBR notification

    ISLAMABAD: General public may not be able to avail 5 percent rebate on their purchases until a notification is issued by the Federal Board of Revenue (FBR).

    Through Finance Act, 2019 a new proviso has been added wherein customers of Tier-1 retailers are entitled for pay-back up to 5 percent of sales tax involved in the sales tax invoice.

    This shall encourage the customers to demand sales tax invoice from registered retailers.

    “However, these provisions shall be applicable when the Board so notifies,” said the FBR in instructions to Inland Revenue offices regarding enforcing changes to sales tax laws made through Finance Act, 2019.

    The FBR informed the IR about changes made to regime of Tier-1 retailers.

    These changes are included option to pay 2 percent turnover tax has been withdrawn.

    Provisions relating to SRO 1125(I)/2011 under which zero-rate sales tax was available, have been omitted, thus subjecting textile and leather items to normal rate except for the integrated retail outlets for which the rate shall be 14 percent as per amendment in Eighth Schedule.
    Another new proviso aims at expanding the scope of real-time integration beyond textile and leather. These provisions shall become effective when the Board so notifies.

    After such notification, the input tax shall be reduced by 15 percent for retailers failing to integrate Point of Sales (POSs) in the prescribed manner, as provided in the newly inserted sub-section (6) in section 8B.

  • CNIC condition not applicable on purchases below Rs50,000

    CNIC condition not applicable on purchases below Rs50,000

    KARACHI: The condition of providing CNIC details is not applicable on purchases up to Rs50,000 by a person, said Zeeshan Merchant, former vice president of Karachi Tax Bar Association (KTBA).

    (more…)
  • Reduced sales tax rates on supply of gold, jewelry imposed

    Reduced sales tax rates on supply of gold, jewelry imposed

    The Federal Board of Revenue (FBR) has introduced significant amendments through the Finance Act, 2019, bringing gold, jewelry, and other precious articles into the sales tax ambit by implementing reduced rates on supplies.

    (more…)
  • Traders announces three-day shutter down protest against tax measures from July 08

    Traders announces three-day shutter down protest against tax measures from July 08

    KARACHI: Small traders have announced three-day shutter down protest in the commercial and financial hub of the country against the changes in tax regime, which are implemented through Finance Act, 2019.

    The Tajir Action Committee in a press conference on Saturday announced the shutter down across Karachi for three days starting from July 08, saying that the changes in tax regime are not acceptable.

    The committee presented its 11-point demands to the government and urged the authorities to withdraw or amend the laws to provide relief to small traders.

    Rizwan Irfan, the senior leader of the committee, said that in case the demands are not accepted the protest would prolong.

    Jameel Pracha, another leader, said that the decision to close down the markets was taken in consultation all traders association.

    The committee demanded abolishing value added tax and reducing turnover tax from 0.6 percent to 0.3 percent.

    Further the threshold of Rs10 million should be given for sales tax registration.

    The annual income of Rs1.2 million should be exempted from income tax.

    The condition of obtaining computerized national identity card (CNIC) should be relaxed up to sales of Rs50,000.

    The government should introduce a fixed tax regime for retailers. The proposed fixed tax should be introduced in four different categories.

    Income tax return forms should be introduced in Urdu language as well.

    Tax audits should be stopped.

    Mobile phone registration with the Pakistan Telecommunication Authority (PTA) should be stopped and a levy of Rs400 should be implemented.

    Abolish 10 percent regulatory duty on import of second-hand (used) cloths.

    The Tajir Action Committee also demanded to stop harassment by officials of Federal Board of Revenue (FBR). They also urged Army Chief to intervene in this situation.

    The traders demanded replacing the governor of Sindh.

    They said that the protest strike may prolong if their demands are not accepted.

  • Aviation industry allowed duty free import of aircraft, spare parts

    Aviation industry allowed duty free import of aircraft, spare parts

    KARACHI: Federal Board of Revenue (FBR) has allowed duty free import of aviation related goods including aircraft and spare parts under National Aviation Policy 2015.

    According to Finance Act, 2019 following goods related to aviation have been allowed duty free import:

    1. Aircraft HS Code 8802.4000 at zero percent customs duty under condition whether imported or acquired on wet or dry lease. In case of M/s Pakistan International Airlines (PIA) Corporation this exemption shall be admissible on and from the 19th March, 2015.

    2. Spare parts Respective headings at zero percent for use in aircraft, trainer aircraft and simulators.

    3. Maintenance Kits Respective headings at zero percent for use in trainer aircraft (8802.2000 & 8802.3000).

    4. Machinery, equipment & tools respective headings at zero percent for setting up Maintenance, Repair & Overall (MRO) workshop by MRO company recognized by Aviation Division.

    5. Machinery, equipment, operational tools, furniture& fixture respective headings at zero percent on one time basis for exclusive use of New/Greenfield airports by company authorized by Aviation Division.

    6. Aviation simulators Respective headings zero percent on one time basis for aircrafts by airline company recognized by Aviation Division.

    The FBR said that for the purposes of this Part, the following conditions shall apply besides the conditions as specified in column (5) of the Table below:—

    (i) the Chief Executive, or the person next in hierarchy duly authorized by the Chief Executive or Head of the importing company shall certify that the imported goods/items are the company’s bonafide requirement. He shall furnish all relevant information online to Pakistan Customs Computerized System against a specific user ID and password obtained under section 155D of the Customs Act, 1969 (IV of 1969). In already computerized Collectorates or Customs stations where the Pakistan Customs Computerized System is not operational, the Director Reforms and Automation or any other person authorized by the Collector in this behalf shall enter the requisite information in the Pakistan Customs Computerized System on daily basis, whereas entry of the data obtained from the customs stations which have not yet been computerized shall be made on weekly basis;

    (ii) the exemption shall be admissible on production of certificate by the Aviation Division, Government of Pakistan to the effect that the intending importer is operating in the country or intends to operate in the county in the airline sector;

    (iii) the list of imported items is duly approved by the Aviation Division, Government of Pakistan in line with Policy Framework approved by the Government of Pakistan;

    (iv) the Chief Executive, or the person next in hierarchy duly authorized by the Chief Executive or Head of the importing company shall furnish an undertaking to the customs authority at the time of import that the goods imported shall be used for the purpose as defined/notified by the Aviation Division, Government of Pakistan under the Aviation Policy; and

    (v) in case of deviation from the above stipulations, the Collector of Customs shall initiate proceedings for recovery of duty and taxes under the relevant laws.

  • Finance Act 2019: FED imposed on all imported vehicles

    Finance Act 2019: FED imposed on all imported vehicles

    The federal government, under the Finance Act 2019, extended the application of Federal Excise Duty (FED) to all imported vehicles, aligning the tax regime with that of locally manufactured automobiles. This policy shift represents a significant move towards harmonizing the taxation framework across the domestic and import markets.

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  • Finance Act 2019: CNIC condition for sales tax invoices applicable from August 01

    Finance Act 2019: CNIC condition for sales tax invoices applicable from August 01

    KARACHI: The condition of obtaining CNIC number for unregistered persons at the time of supplies by registered person will be applicable from August 01, 2019.

    The condition has been proposed to be applicable from July 01, 2019 through Finance Bill 2019.

    However, through Finance Act, 2019 this condition now will be applicable from August 2019.

    An amendment has been introduced through Finance Bill 2019 to Section 23 of Sales Tax Act, 1990 under which it was now required specifically to mention particulars on invoices in Urdu or English language. Tax Invoice is also required to reflect CNIC Number of recipient in case supplies are made to unregistered person.

    The Finance Bill 2019 also proposed to require a supplier of textile yarn and fabric to mention count, denier and construction, in addition to description, on tax invoice at the time of making taxable supply.

    According to commentary on Finance Act, 2019 issued by PwC A F Ferguson Chartered Accountants NTN or CNIC are now required to be mentioned in tax invoice in respect of supply to unregistered persons.

    In the Finance Bill 2019, only CNIC was proposed to be mentioned on tax invoice.

    Further through Finance Act 2019, such requirements have been made effective from 1st August, 2019.

    However, an exception from such requirement has been introduced through the Finance Act for supplies made by a retailer where the transaction value inclusive of sales tax does not exceed rupees fifty thousand, if sale is being made to an ordinary consumer.

    The term ‘Ordinary Consumer’ has also been explained in the Finance Act as a person who is buying goods for his own consumption and not for the purpose of re-sale or processing. It has been further provided in the Finance Act that in case it is subsequently proved that CNIC provided by the purchaser was not correct, liability of tax or penalty shall not arise against the seller, in case of sale made in good faith.