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Tag: Finance Bill 2019

  • Pakistan reintroduces advance tax on foreign payments

    Pakistan reintroduces advance tax on foreign payments

    ISLAMABAD: Pakistan has reintroduced advance tax on foreign payments made through credit, debit or prepaid cards. The advance tax has been revived through Finance Bill, 2022.

    The country presented its federal budget 2022/2023 on June 10, 2022 and made several amendments in tax laws to broaden tax base and plug revenue leakages.

    READ MORE: Exchange companies to withhold tax on payment to MTOs

    The Finance Bill, 2022 proposed to reintroduce Section 236Y of the Income Tax Ordinance, 2001. The section was omitted through Finance Act, 2021.

    Following is the proposed amendment in the Income Tax Ordinance, 2001:

    READ MORE: Salaried persons denied adjustments against deduction

    “236Y. Advance tax on persons remitting amounts abroad through credit or debit or prepaid cards.—(1) Every banking company shall collect advance tax, at the time of transfer of any sum remitted outside Pakistan, on behalf of any person who has completed a credit card or debit card or prepaid card transaction with a person outside Pakistan at the rate specified in Division XXVII of Part IV of the First Schedule.

    READ MORE: New ADR mechanism introduced to facilitate taxpayers

    (2) The advance tax collected under this section shall be adjustable.”

    The Finance Bill 2022 proposed advance tax rate on amount remitted abroad through credit, debit or prepaid cards under section 236Y shall be 1 per cent of the gross amount remitted abroad.

    READ MORE: FBR to disable mobile SIMs on non-filing of tax returns

  • Restoration of multiple years audit to burden taxpayers

    Restoration of multiple years audit to burden taxpayers

    KARACHI: Business community has criticized the government for eliminating condition of conducting audit once in three-year period.

    Overseas Investors Chamber of Commerce and Industry (OICCI) highlighted anomalies in the Finance Bill 2020, sent to the Federal Board of Revenue (FBR) and said that omission of the condition would burden the taxpayers and would give sweeping powers to tax officials.

    The Finance Act 2018 restricted the frequency of conducting audits to once in a three-year period.

    This amendment of 2018 demonstrated the confidence of the Government on the records maintained by registered persons.

    The Bill now seeks to omit the condition of conducting the audit once in a three-year period. If passed, this will unnecessarily burden taxpayers, while handing over sweeping powers to the assessing officers of Inland Revenue to conduct audits covering one or multiple tax years with no reprieve for the taxpayer available under the law, in absence of any prescribed limitation.

    The consequence of this change will likely erode the taxpayer’s confidence in the revenue machinery and the probable unnecessary wastage of time and effort by the revenue authorities.

    The OICCI said that during the FBR/OICCI Web link meeting on May 5th the FBR Member (IR-Operations) informed that new Audit Policy will be announced soon, where there will be only one audit in three years u/s 122, which was welcomed by OICCI members.

    Therefore the removal of condition of one audit in three years in the Finance Bill 2020, is a shock for OICCI members.

    “Hence, we strongly advocate maximum of one for audit within three years, for promoting Ease of Doing Business,” the OICCI said.

  • Tax credit allowed for hiring fresh graduates

    Tax credit allowed for hiring fresh graduates

    KARACHI: In order to generate employment in the country, the government allowed tax credit to employers for hiring fresh graduates from July 01, 2019.

    According to Deloitte Pakistan, a new section is proposed to be introduced through the Finance Bill 2019 in order to encourage creation of employment opportunities for fresh graduates.

    A person employing fresh qualified graduates, having graduated after 1st July 2017, from universities or institutions recognized by the Higher Education Commission would be given a tax credit to the extent of the lesser of amount of annual salary paid to fresh graduates or, 5 percent of persons taxable income for the year.

    Further, tax credit would be allowed in the year in which the fresh graduates are employed.

    However, the credit will be restricted to salary of those numbers of fresh graduates not exceeding 15 percent of the total employees.

  • Finance Bill 2019: tax officials granted powers to enter premises for gold, prize bonds; KCCI opposes

    Finance Bill 2019: tax officials granted powers to enter premises for gold, prize bonds; KCCI opposes

    KARACHI: The Finance Bill 2019 has proposed discretionary powers to Commissioner Inland Revenue to enter and search any premises for undeclared gold and prize bonds.

    Under Section 175 of Income Tax Ordinance, 2001 such powers have already with the commissioners but the proposal intended to expand the power to include gold and bearer security.

    Karachi Chamber of Commerce and Industry (KCCI) has opposed strongly to this recommendations saying that this is against the dignity granted to an individual as per the Article 14 of the Constitution and would tantamount to violation of sanctity of residential premises, if raided.

    A research report of the KCCI said that raiding of homes and subsequent breach of privacy is against national cultural norms and is an idea uncalled for, having grave social repercussions.

    “This proposal is also against the spirit of withdrawal of discretionary powers of the taxman.”

    The Asset Declaration Scheme 2019 also does not allow declaration of gold, precious stones, bearer security and bearer prize bonds, thereby restricting a holder of such assets from declaring them before probable confiscation. Any such measure before allowance of declaration makes this a very harsh measure.

    Such sweeping discretionary powers granted to the Commissioner would result in harassment to ordinary citizens including housewives and the elderly, as now raids could be made on homes as well, and by no means should be allowed to be confiscated.

    Hence, this proposal should be removed from the budget. Further, the Asset Declaration Scheme 2019 should be amended to include declaration of gold and bearer securities.

  • Tax slabs increased for rental income from properties

    Tax slabs increased for rental income from properties

    KARACHI: The government has revised tax slabs for rental income from property to eight from five.
    Experts at Deloitte Pakistan Chartered Accountants said that the Finance Bill 2019, proposed the increase in the number of tax slabs from five to eight.
    Three new tax slabs are proposed for income exceeding Rs4,000,000 to match the maximum rate with that of the individual tax rates.
    Rates of tax on income from property, based on the finance bill, shall be as follows:
     

    S. No. Gross Amount of Rent Rate of Tax
    1.Where the gross amount of rent does not exceed Rs.200,000.Nil
    2.Where the gross amount of rent exceeds Rs.200,000 but does not exceed Rs. 600,000.5 per cent of the amount exceeding Rs. 200,000.
    3.Where the gross amount of rent exceeds Rs.600,000 but does not exceed Rs. 1,000,000.Rs. 20,000 plus 10 per cent of the amount exceeding Rs. 600,000.
    4.Where the gross amount of rent exceeds Rs.1,000,000 but does not exceed Rs. 2,000,000.Rs. 60,000 plus 15 per cent of the amount exceeding Rs. 1,000,000.
    5.Where the gross amount of rent exceeds Rs.2,000,000 but does not exceed Rs. 4,000,000.Rs. 210,000 plus 20 per cent of the amount exceeding Rs. 2,000,000.
    6.Where the gross amount of rent exceeds Rs.4,000,000 but does not exceed Rs. 6,000,000.Rs. 610,000 plus 25 per cent of the amount exceeding Rs. 4,000,000.
    7.Where the gross amount of rent exceeds Rs.6,000,000 but does not exceed Rs. 8,000,000.Rs. 1,110,000 plus 30 per cent of the amount exceeding Rs. 6,000,000.
    8.Where the gross amount of rent exceeds Rs. 8,000,000.Rs. 1,710,000 plus 35 per cent of the amount exceeding Rs. 8,000,000.
  • Prime Minister assures business community of considering sales tax zero rating

    Prime Minister assures business community of considering sales tax zero rating

    KARACHI: Prime Minister Imran Khan has assured business community of considering restoration of sales tax zero rating for export sector.

    A delegation of Federation of Pakistan Chambers of Commerce and Industry (FPCCI) met Prime Minister Imran Khan on Thursday in Islamabad to discuss anomalies in the Finance Bill 2019.

    On FPCCI demand of restoration of SRO 1125(I)/2011 allowing five export oriented export sectors at zero rate, the prime minister assured to consider it sympathetically, said a statement issued by the FPCCI.

    The FPCCI delegation was led by S.M. Muneer, leader of the business community and Former Chief Executive TDAP and Former President, FPCCI and consisting of Aqil Karim Dhedi; Engr. Daroo Khan Achakzai, President, FPCCI and Zubair F. Tufail, Convener of the FPCCI Budget Advisory Council – held a detailed meeting with the Prime Minister Imran Khan and Abdul Hafeez Shaikh, Advisor to the PM on Finance which lasted for 2 hours and discussed / briefed them about the hardships of the business community emanated from some harsh measures of the Finance Bill, 2019 that would give serious blow to trade and industry, especially export sector in the wake of exorbitant policy rate of 12.25 percent coupled with the massive devaluation of Pak-Rupee versus dollar in the last few months withdrawal of zero rated regime from export industrial sectors etc.

    The FPCCI delegation particularly emphasized and discussed ten major demands out of which eight proposals have been accepted by the Prime Minister, the major one such as doing away with raid on any premises; reduction in tax rates for service sector; routing taxation and business related policy through Federal Government/Cabinet instead of FBR, as directed by the Supreme Court; lack of personal interaction and minimal possibility of abuse of discretionary powers by the tax officials; conduction of audit once in a three years etc.

    Moreover the issues of retailers, wholesalers and real estates were also discussed in details.

  • List of transactions not to attract 100 percent increased withholding tax

    List of transactions not to attract 100 percent increased withholding tax

    KARACHI: The Finance Bill 2019 has proposed a new schedule related to compliance with 100 percent increased withholding tax rates to persons not appearing on Active Taxpayers List (ATL).

    Deloitte Yousuf Adil, Chartered Accountants in their budget commentary said that the increased withholding tax rates specified under this schedule are inapplicable with respect to following payments and related withholding tax provisions in the case of Person not appearing in the Active Taxpayer list:

    Salary under section 149 of Income Tax Ordinance, 2001

    Export under section 154 of Income Tax Ordinance, 2001

    Income from Property under section 154 of Income Tax Ordinance, 2001

    Withdrawal of Balance under Pension Fund under section 156B of Income Tax Ordinance, 2001

    Cash withdrawal from Bank under section 231A of Income Tax Ordinance, 2001

    Advance Tax on Transactions in Bank under section 231AA of Income Tax Ordinance, 2001

    Collection of Tax by NCCPL under section 233AA of Income Tax Ordinance, 2001

    Electricity Consumption under section 235 of Income Tax Ordinance, 2001

    Domestic Electricity Consumption under section 235A of Income Tax Ordinance, 2001

    Tax on Steel Melters, Re-Rollers etc under section 235B of Income Tax Ordinance, 2001

    Advance Tax on Purchase of Air Tickets under section 236B of Income Tax Ordinance, 2001

    Advance Tax on Functions and Gatherings under section 236D of Income Tax Ordinance, 2001

    Advance Tax on Cable Operators and Other Electronic Media under section 236F of Income Tax Ordinance, 2001

    Collection of Advance Tax by Educational Institutions under section 236I of Income Tax Ordinance, 2001

    Advance Tax on Dealers, Commission Agents and Arthis etc under section 236J of Income Tax Ordinance, 2001

    Advance Tax on Purchase of International Air Tickets under section 236L of Income Tax Ordinance, 2001

    Advance Tax on Banking Transactions otherwise than through Cross Cheque under section 236P of Income Tax Ordinance, 2001

    Payment to residents for use of machinery and equipment under section 236Q of Income Tax Ordinance, 2001

    Collection of advance tax on education related expenses remitted abroad under section 236R of Income Tax Ordinance, 2001

    Advance Tax on Insurance Premium under section 236U of Income Tax Ordinance, 2001

    Advance Tax on extraction of minerals under section 236V of Income Tax Ordinance, 2001

    Advance Tax on Tobacco under section 236X of Income Tax Ordinance, 2001

  • Customs duty concessions allowed on 1650 raw materials

    Customs duty concessions allowed on 1650 raw materials

    KARACHI: The government has allowed customs duty concessions on import of 1650 raw materials through Finance Bill 2019.

    According to Deloitte Yousuf Adil, Chartered Accountants, the Finance Bill proposed to introduce concession of Customs Duty on import of 1650 raw materials/industrial inputs.

    Major items are listed as follows:


     

    PCT codeDescriptionRate
    2710.1911Kerosene0
    2710.1913J.P.40
    2710.1998Spin finish oil0
    2711.1200Propane0
    2711.1300Butanes0
    2711.1400Ethylene, propylene, butylene and butadiene0
    2711.1910L.P.G.0
    2711.1990Other0
    2711.2100Natural gas0
    2711.2900Other0
    2805.1200Calcium0
    2805.1900Other0
    2805.4000Mercury0
    2808.0010Nitric acid0
    2808.0090Sulphonitric acids0
    2809.1000Diphosphorus pentaoxide0
    2809.2010Phosphoric acid0
    2814.1000Anhydrous ammonia0
    2814.2000Ammonia in auqeous solution0
    2817.0000Zinc oxide; zinc peroxide.0
    2818.3000Aluminium hydroxide0
    2819.1000Chromium trioxide0
    2819.9010Chromium oxide0
    2819.9020Chromium hydroxide0
    2936.2100Vitamins A and their derivatives0
    2936.2200Vitamin B1 and its derivatives0
    2936.2300Vitamin B2 and its derivatives0
    2936.2400D- or DL-Pantothenic acid (Vitamin B3 or Vitamin B5) and its derivatives0
    2936.2500Vitamin B6 and its derivatives0
    2936.2600Vitamin B12 and its derivatives0
    2936.2700Vitamin C and its derivatives0
    PCT codeDescriptionRate
    2936.2800Vitamin E and its derivatives0
    2937.1200Insulin and its salts0
    3002.9010Human blood0
    3002.9020Animal blood0
    3105.2000Mineral or chemical fertilisers containing the three fertilising elements nitrogen, phosphorus and potassium0
    8427.1000Self- propelled trucks powered by an electric motor0
    8433.6000Machines for cleaning, sorting or grading eggs, fruit or other agricultural produce0
    8436.8000Other machinery0
    8444.0000Machines for extruding, drawing, texturing or cutting man- made textile materials.0
    8530.1000Equipment for railways or tramways0
  • FPCCI may opt harsh decisions against proposed budgetary measures

    FPCCI may opt harsh decisions against proposed budgetary measures

    KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on has announced to take harsh decision against duty and tax measures proposed through Finance Bill, 2019.

    At a pressing briefing on Wednesday, Engineer Daroo Khan, President, FPCCI said that the decision would include closure of business and trade activities in protest.

    He said that the business community would share its reservations with the government. If the government declines to accept demands then option to protest is open, he added.

    The FPCCI president said that budgetary measures had would create hardship for all including business community as well as general public.

    The national chamber has identified many reservations on the budget 2019/2020. The apex chamber has constituted a committee on the Finance Bill, 2019.

    Engr. Daroo Khan demanded the government to restore sales tax zero-rating for export sector. Further, he pointed out that hike in tariff of gas and electricity would also make difficult for business to continue.

    He suggested the government that if it had been decided to abolish the zero rate regime then there must be assurance of releasing refunds.

    He also demanded the government to restore provision of audit once in three years as Finance Bill proposed to empower tax officials to conduct audit of a taxpayer any or every year.

    S M Muneer, leader of business community, however, said that the business community would not protest without meeting with government authorities.

    He said that a delegation of FPCCI would hold talk with Dr. Abdul Hafeez Shaikh, advisor to Prime Minister on Finance and Revenue on June 20.

    Muneer said that massive depreciation of Pak Rupee had created difficulties for businesses.

    Zubair Tufail, former FPCCI president, said that the proposed budget would encourage smuggling of goods.

    He said that banks should be asked for instant processing of refunds in case the zero-rating was abolished.

    Mirza Ikhtiar Baig, business leader, said that the business community was meeting with people in the government and opposition.

    He said that a delegation of Pakistan Peoples’ Party headed by its chairman Bilawal Bhutto Zardari was visiting FPCCI on June 22, 2019. But we are meeting first with the government tomorrow (June 21), he added.

  • Law proposed to end corruption in Pakistan Customs

    Law proposed to end corruption in Pakistan Customs

    KARACHI: The government has decided to take stern action against officials of Pakistan Customs, who are involved in corruption or corrupt practices.

    A new section 156A to the Customs Act, 1969 has been proposed through Finance Bill, 2019 to initiate criminal proceedings against officials involved in accepting bribe or corruption.

    According to EY Ford Rhodes Chartered Accountants Firm said that the Finance Bill 2019 seeks to insert a new Section 156A in the Act whereby the FBR may prescribe rules to initiate criminal proceedings against its officials who willfully and deliberately commits or omits an act which results in personal benefit or undue advantage to the officials or the taxpayer or both.