Know everything about Budget 2020-21 for Business and Common people

Finance Bill 2020-21 (“The Bill”) for the fiscal year 2020-21 was laid before National Assembly on 12th June 2020. The bill has proposed amendments in Income Tax Ordinance, 2001 (“ITO”), Sales Tax Act, 1990 (“STA”), Federal Excise Act, 2005 (“FEA”) among other laws. We have prepared our comments on significant amendments proposed in ITO, STA & FEA. The comments presented are brief and detailed comments will follow after passage of the bill in the National Assembly along with passage of Provincial Finance Bills in respective Provincial Assemblies. Our comments are based on publicly available copies of the Finance Bill. The interpretations of the amendments are based on our understanding of tax law and past practices. These comments are provided for general use of public and should not be used for any specific transaction. We do not guarantee that these interpretations will be acceptable by the tax department.

Budget 2020-21: Everything you need to know

The comments are prepared for general business understanding of masses.

In case of any technical query, kindly contact us. Please feel free to provide your feedback for further improvements in the document.

PM Imran Khan PACKAGE FOR CONSTRUCTION INDUSTRY, 2020

In an attempt to re-energize the economy after the outbreak of pandemic COVID-19, the Federal Government has promulgated the Tax Laws (Amendment) Ordinance, 2020 [the Ordinance] on 17 April 2020 with the object of promoting construction and allied industry in the country. This Ordinance is a step in the right direction to deal with the said crisis due to which industries, businesses, offices, services have also been shut down in Pakistan and economic activity is at a stand-still. Under these circumstances, the promulgation of said Ordinance offering tax reliefs to construction sector will serve as double-edged sword by meeting the shortage of houses in the country on one hand and creating employment opportunities for the poor and most vulnerable segments of the population, including the daily wagers in Pakistan. By way of the Ordinance, amendments have been made in the Income Tax Ordinance, 2001 [Ordinance 2001] through insertion of new section 100D and Eleventh Schedule to give effect to income tax matters relating to builders, developers, first purchasers of plots and buildings in new projects and purchaser of plots who intends to construct building.

Check here and read Key insights and implication for Construction industry

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FBR date for filing tax return of year 2018 extended to 09.08.19.

FBR vide its notification dated 02 August 2018 has extended deadline for filing annual income tax return of tax year 2018 (previously fixed for 02.08.19) to 09.08.2019. Ensure filing your return by the new deadline to become a filer and avoid penlty of Rs.10,000 on late filing.

We can assist you in preparing and filing your return and wealth statement in time. Please contact should you need our assistance.

What is GST?

GST literally known as ‘general sales tax’ and in legal terms it refers to ‘sales tax’ which applies on goods and services where every supplier in a supply chain is to pass on burden of GST or sales tax to the buyer. It ends up when goods or services are delivered to ultimate or final consumer.

What is VAT in Pakistan?

VAT stands for value added tax as is universally accepted in all tax abiding countries. This levy is indirect in nature as burden of this levy is ultimately rooted to the end consumers. The description ‘value added tax’ is taken due to the reason that every supplier and/or service provider in a supply chain is required to impose this levy on the goods he supplies or service he provides so as to collect tax at a certain proportion of value which he adds to the goods or service he supplies.

This is also referred as ‘sales tax’, ‘GST’, ‘Indirect tax’ and ‘ service tax’.

GST rate on supplies of goods in Pakistan

The standard rate of GST or sales tax in Pakistan is 17% ad-velorem on imports and supplies of goods all over Pakistan with the exception of few supplies which are charged to tax at reduced rate ranging 5% to 10% and few other supplies subject to extra and fixed rate of sales tax depending upon their features and/or values e.g. confectioners and cell phones etc.

Supplies referred in 6th schedule of the Sales Tax Act, 1990 (1990 Act) and those declared as such through issuance of notification by the Federal government are exempt from sales tax.

Exports of goods from Pakistan to abroad including supplies of goods referred in the 5th Schedule to the 1990 Act and those declared as such through issuance of notification by the federal government are chargeable to sales tax at the rate of 0%.

FBR Date Extended till 30th Novemeber 2018 to Become Filer

This is the best time to become active tax filler to get huge benefits and making your wealth legalise through tax amnesty. As per FBR press release date is further extended to 30 November 2018.

Federal cabinet, on the recommendations of the Finance Minister, has approved extension of closing date of tax amnesty schemes for declaration of foreign assets and domestic income and assets till July 31st, 2018. This has been effected through a Presidential Ordinance.

The deadline for filing amnesty declarations was June 30th, 2018. However, during last week a large number of representations have been received from trade bodies, professional associations and general public for extending the closing date due to short operational period after clearing legal and procedural challenges. The extension was also needed to remove ambiguities through clarifications and explanations required to provide certainty to the general public and to ensure effective implementation of the schemes. In addition, declarants of foreign assets faced problems in the payment of tax on foreign assets and repatriation of liquid assets.

The Finance Minister recommended extension of the cut-off date for availing amnesty schemes as there has been an overwhelming demand and response which is on the rise. The date has been extended by one month to enable general pubic to file declarations for undeclared foreign assets and undeclared domestic assets and income and thereby get their tax affairs in order. It will also help the government in bringing undocumented persons, assets and income into the documented sector. Depending on flows, the schemes have potential to bring in macroeconomic and fiscal stability in the economy.

Tax Amnesty scheme 2018 sees massive response

With days to go before its end, the tax amnesty scheme announced by the Pakistan Muslim League-Nawaz government has seen a surge of interest. According to multiple well-placed sources in the Federal Board of Revenue, so far Rs21 billion has already been raised under it in the form of taxes till June 21.

The tax amount created through the amnesty declaration and deposited in the banks stood at nearly Rs5bn, while the remaining tax amount of Rs16bn has been created in the FBR online system through the submission of challans.

The deadline of the scheme is June 30 which, according to the law, is non-extendable. Pressure is mounting on the government from various sides to extend the deadline.

Rs21bn tax raised thus far; according to law, June 30 deadline can’t be extended

Looking at the numbers of declarations coming in, and those in the pipeline, the sources in the FBR and finance ministry said the total amount of tax paid on assets declared under the scheme could well go as high as Rs100bn, though it was too early to properly calculate this number at this stage.

The details of tax amount created so far were shared with caretaker Finance Minister Dr Shamshad Akhtar on Thursday for approval before sharing it with the media. The minister received the figures, but directed top officials of the FBR not to disclose them to the media at this stage.

It was in this background that FBR spokesperson Dr Muhammad Iqbal at a press conference on Friday did not disclose the tax figure created officially, preferring to say only that the response thus far had been “encouraging”. He went on to claim that its success would help resolve the current account deficit and balance of payment issues. He said the number of beneficiaries of the scheme was increasing every day, and categorically stated that the FBR had no power to extend the deadline.

The scheme became effective from April 10 and expires on June 30. It allows people to voluntarily declare domestic as well as foreign assets that had till April 10 been held beyond the tax authorities’ knowledge and reach. It offers varying rates that will be charged on these assets, ranging from 2 to 5 per cent, depending on whether it is a domestic or foreign asset, the asset class, and whether or not it is being repatriated to the country or now. This is the fourth in a series of amnesty schemes announced by the PML-N government in five years, and comes at a time when many holders of black money abroad are already very concerned about the OECD tax information treaty that Pakistan has signed which will enable automatic sharing of information with many other countries. That automatic sharing is set to begin on Sept 1 of this year.

The FBR spokesperson said the response from people increased overwhelmingly after remarks from Chief Justice of Pakistan Saqib Nisar that the bureau could pursue the scheme. A Supreme Court bench was hearing the case on the matter at its Lahore registry.

A source in the finance ministry told Dawn that after green signal from the Supreme Court, Finance Minister Shamshad Akhtar held several meetings with top officials of the FBR to energise the scheme.

Several technical flaws were discovered in the scheme meant for declaration of foreign assets which needed clarification and improvement along the way. “We have addressed almost all queries and issues raised by intended people who want to declare their foreign assets,” the FBR source told Dawn. These apprehensions were removed in consultation with chartered accounts that are in direct contact with intended clients.

The FBR spokesperson said that several legal measures were already taken in the last budget to penalise those people who would not avail this scheme. He said it would be difficult for people, especially for those who did not disclose their foreign assets.

In the 1958 amnesty scheme, an amount of Rs1.12bn was recovered from undeclared assets, followed by Rs920m in 1968, Rs1.5bn in 1976, Rs10bn in 2000 and Rs3.16bn in 2008. There are several other schemes which were also offered in 1985, 1991, 1998, 2012 and 2016. However, the FBR did not disclose their revenue recovery or beneficiaries.

Resource:

Originally Published in Dawn, June 23rd, 2018

https://www.dawn.com/news/1415559/amnesty-scheme-sees-massive-response

 

How to file Tax returns in Pakistan 2018

Once you’ve registered, you can send your tax return using HM Revenue and Customs’ (HMRC) free Self Assessment online service.

See this video to Become filer in Pakistan with FBR:

There are different ways to register if you’re:

  • self-employed or a sole trader
  • not self-employed
  • registering a partner or partnership

You can get help filling in your return.

You then have to pay your bill by the deadline.

Using software or paper forms

You can choose to send any Self Assessment return using software or paper forms.

You must use one of these options to send returns:

  • for a partnership
  • for a trust and estate
  • if you get income from a trust
  • if you lived abroad as a non-resident
  • if you’re a Lloyd’s underwriter

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