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4th July, 2008 EXPLANATORY NOTES FOR S.R.O. 713(I)/2008

Federal Board of Revenue has issued Notification (Sales Tax) / S.R.O. 713 (1)/2008 dated 3rd July, 2008. The said Notification has amended S.R.O. 647(I)/2007 dated 27th June 2007, which provides exclusions to certain sectors from the limitation as prescribed in section 8B of the Sales Tax Act, 1990. The sectors specified in the S.R.O. are not subject to limitation of input tax adjustment to the extent of 90% of output tax. Presently, following sectors are given this benefit under S.R.O. 647(I)/2007:

 

1.

Persons registered in electrical energy sector.

2.

Oil marketing companies and petroleum refineries.

3.

Fertilizers manufacturers.

4.

Manufacturers consuming raw materials chargeable to sales tax at the rate of 18.5% or 21% provided value of such raw materials exceeds 50% of value of all taxable purchases in a tax period.

5.

Wholesalers-cum-retailers operating in Chapter XII of the Sales Tax Special Procedures Rules, 2007.

6.

Commercial importers provided the value of imports subjected to 2% value addition tax under Chapter X of the Sales Tax Special Procedures Rules, 2007, exceeds 50% of value of all taxable purchases in a tax period.

7.

Person making zero-rated supplies provided value of such supplies exceeds 50% of value of all taxable supplies in a tax period.

 

Through amendment by S.R.O. 713(I)/2008, following sectors have been added to the existing list:

8.

   Distributors and wholesalers.

9.

   Gas distribution companies.

10.

   Solvent extracting units of edible oils.

 

-Sd-
(Muhammad Hafeez Mughal)
Secretary (PR)
1st July, 2008 Explanatory notes for SRO 695(1)/2008 dated 26-06-2008
1. This SRO has been issued to reduce the pressure from e-portal and also to provide reasonable time to the taxpayers to file their Income Tax withholding statements. Earlier to this there was a same date for e-filing of monthly return of Sales tax as well as Income Tax Withholding statement and it used to slow down the whole process on e-portal on the last dates. Through SRO No.353 dated 03-04-2008, the last date of filing of withholding statement was changed to 10th of each month. But it created problem for the taxpayers as the time available to file their Income Tax withholding statement was too short. Hence the present SRO has now prescribed the new date for filing withholding statement for Income Tax as 20th of each month. The change in date of Income Tax withholding statement will ease the pressure on e-portal facilitating the taxpayer.

2. A further change has been brought and now e-filing has been made mandatory for Non-Resident ship owner and air craft owner or Charterer thereof. Both these provisions will be applicable w.e.f 1st July, 2008.

-Sd-
(Muhammad Hafeez Mughal)
Secretary (PR)
1st July, 2008 VIDEO/PICTORIAL COVERAGE OF FBR CHAIRMAN'S PRESS CONFERENCE
Secretary General, Revenue Division/Chairman, Federal Board of Revenue, Mr. M. Abdullah Yusuf addressing a Press Conference on 2nd July, 2008 (Wednesday) at Conference Room, 3rd Floor, FBR Headquarters, Constitution Avenue, Islamabad at 4.00 p.m.

The Chairman will apprise the media about revenue collection achievements of FBR during the financial year 2007-08, ended last mid-night. He will also respond to the queries, if any, about the taxation measures, announced by the Government, in the new Federal Budget.

All local & foreign economic correspondents, TV channels and Press Photographers are cordially invited to cover the Conference.

-Sd-
(Muhammad Hafeez Mughal)
Secretary (PR)
 28th June, 2008 COLLECTION OF TAX REVENUE ON 28TH, 29TH & 30TH JUNE SBP, NBP, INCOME TAX OFFICES TIMINGS EXTENDED


In order to facilitate the taxpayers to pay their due taxes, all authorized branches of State Bank of Pakistan and National Bank of Pakistan will remain open till 6.00 p.m. on Saturday & Sunday, the 28th & 29th June, 2008 and uptill 10.00 p.m. on Monday, the 30th June, 2008.

Accordingly, all Income Tax Offices will remain open till 8.00 p.m. on Saturday & Sunday, (28th & 29th June) and till 12.00 midnight on Saturday, the 30th June, 2008. They will receive CPRs (challans) and arrange collection of tax and facilitate the taxpayers.

These measures have been taken by the Federal Board of Revenue as a part of its policy to extend all possible help and cooperation to the taxpayers in meeting their tax obligations.
 
-Sd-
(Muhammad Hafeez Mughal)
Secretary (PR)
22nd June, 2008
 		 Major Amendments in Finance Bill

National Assembly of Pakistan today approved the Finance Bill for financial year 2008-09. Out of total 76 amendments, proposed by the Senate of Pakistan, 51 proposals have been accepted. The remaining 15 proposals will be duly considered during the course of the year.

Major Amendments made in the Finance Bill, passed by the National Assembly today, concerning Sales Tax & Federal Excise are as under:

  • Definition of cottage industry has been amended to provide that those manufacturers shall fall within the purview of cottage industry whose annual utility bill is below seven lac rupees and annual turnover is below Rs. Five million. Earlier the utility bill limit was six lac rupees. It may be noted that supplies of cottage industry are exempt from payment of sales tax.

  • Exemption from payment of sales tax has also been granted by amending Sixth Schedule of Sales Tax Act, 1990, to hospitals owned by federal or provincial government, hospitals of statutory teaching universities having two hundred or more beds and charitable hospitals having fifty or more beds.

  • The services of property developers and promoters have been subjected to federal excise duty by amendment in First Schedule. The development of plots shall be subject to FED at Rs. 100 per square yard and construction of residential and commercial units shall be subject to FED at Rs. 50 per square foot of covered area.

    The duty structure for cigarettes has been changed to reflect increase in prices of cigarettes. The new structure shall be effective from 22nd June 2008.


    Amendments pertaining to Customs include the reduction of import duty on sulphonic acid from 15% to 10%.


    INCOME TAX :

    Earlier, the definition of urban area for the purpose of CVT, apart from rating areas, also included the following extended areas:

    I. In respect of Karachi, 40 kms from the outer limit of rating area or Cantonment Board.

    II. In respect of Faisalabad & Lahore, 30 kms form the outer limit of rating area or Cantonment Board.

    III. In respect of other cities, 10 kms form the outer limit of the rating areas.

    Now, the urban area for the purpose of CVT has been restricted to rating areas only and the above limits have been withdrawn.

    2. In Finance Bill, a proposal was included whereby the limit of donation to charitable institutions, educational intuitions and hospitals etc were reduced from 30% and 15% to 10% of the taxable income in respect of individuals and companies. By making amendment in the Finance Bill this reduction in donation for the purpose of tax credit to a donor has been withdrawn.

    3. One time collection of Withholding Tax (WHT) on purchase of new cars has been reduced substantially. The rate of WHT on purchase of new cars will now be as under:

ENGINE CAPACITY AMOUNT OF TAX
Upto 850cc Rs. 7, 500
851cc to 1000cc Rs. 10,500
1001cc to 1300cc Rs. 16,875
1301cc to 1600cc Rs. 16,875
1601cc to 1800 Rs. 22,500
1801cc to 2000cc Rs. 16,875
Above 2000cc Rs. 50,000

       4. Exemption form Withholding Tax (WHT) in respect of the following categories of exporters   
         has been allowed:

i) Direct & Indirect exporters covered, by DTRE scheme.

ii) Goods temporarily imported into Pakistan for the purpose of re-export.

iii) Manufacturing bonds.
Further, WHT on import of cotton lint, cotton yarn, and fabrics will be subjected to 1% WHT. The anomaly has been removed by bringing it at par with five (5) zero-rated sectors in Sales Tax.


5. Earlier, the senior citizens of age 60 and above were allowed a 50% rebate on tax liability if their total taxable income was upto Rs. 400,000. This limit has been increased to RS. 500, 000 to give relief to the senior citizens.

6. Earlier fixed tax was imposed on builders and developers. Now this tax has been withdrawn as income tax and the Federal Excise duty on services of property developers and builders has been levied.

Several other changes of editorial nature have also been made on the basis of the discussion in the Parliament on the Bill.
 

-Sd-
(Muhammad Hafeez Mughal)
Secretary (PR)
21st June, 2008 FBR, PNRA SIGN AGREEMENT TO COMBAT ILLICIT TRAFFICKING OF RADIOACTIVE & NUCLEAR MATERIALS

The Federal Board of Revenue and Pakistan Nuclear Regulatory Authority signed a Memorandum of Understanding today to promote cooperation and organize mutual assistance against illicit trafficking of radioactive and nuclear materials.

Member (Customs), FBR, Mr. Mahmood Alam and Member Executive, PNRA, Mr. Shakil-ur-Rehman singed the agreement on behalf of their respective organisations.

Secretary General, Revenue Division/Chairman, Federal Board of Revenue, Mr. M. Abdullah Yusuf and Chairman PNRA, Mr. Jamshed Azim Hashmi were present on the occasion.

Speaking on the occasion, FBR Chairman said that Pakistan Customs was engaged in combating commercial fraud, counterfeiting drug trafficking, money laundering, electronic crime and smuggling of arms. In addition to these challenges, the growing threat of international terrorism has, now, emerged as a major concern for Customs Administrations which includes potential threat of smuggling of nuclear and radioactive materials, he added.


"This is a common threat to all countries including Pakistan which has grave implication to security," Mr. Abdullah Yusuf said and added, "Both, FBR and PNRA, recognize the need to formalize cooperation and mutual assistance to meet the possible threat of smuggling of nuclear and radioactive materials through Pakistan." As government department that controls and administers the international movement of goods, Pakistan Customs is in a unique position to contribute to the global trade supply chain security besides socio-economic development in Pakistan through revenue collection and trade facilitation. On the other hand, Mr. Yusuf said, PNRA has the technical expertise to equip and train Customs personnel for detection of radioactive and nuclear materials. Therefore, by signing this MOU, FBR and PNRA shall achieve cooperation to create an organizational framework which was needed to effectively combat the nuclear terrorism threat, he added.


FBR Chairman was the opinion that this MOU shall enhance enforcement capabilities of Pakistan Customs for preventing, detecting and responding to illicit trafficking in nuclear and other radioactive materials. It is intended to provide the framework to ensure that their illicit trafficking is prevented. He informed that Pakistan Customs has prepared an implementation plan including a Pilot Project for enforcing provisions of this MOU. Pakistan Customs is committed to achieve the objectives of this MOU as a national responsibility, the Chairman added.

Mr. Abdullah Yusuf assured that FBR shall undertake all necessary measures to provide adequate training to Customs personnel through PNRA for use of detection equipment so that all international entry and exit points are fully monitored at the earliest. He was confident that the MOU shall go a long way to bring security to this country and international community.

PNRA Chairman, Mr. Jamshed Azim Hashmi, in his speech, said that both FBR and PNRA will cooperate with each other to meet international obligations to combat illicit trafficking of radioactive and nuclear materials. He assured all support to FBR to make the borders secured.

The MOU, signed today, explains that the world today is facing a growing international threat of illicit trafficking of radioactive and nuclear materials which present a grave hazard to national and international security. The Government of Pakistan recognizes its international obligations to join global efforts to combat threat of illicit trafficking of radioactive and nuclear materials.

Pakistan Customs is the primary enforcement agency at international entry and exit stations including international airports, dry ports among other Customs stations while PNRA is the national statutory nuclear regulatory authority in Pakistan entrusted with the task to regulate all aspects of application of ionizing radiations and nuclear energy in Pakistan, Therefore, the two organizations have entered into agreement for cooperation in joint measures for detection, and subsequent management, of radioactive and nuclear materials at strategic points. The necessary detection equipment has been procured by PNRA which shall be handed over to Pakistan Customs after training of the Customs personnel. This equipment shall be used by Pakistan Customs at sea ports, dry ports, airports and at any other Customs station at international border or for goods in transit or in transshipment or the goods en route throughout territory of Pakistan.

Under this MOU, PNRA shall provide the Pakistan Customs training, technical assistance and maintenance facilities for radiation detection equipment and radiation protection, management of radioactive/contaminated consignments while both shall cooperate to manage radioactive sources/materials identified or seized/confiscated by the Pakistan Customs.


It has been agreed that Pakistan Customs in association with PNRA shall run a pilot project at Islamabad International Airport for comprehensive enforcement model for Customs controls including monitoring/detection of radioactive/nuclear materials. This model shall be applied to all other international airports by the Pakistan Customs for effective and modern enforcement controls after completion of the pilot project.
 

-Sd-
(Muhammad Hafeez Mughal)
Secretary (PR)
10th June, 2008
 		 FBR HELPLINE TIMINGS EXTENDED

It has been decided that FBR Helpline will remain open from 09.00 A.M. to 09.00 P.M. from 11th to 30th June, 2008 to facilitate the taxpayers regarding their queries about taxation measures / changes in respect of Income Tax, Customs, Sales Tax and Federal Excise proposed in the Federal Budget 2008- 2009.
Officers and staff will be available at FBR Helpline to answer queries on budgetary measures immediately after the conclusion of Budget Speech. Taxpayers can seek help and assistance at FBR’s Toll-Free Help line number 0800-00 227 and 051-111-227-227. FBR’s website www.fbr.gov.pk  is also accessible for free downloading of Budget 2008-2009 after the conclusion of Budget Speech on 11th June 2008.

- Signed-
(Khawar Khurshid Butt)
Member. FATE / Official Spokesman, FBR
9th June, 2008 Explanatory notes for SRO 522(1)/2008 dated 09-06-2008
This SRO has been issued to reduce the pressure from e-portal and also to provide reasonable time to the taxpayers to file their Income Tax withholding statements. Earlier to this there was a same date for e-filing of monthly return of Sales tax as well as Income Tax Withholding statement and it used to slow down the whole process on e-portal on the last dates. There through SRO No.353 dated 03-04-2008, the last date of filing of withholding statement was changed to 10th of each month. But it created problem for the taxpayers as the time available to file their Income Tax withholding statement was too short. Hence the present SRO has now prescribed the new date for filing withholding statement for Income Tax as 20th of each month. The change in date of Income Tax withholding statement will ease the pressure on e-portal facilitating the taxpayer.

-Sd-
Usman Khalid Mirza
Member (Direct Taxes)
2nd June, 2008 SUBJECT: FBR HAS SURPASSED THE REVENUE TARGET SET FOR MAY 2008.

FBR has surpassed the revenue target of Rs. 84.8 billion assigned for May 2008.

2. The provisional tax collection for May 2008 has achieved an overall growth of 30.3%. The net collection during May 2008 has been Rs. 86 billion against Rs. 66 billion during May 2007. The revenue on account of direct taxes has risen from Rs. 20 billion last May to Rs. 24.1 billion in May 2008 reflecting a growth of 20.3%. The sales tax collection has jumped to Rs. 38.5 billion as against Rs. 27.4 billion of last May showing a growth of 40.3%. While sales tax on import stage has increased by 16.8%, the increase in the domestic component is 76%. The collection of federal excise duties has increased by 15.9%, increasing from Rs. 7.3 billion to Rs. 8.5 billion. Finally, a healthy growth of 33.3% has been recorded in the collection of customs duties where the net receipts have reached Rs. 14.9 billion against Rs. 11.2 billion of last May.

3. The July – May collection of FBR now stands at Rs. 849.6 billion as against Rs. 722.5 billion of corresponding period of last year showing an overall growth of 17.6%.

4. The provisional figures for the month of May are expected to increase further during the next few days.

-Sd-
(Khawar Khurshid Butt)
Member (FATE)
Official Spokesman of Federal Board of Revenue
Dated: 02-06-2008

2nd June, 2008 FBR PROMOTES 111 CUSOTMS OFFICIALS AS DY. SUPERINTENDENT
 
Federal Board of revenue has approved the promotion of 111 Customs Inspectors/Stenotypists, working in BS 11/12, as Dy. Superintendent (BS-14).
A meeting held under the chairmanship of Member (Admn), Maj.Gen. (Retd.) Muhammad Yasin has given final approval to the recommendations of the Department Promotion Committee (DPC) which met earlier in this regard. The DPC was presided over by the Collector, Sales Tax, Lahore.
Earlier, FBR had promoted 63 Income Tax Inspectors as Income Tax Officers, about a month back.
 

-Sd-
(Muhammad Hafeez Mughal)
Secretary (PR)