Showing posts with label tax. Show all posts
Showing posts with label tax. Show all posts

Wednesday, 4 June 2014

New tax rates on cars, vehicles

ISLAMABAD: The government has slapped increased tax rates as well as advance tax on motor cars in the budget 2014-15.

Up to 850cc, the proposed advance tax stands at Rs10,000 for both return filers and non-filers.For 851cc to 1000cc, the proposed tax rate is Rs20,000 for filers and Rs25,000 for non-filers.

For 1001cc to 1300cc, the government has proposed tax rate of Rs30,000 on filers and Rs40,000 for non-filers.For 1301cc to 1600cc, the proposed tax rate is Rs50,000 for filers and Rs100,000 for non-filers.

For 1601cc to 1800cc, the proposed tax rate stands at Rs75,000 for filers and Rs150,000 for non-filers. For 1801cc to 2000cc, the government has proposed tax rate of Rs100,000 for filers and Rs200,000 for non-filers.

For 2001cc to 2500cc, the government has proposed tax rate of Rs150,000 for filers and Rs 300,000 for non-filers.

For 2501cc to 3000cc, the government has proposed tax rate of Rs200,000 for filers and Rs400,000 for non-filers.

For above 3000cc, the government has proposed tax rate of Rs250,000 for filers and Rs450,000 for non-filers.

In case of private cars, the government has slapped Rs1,000 tax for filers and non-filers up to 1000cc cars.

Up to 1001cc to 1199cc, the proposed tax rate for filers will be Rs1,800 and non-filers Rs3,600. For cars from 1200cc to 1299cc, the proposed tax rate for filers will be standing at Rs2,000 and for non-filers Rs4,000.

For 1300cc to 1499cc, the proposed tax rate stands at Rs3,000 for filers and Rs6,000 for non-filers.

For 1500cc to 1599cc, the proposed tax rate for filers will be standing at Rs4,500 and non-filers Rs9,000. For 1500cc to 1999cc, the proposed tax rate for filers stands at Rs6,000 and for non-filers Rs12,000.

For 2000cc and above, the tax rate for filers will be Rs12,000 and for non-filers Rs 24,000.

Where the motor vehicle tax is collected in lump sum, the tax rate will be standing at Rs10,000 for filers and non-filers.

For 1001cc to 1199cc, the proposed tax rate for filers will be standing at Rs18,000 and non-filers Rs36,000. For 1200cc to 1299cc, the proposed tax rate is Rs20,000 for filers and Rs40,000 for non-filers.

For cars from 1300cc to 1499cc, the proposed tax rate is Rs30,000 for filers and Rs60,000 for non-filers. The tax rate will be Rs45,000 for 1500cc to 1599cc for filers and Rs90,000 for non-filers.

For 1600cc to 1999cc, the proposed tax rate is Rs60,000 for filers and Rs120,000 to non-filers.

For 2000cc and above, the proposed tax rate for filers will be standing at Rs120,000 and Rs240,000 for non-filers.

Friday, 30 May 2014

Govt to impose 10pc tax on expensive air tickets

ISLAMABAD: The government has decided to impose 10 percent withholding tax on first class and business class international travelers in the budget 2014-15, The News has learnt.

In another major revenue spinning measure, the government is all set to enhance tax rates on services of professionals including doctors, lawyers, chartered accountants, architects, dentists, interior decorators and many others from existing 6 to 10 pc.

However, Prime Minister Nawaz Sharif on Thursday directed the FBR authorities not to increase the tax burden on the common citizens and on kitchen items such as vegetables, ghee, cooking oil, medicines.

“Prime Minister Nawaz Sharif has convened another crucial meeting on Friday to take decisions on withdrawal of hundreds of Statutory Regulatory Orders (SROs) as well as transferring SRO issuance powers to Parliament,” official sources in Finance Division confirmed to The News here on Thursday.

According to finalised budgetary measures, the government has decided to tap expenditures side of potential tax evaders in the coming budget as 10% withholding tax in adjustable mode is proposed to be levied on non- filers international travelers and 5 percent on registered travelers who travel in first class and business class of airlines.

“There will be no withholding tax on economy class of international travelers,” said the sources.

According to the working done to justify imposition of 10 percent withholding tax in adjustable mode on wealthy people who can afford to travel in first class or business class, the sale of total airline tickets for purpose of international traveling of wealthy class consumed Rs60 billion per annum. There is fixed Federal Excise Duty (FED) imposed on air traveling for both domestic and international travelers.

Currently, there is 5 percent Withholding Tax (WHT) imposed on domestic travelers and now the government would be moving towards slapping this tax on international travelers. “We expect that the FBR will generate around Rs6 billion through this tax measure in the next fiscal year,” said the official sources.

The government, the sources said, intended to move ahead to increase the tax burden on those who are unwilling to come into tax net.

Another proposal so far finalised by the government for upcoming budget is to increase rate of withholding tax on professionals such as doctors, lawyers, chartered accountants and many others.

The services under section 153(1) (b) of the Income Tax Ordinance 2001 attract tax deduction of 6 percent. The said rate is to be enhanced to 10 percent in the coming budget. Under section 153, the services include the services of accountants, architects, dentists, doctors, engineers, interior decorators and lawyers, otherwise than as an employee.

Tuesday, 22 April 2014

Govt decides to reduce sales tax rate to single digit


 
KARACHI: To reduce inflation, give relief to the middle and lower income people and stop tax evasion, the government has accepted the proposal of the business community’s working group to bring down the sales tax rate to a single digit.
On the direction of the finance minister, the Federal Board of Revenue (FBR) started work on reducing the rate of sales tax below 10 percent. The finance minister and his team welcomed the proposal coming from chambers and associations from across the country. Sources said Finance Minister Ishaq Dar had told traders and industrialists that the prime minister wanted to give relief to the middle and lower income groups.

A panel of chartered accountants and economic experts has put the proposal in front of the ministry after working many weeks. According to the proposal, reducing the sales tax rate to a single digit will benefit the people and reduce inflation.

The working group has also included the analysis of FBR data for the year 2012-13 showing that when the government had implemented sales tax at the rate of 17 percent, it could generate revenue only at the rate of 3.92 percent after making adjustments.

The reason for this loss is fake refunds and wrong inputs.The proposal has asked the government to set the sales tax rate at between 5 to 7 percent and abolish the system of input adjustments and refunds.

If the government keeps the rate of sales tax at 7 percent, it could generate revenue worth Rs1,400 to 1,500 billion. The sources said the ministry had accepted the proposal overall but corrupt elements in the FBR were opposing it.

Wednesday, 16 April 2014

Senator Gulzar tax evasion case being pursued, says FBR

 
ISLAMABAD: Federal Board of Revenue says it will expedite investigations into the alleged tax evasion and concealment of assets by a political dynasty of senators and acknowledged that the case has not yet been concluded.
Reacting on a report published in The News on Tuesday about Senator Gulzar and his family that hid their businesses abroad from tax authorities, a senior FBR official told The News that operation wing had directed the regional offices to expedite the investigation bringing the case to a logical conclusion at the earliest.

However, it remains to be seen when the official claims in this respect are translated into reality as FBR has traditionally been soft on the big fish involved in tax evasion.The official said majority of the family members neither filed tax returns nor submitted wealth statements in the years under examination and they have been served with show cause notices.

A legal battle in UK over the possession of super-expensive mansion worth Rs14 billion has brought under scrutiny the alleged tax evasion and concealment of assets in Pakistan and abroad by a family of senators.

Senator Gulzar Ahmed, his sons (privatization minister in PPP government) Senator Waqar Ahmed and now-former Senator Ammar Ahmed Khan are at the center stage of this controversy.

This case has become a test case for the government that has voted for the National Assembly resolution moved by PTI MNA Asad Umar demanding investigation into the tax evasion of all the parliamentarians.

While the family has persistently been declaring losses in businesses to avoid taxes in Pakistan, its statement deposited to the London’s high court in litigation against Deutsche Bank offers contrasting confession.

The court documents spills the beans about properties and businesses in and outside Pakistan neither claimed in tax returns submitted to Federal Board of Revenue nor in asset details submitted to Election Commission of Pakistan.

This is a typical story of a rich family using political clout to thrive in business without returning any penny in taxes to the public exchequer.While the declaration of previously concealed assets and only in the UK’s court could not win legal battle to the family there; however, it earned the family unpleasant attention in Pakistan that has now been spotted on the radar screen of the FBR’s wing hunting down tax evaders.

Intelligence and Investigation Directorate (Inland Revenue) of FBR after diligently examining the UK court’s record unearthed massive tax fraud and details forwarded for thorough scrutiny to the regional tax office in Lahore.

Senator Gulzar, his wife Razia Sultan, his daughter Sehr Ashar, Senator Waqar and Ammar Ahmed were recommended for thorough probe.The investigation was ordered in November last year without any progress so far that raises apprehensions about the likely ‘shut and close case’ in the name of ‘political reconciliation.’

Tuesday, 15 April 2014

Dar tasks FBR to recover Rs257 bn tax monthly

 
ISLAMABAD: Finance Minister Ishaq Dar on Tuesday directed the Federal Board of Revenue (FBR) to meet the target of tax collection at the rate of Rs257 billion a month as the country could not afford a delay in matters related to the economy.
He said the tax rates would not be increased but the tax base would be expanded to improve the ratio of tax to Gross Domestic Product (GDP).Notably, the government has made a commitment with the International Monetary Fund (IMF) to abolish tax exemptions and broaden the narrowed tax base in the next budget 2014-15 for increasing its stagnant tax to GDP ratio.

Dar was speaking at the FBR’s Regional Commissioners Conference held at the board’s headquarters.“We are committed to raising the tax revenue of the FBR 0.75 percent by abolishing tax exemptions and taking other measures in the upcoming budget,” official sources told The News.

They said nearly 0.35 percent of GDP-related revenue would be generated only through abolishing different tax exemptions currently being enjoyed by influential segments of the society.The finance minister said, “All the macroeconomic targets are indicating a positive side of our national economy, but the FBR’s tax collection is lagging behind. All-out efforts are required to achieve the revised target.”

The minister said he might start sitting in the Revenue Division to ensure the revised tax collection target of Rs2.345 trillion for the fiscal 2013-14 materialised.The finance minister had returned home on Tuesday morning from the US after attending the annual spring meeting of the IMF and World Bank. On his return, he directly reached the FBR headquarters to inform the tax collectors that they would have to gear up efforts to achieve the target of Rs199 billion envisaged for the ongoing month (April 2014).

He appreciated the tax collector for attaining 17 percent growth in revenue by netting Rs1.573 trillion in the first nine months of the current fiscal year as compared to the same period last fiscal.

The FBR will have to generate Rs772 billion during the last quarter (April-June) to meet the annual target.The tax collection target was revised downward from Rs2.475 trillion to Rs2.345 trillion in view of the constraints.

FBR’s spokesman Shahid Hussain Asad told this scribe that the finance minister had appreciated the performance of the board and also directed the tax officials to improve their performance in the last quarter.

“In the conference, we finalised a strategy to improve our tax collection,” he said and added that the government was not going to announce any relief. Therefore, the commissioners are sensitised to focus on their collection targets envisaged for the remaining two-and-a-half months, he said.

It is relevant to mention here that the Nawaz Sharif government has committed to the IMF to abolish a number of tax exemptions and to take other measures to broaden the narrowed tax base in the next budget 2014-15

Saturday, 5 April 2014

Tax ombudsman office clarifies report

ISLAMABAD: The Federal Tax Ombudsman office has clarified a news item published in ‘The News’ on March 30, titled, ‘Textile iron companies using FTO office to break tax queue”.

In a press release on Friday, the Registrar of the Federal Tax Ombudsman Secretariat termed the report incorrect.

He said that the observation that Advisers in the Regional Office Lahore, routinely summon Commissioners Inland Revenue during Complaint Proceedings and pressurize them to issue refunds of tax to Complainants, “Whether Lawful or Not” is false and is categorically denied.

The fact is that neither Commissioners nor Additional Commissioners are asked to appear before the Advisers unless special circumstances require their personal appearance to render explanation on specific points in particular cases through lawful exercise of powers conferred upon the F.T.O and delegated to the Advisers.

In not a single case, has any Adviser issued instructions unilaterally to FBR officers for issuance of tax refunds. Any correspondence between the Regional Office and FBR officials in the context of tax refunds is, invariably, directly related to implementation of the recommendations made by the Federal Tax Ombudsman when disposing of complaints. Advisers are duty bound to get all the recommendations approved by the FTO, fully implemented within the time frame stipulated in the order/statute.

In the cases referred to in the news item namely (i) C.No.80/2013 M/s. Black Gold Industry, (ii) C.No.1123/2013 M/s. Irfan Textile Mills (iii) C.No.337/2013 M/s. Siddique Iron Industry (Pvt) Ltd. and (iv) C.No.1399/2013 M/s. US Demin Mills (Pvt) Ltd., the FBR/Inland Revenue Department neither filed Review Petitions before the FTO nor preferred Representations before the Hon’ble President of Pakistan against the recommendations issued by the FTO.

In such an eventuality, the recommendations have attained finality. The FBR, therefore, is bound under the law, to fully implement the recommendations before taking any other action. In complaint No.1398/2013 M/s. US Apparel (Pvt) Ltd., the department gave a written undertaking to issue refund, as per law, but subsequently filed a Representation before the Hon’ble President of Pakistan which is still sub-judice.

The Hon’ble President of Pakistan when disposing of departmental representations against FTO’s recommendations for issuance of due refund, has invariably directed that no action may be taken by FBR before first implementing the FTO’s recommendations. FBR too has strictly directed field formations, in writing, to fully implement the FTO’s recommendations in such cases within the time given in the FTO’s order and not to take any other action without first doing so. The Advisers take cognizance of any violation of the President’s decision and the FBR instructions by the field officers and draw their attention to the serious lapses whenever the same occur.

As regards the observation that Advisers pressurize FBR officers to ‘break the queue’ and issue refund ‘out of turn,’ this again is a patently misleading statement.

The fact is that the FTO makes time bound recommendations in his order disposing of a complaint and Advisers monitor implementation of the same.

Again, the FBR has also directed FBR field officials, in writing, not to delay issuance of refund under any pretext in cases where the FTO or any competent Court, has directed that refund be issued even if that entails ‘breaking the queue.’

The observation that the Advisers in the Regional Office Lahore were taking undue interest in issuance of tax refunds in Steel and Textile sector cases is bereft of any objective basis whatsoever. The fact is that almost 80% of the complaints received in the FTO Office from all categories of taxpayers pertain to unwarranted delay by departmental officers in issuance of refund and the Advisers monitor implementation of the FTO’s recommendations in all the complaints disposed of requiring speedy administrative justice.

The statement that an Adviser employed in the Regional office Lahore was also working as a Tax Consultant is malicious and scandalous and conduct of Advisers is closely/analytically monitored.

Sunday, 30 March 2014

Textile, iron companies using FTO office to break tax queue

ISLAMABAD: As Federal Board of Revenue (FBR) has framed rules ensuring tax refund on ‘first come, first served’ basis, the fat and shrewd claimants are using the officials of Federal Tax Ombudsman (FTO) for breaking the queue and getting their money, either by hook or by crook.

Background discussions indicate that the FTO Registry Office, Lahore is very pro-active in getting the refund whether they are lawful or not and this practice has gained momentum after the exit of Dr Shoaib Suddle, former FTO, as during his time only he used to summon commissioners and that, too, on review applications.

The situation has now totally reversed on this count as advisers at Lahore Registry summon even the commissioners concerned to withdraw lawful orders.

In some cases, the Registry Office has directly approached sales tax refund office for passing telephonic instructions. This is in contrast with another revelation that one of the advisers, Haji Ahmed, was also working as private consultant dealing with refund issues while simultaneously discharging duties in FTO office.

M/s Irfan Textile Mills, one claimant, got five claims refunded out of turn by approaching FTO Registry Office. Similarly, two claims of M/s Eastern Spinning at serial number 383 and 377 have also been sanctioned out of turn on the instructions of the adviser of the FTO Lahore Office.

Seeing this practice, more and more taxpayers are approaching the FTO Lahore office for expediting their refunds. Recently, M/s US Apparel and M/s US Denim approached FTO and subsequently the FBR officers were issued instructions to sanction their refunds amounting to Rs300 million in a similar fashion.

There is an interesting case of M/s Siddiq Iron Industry which filed refund claim amounting to Rs555 million in complaint No 202/HR/ST (44)/337/2013. This claim was rejected, as the tax stated to have been paid at import stage was mis-declared. Accordingly, the refund was rejected and this order was confirmed by commissioner appeal but his action was declared as non-compliance of the FTO recommendation.

This action was contrary to earlier practice where the FTO used to recommend for processing the refund claim as per law. In the said case, the additional commissioner and young lady officers were summoned and asked to give in writing the schedule of refund which the FBR would issue to M/s US Apparel, a practice in violation of existing rules.

In another case, the FTO adviser earlier recommended that the refund of M/s Blackboard Industry amounting to millions of rupees should be processed as per law. As the officers concerned were in the process of concluding the proceedings, FTO office issued an order granting interim relief and instructed the officer not to pass an adverse action.

As ‘The News’ sent a list of questions to FTO for its version, the spokesman responding to a question about the adviser’s power said that the adviser had been delegated authority to summon and examine such officers as are relevant to the proceeding. However, they were silent on the point that the tax commissioners couldn’t be summoned by an official other than FTO himself, as they are supervisory officers.

On the question of registry office, the role in facilitating out of turn refund payment, the spokesman said there was no order for refund on ‘first come, first served’ basis.’ As a matter of fact, FBR issued these instructions vide letter C No 1(11)CSTRO/FBR/2013 directing tax officers to give priority to FTO recommendation. However, the FTO adviser can direct expedition in process only when a taxpayer is denied refund in normal proceedings whereas Lahore Registry Office invariably asked for sanctioning of refund by all means as was done in case of M/s Blackboard Industry through show of undue haste.

Contrary to spokesman’s version, the jurisdiction of FTO has been determined in section 9, sub-section (2) clause (b) of the Federal Tax Ombudsman Ordinance, 2000, which is re-produced as under: “The Federal Tax Ombudsman shall not have jurisdiction to investigate or inquire into matters which. (a) are subjudice before a court of competent jurisdiction or tribunal or board or authority on the date of the receipt of a complaint, reference or motion by him; or (b) relate to assessment of income or wealth, determination of liability of tax or duty, classification or valuation of goods, interpretation of law, rules and regulations relating to such assessment, determination, classification or valuation in respect of which legal remedies of appeal, review or revision are available under the relevant Legislation…(c) is contrary to law, rules or regulations or is a departure from established practice or procedure, unless it is bona fide and for valid reasons; (d) is perverse, arbitrary or unreasonable, unjust, biased, oppressive, or discriminatory; (e) is based on irrelevant grounds; or (f) involves the exercise of powers, or the failure or refusal to do so, for corrupt or improper motives, such as bribery, jobbery, favouritism, nepotism, and administrative excesses.

A plain reading of above law explains that the FTO is empowered to make inquiries where prima facie maladministration has taken place. It cannot take cognizance where departmental remedies are available as appear before commissioner (Appeals) or appellate tribunals. However, in routine or all cases involving refunds, the complaint is registered and inquiries are held. Then the officers from additional commissioners to commissioners are summoned given veiled threats to sanction the refunds, according to officials privy to the state of affairs in FTO Registry Office in Lahore.

To another question, the spokesman denied that Haji Ahmed was doing private practice. However, ‘The News’ confirmed from different sources that he was consultant with Arif Butt until recently while simultaneously discharging duties as FTO adviser.

Regarding contempt threats as a tool being used by advisers in the registry office, the spokesman denied this but stated that there were provisions that enabled the FTO to initiate contempt proceeding.

As a matter of fact, tax lawyers say, the FTO is empowered to do so but Lahore Registry adviser invariably invokes this provision for getting the refund sanctioned whether it is admissible under the law or not.

In M/s Blackboard Industry case, the spokesman said, there were inordinate delays in implementation of FTO recommendations and accordingly the officers concerned were cautioned till contempt petition was disposed of. No adverse action could be taken against the complainant. This was done as per complainant apprehension that his refund would be rejected arbitrarily raising demand against him.

The counter argument is that the officer concerned has right to pass the order as warranted under the law. He cannot be stopped from issuing an order which the law empowers him.

On M/s Siddiq Iron Industry (Pvt) Ltd and M/s Irfan Textile Mill cases, the spokesman said the adviser’s recommendations required that the department issued the refund as was due under law as they paid tax on import stage. However, the FBR officials say they did not pay any tax on the import stage on re-meltable scrap, which is refundable or adjustable. Rather the complainant through mis-declaration complained for refund that it has paid tax on import stage, they said. The FTO recommended refund on the grounds that they have paid tax on the import.

IMF for expanding tax circle, ending relaxations

KARACHI: International Monetary Fund (IMF) on Saturday asked Pakistan to create better atmosphere of business, expand tax circle and abolish SROs about tax relaxation.

The IMF expressed satisfaction over the structural reforms initiated by the present government. However, for further improvement in reforms it asked the government to take tax base to 0.5 percent of country’s GDP along with removing hurdles in the way to make investment, so that the pace of financial ratio could be increased by getting maximum investment.

The IMF further asked the Pakistan government to abolish concession in tax and also abolish SROs in this regard. The IMF also asked the government to reduce deficit and bring it between 5.5 percent and 5.75 percent of the GDP.

The sources said that the government was seriously thinking to implement proposals of IMF and it was expected that the announcement of implementing these proposals would be made in the financial budget 2014-15 which would be presented in June. The IMF said that there seemed improvement in Pakistan economy totally and it was expected that the ratio of GDP would be increased from 2.8 percent to 3.1 percent in the current financial year.