Tax Laws (Second Amendment) Ordinance 2019 was passed by the National Assembly and was promulgated through Presidential Ordinance in December 2019.

After passage, Tax Laws (Second Amendment) Ordinance 2019 shall be called as the Tax Laws (Amendment) Act, 2020.

A copy of the Act has been issued by the FBR and this act amends Section 33 of Sales Tax Act, 1990.

 As per this amendment:

1. Any person, who is integrated for monitoring, tracking, reporting or recording of sales, production and similar business transactions with the board or its computerized system, conducts such transactions in a manner so as to avoid monitoring, tracking, reporting or recording of such transactions, or issues an invoice which does not carry the prescribed invoice number or barcode number or barcode or bears duplicate invoice number or counterfeit barcode, or any person who abets commissioning of such offence.

In the cases mentioned above, a penalty of higher of Five hundred thousand rupees or two hundred per cent of amount of tax involved shall be imposed on such person. Upon conviction by a special judge, such person shall be liable to an imprisonment up to maximum of two years or an additional fine shall be charged from the person, which may extend to two million rupees, or both.

Further, upon conviction by a special judge, a person who abets commissioning of such offence shall be convicted with an imprisonment of up to 1 year or with an additional fine up to two hundred thousand rupees or both.

2. Another amendment as per this act is the case in which a person fails to register his business for monitoring, tracking, reporting or recording of sales, production and similar transaction under the computerized system, while he was required to be registered with the act. The second case is the registered person who fails to integrate with this system the way as required by the law.

A penalty of up to one million rupees shall be imposed on such person and if such offence remains continued after a period of six months of the imposition of penalty as mentioned above, the business premises of such person shall be sealed and an embargo shall be placed on his sales.

3. Any person being a manufacturer or importer and deals with such items whose basis of taxation is retail price and such person fails to print retail price in the manner as stipulated by the Act.

A penalty of higher of ten thousand rupees or five per cent of the amount of tax involved shall be imposed on such person.

Further, such goods shall be liable to confiscation. However, the redemption of the confiscated goods may be allowed by the adjudication authority, in case payment of fine made is not less than twenty per cent of the total retail price of such goods.

30 April 2020

A business support package named “Chotae Karobar o Sanat Imdadi Package” has been announced by the Government on Monday this week. As per this package, payment of three months of electricity consumption amounts to 5KW commercial and 70KW industrial connections have been entailed in order to see the small industrial and commercial units through this difficult time.

These commercial and industrial units would be able to utilize the deposited amount over a period of the next six months.

The target of this support package is smaller businesses, hence, connections up to 5KW commercial and 70KW industrial would be getting benefit from this scheme. These connections constitute 90% of the commercial connections and 70-80% of industrial connection in Pakistan.

The total amount would be credited in the bills paid by such consumers for electricity consumption during the last year’s corresponding three months (May to July 2019).

These consumers can utilize the sums for up to six months.

However, this financial support will be capped at Rs.100000 for commercial and Rs.450000 for industrial connections.

It is being expected that over 3.5 million firms would be getting benefit from this scheme.

29 April 2020

An SRO 326 (I)/2020 has been issued by the FBR for the amendment of the Islamabad Capital Territory (Tax services) Ordinance 2001. As per this amendment, sales tax on the services has been reduced from five percent to zero percent.

FBR stated that the rate of tax shall be zero percent on the services being provided by the property developers and promoters, allied services being included, related to low-cost housing schemes sponsored or approved under the Naya Pakistan housing scheme and Development authority or under the Ehsaas program by the Government.

As per this amendment, a condition shall be met that no input tax adjustment or refund shall be admissible in order to avail the rate of zero percent for such services.

28 April 2020

FBR has inserted a new clause (114AA) in Part I of the second schedule to the ordinance. As per this clause, the exemption has been provided on the capital gain on the sale of constructed residential property (in case of a house, having a land area of 500 square yards and in case of flat, area up to 4000 square yards), that was being used for personal accommodation by the resident individual, his spouse or his dependents, and the utility bills for that property were being issued in the name of said individual.

The exemption shall not be available to such a person who has previously availed the exemption.

However, Section 236C of the ordinance remains un-amended, the section implies that sale of the above-mentioned properties would be subject to the advance tax collection of 1% of the sale proceeds, unless, an exemption certificate from commissioner has been obtained by the seller.

As per the current provisions, the capital gain tax is zero on the sale of those constructed properties whose holding period is more than 4 years. Also, in the case when such property is sold within one year of the holding period, advance tax collected under Section 236C at the rate of 1% is being treated as minimum tax.

This amendment is purposed to providing an exemption of capital gain tax to those constructed properties whose holding period is less than 4 years,

27 April 2020