An SRO 344(I)/2020 has been issued by the FBR for the purpose of making an amendment in the SRO 1190(I)/2019 dated October 02, 2019.

Input adjustment of 95% had been allowed against output tax by the FBR.

Through SRO 1190(I)/2019, making an amendment in Section 8B of the Sales Tax Act 1990, a fresh list of Sectors that were allowed for input adjustment was issued by the FBR.

Input adjustment and refunds were allowed to the following sectors:

1. Fertilizers manufacturers.
2.  Distributors.
3. Pakistan Steel, Bin Qasim, Karachi.
4. Oil marketing companies and petroleum refineries.
5. Telecommunication services.
6. Persons registered in electrical energy sector.
7. Persons making zero-rated supplies, including exports, provided that the value of such supplies exceeds 50 percent of the value of all taxable supplies in a tax period.
8. Registered persons other than manufacturers, making supplies of items covered under the Third Schedule to the Sales tax Act, 1990, on which sales tax has been paid by the manufacturer or importer on retail price, provided that value of such supplies exceeds 80 percent of the value of all taxable supplies in a tax period
9. Gas distribution companies.
10. Commercial importers where value of import subject to 3 percent value addition as prescribed in Twelfth Schedule to the Act exceeds 50 percent of value of all taxable purchases, including imports, in a tax period.

01 May 2020

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