Finance Bill 2020 has made an amendment according to which Pakistan Stock Exchange (PSX) is required to deduct/collect a reduced rate of three percent on payment to non-residents.

As per the Federal Board of Revenue Pakistan, after Finance Act, 2020, various service providers are required to collect three percent income tax on payment to non-residents.

These services include:

• Inspection, certification, testing and training services,
• Building maintenance services,
• Share registrar services,
• Tracking services,
• Software development services,
• Hotel services,
• Courier services,
• Freight forwarding services,
• Transport services,
• Air cargo services,
• Manpower outsourcing services,
• Security guard services,
• IT services and IT-enabled services as defined in clause (133) of Part I of Second Schedule,
• Advertising services (other than by print or electronic media),
• Car rental services,
• Services rendered by Pakistan Stock Exchange Limited and Pakistan Mercantile Exchange Limited.

25 July 2020

As per the Finance Act 2020, for the persons appearing in an Active Taxpayers List (ATL), condition for the advance tax on educational fee under Section 236I of Income Tax Ordinance, 2001 has been abolished.

However, the condition for paying advance tax on educational fee is still valid for those not appearing in ATL.

Also, it has been made the requirement for educational institutes to provide details of those Non-ATL persons making a fee of more than Rs.200000 per annum.

The tax shall be collected under section 236I at a rate of 5 percent of the amount of fee for persons not appearing on ATL.

The collection of advance income tax on payment of the educational fees was introduced through Finance Act, 2013. The purpose of introducing the advance tax on such transaction was to bring those people into tax net who have taxable income but not paying their tax liability.

However, advance tax payable is adjustable against income tax liability, if the persons ensure his name on ATL and also files the income tax return.

23 July 2020

For the purpose of reduction in the domestic price of wheat, the Federal Board of Revenue Pakistan has abolished the regulatory duty on the import of wheat.

For this purpose, FBR has issued an SRO 633(I)/2020 which makes an amendment to SRO 6809I)/2019 dated June 28, 2019.

With the issuance of this SRO, regulatory duty in the import of wheat has been reduced from 60 percent to zero.

As per the sources of the FBR, this decision has been taken to encourage the import of wheat for the purpose of ensuring buffer stock at home and to maintain the retail price at lower.

22 July 2020

Big retail units shall remain sealed until they integrate with the online system of the Federal Board of Revenue Pakistan for sharing of sales and purchases.

It has been made mandatory for the big retail units to integrate their outlets with the FBR under the sales tax act 1990.

Those retailers would be facing punitive actions as per the statute who failed to integrate with the FBR.

Finance Act, 2020 has made amendments related to penalty for non-compliance for linkage of sales and purchase data with the FBR.

As per the amendment made to the Sales Tax Act 1990,

Any person, who is required to integrate his business for monitoring, tracking, reporting or recording of sales, production and similar business transactions with the board or its computerized system, fails to get himself registered under the Act, and if registered, fails to integrate in the manner as required under the law.

Penalty for above-mentioned is as follows:

• A penalty of up to one million rupees
• In case of continuation of failure to integrate with the FBR, after a period of two months after the imposition of penalty as aforesaid, his business premises shall be sealed till such time he integrates his business in the manner as stipulated under sub-section (9A) of Section 3 or Section 40C, as the case may be.

All tier-1 retailers are required to integrate all their POSs with FBR’s computerized system.

Tier-1 retailer is defined in section 2(43A) of the Sales Tax Act, 1990, to be a person who falls in any of the following categories:

• A retailer operating in an air-conditioned shopping mall, plaza or center, excluding kiosks;
• A wholesaler-cum-retailer, engaged in bulk import and supply of consumer goods on a wholesale basis to the retailers as well as on a retail basis to the general body of the consumers
• A retailer operating as a unit of a national or international chain of stores;
• A retailer whose cumulative electricity bill during the immediately preceding twelve consecutive months exceeds Rupees twelve hundred thousand;
• A retailer, whose shop measures one thousand square feet in area or more,

Extension in the date:

An extension has been made to the date for the integration of Point of Sales (POS) till August 31, 2020.

Previously, the last date to integrate the POS was June 30, 2020.

As per the FBR, only those retailers will be allowed to integrate their POS by August 31 who submit their intention to RTOs/LTUs by August 20, 2020.

FBR sources said that the decision had been taken due to lockdown in the many parts of the country in order to prevent the spread of coronavirus the business activities had become standstill.

The deadline had expired on December 15, 2019, which was given by the FBR to tier-1 retailers to integrate their POSs with the FBR online system. However, an extension was made in order to give the opportunity to big retailers to make compliance.

21 July 2020