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FBR Issues Updated Sales Tax and Federal Excise Acts

Islamabad: FBR Issues Updated Sales Tax and Federal Excise Acts. The Federal Board of Revenue (FBR) has released the revised editions of the Sales Tax Act, 1990, and the Federal Excise Act, incorporating amendments introduced through the Finance Act 2023, as reported by a leading newspaper on July 5. These amendments bring about notable modifications to the tax system in Pakistan.

Here are the key details regarding the updated Sales Tax Act and Federal Excise Act:

A 4% additional tax will be imposed on the value of supplies made to individuals who are not registered or are not active taxpayers.

Individuals engaged in the manufacturing, possession, transportation, distribution, storage, or sale of specified goods with counterfeit tax stamps, banderoles, stickers, labels, or barcodes will have their goods confiscated outright.

Sales tax zero-rating will apply to imports or supplies made by, for, or to qualified investments mentioned in the First Schedule of the Foreign Investment (Promotion and Protection) Act, 2022, within the timeframe specified in the Second Schedule of the Act.

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Sales tax exemption will be granted to blood transfusion sets that are not packed in aluminum foil but are imported alongside blood bags CPDA-1, in the same shipment and corresponding quantity.

Supplies and imports of plant machinery and equipment for installation in tribal areas are exempt from sales tax. Industrial inputs used by industries located in tribal areas also qualify for the exemption. These exemptions will remain in effect until June 30, 2024.

Sales tax exemption is provided for electricity supplies made to residential and commercial consumers in tribal areas, as well as industries in tribal areas that were established and commenced production before May 31, 2018, with specific sectors excluded. This exemption is valid until June 30, 2024.

A 1% sales tax applies to substances registered as drugs under the Drugs Act, of 1976, and medicaments classified under Chapter 30 of the First Schedule to the Customs Act, of 1969. However, certain items such as filled infusion solution bags, scrubs, detergents, surgical tapes, disinfectants, and cosmetics are exempt from this tax.

Raw materials used for the primary manufacturing of pharmaceutical active ingredients and products are subject to a 1% sales tax. Reduced tax rates apply to imported raw materials subject to specific conditions.

These amendments bring significant changes to Pakistan’s tax system, with the aim of streamlining processes, tackling counterfeiting issues, and providing exemptions for specific goods and areas.

Punjab presents 4-month budget 2023-24 with outlay of PKR 1.719t

Lahore: Punjab presents 4-month budget. The interim government of Punjab has released an income tax-free budget for the beginning of the next fiscal year, 2023-24 (July until October), according to a report released on the 20th of June.

The announced Punjab budget included an investment of PKR 1.719 trillion. It was approved by the cabinet led by chief minister Mohsin Naqvi. Here are the main aspects of the budget

The wages of all employees in the government will be raised by 30%.
Pensioners will get an increase of 5%, and pensioners over 80 will get a rise of 20%.
An increase of 30% in the basic salary of employees in the government
The budget doesn’t introduce any new taxes.
The elimination of all provincial taxation on the IT sector
PKR 325 billion to support the development program in this period.
A total of PKR 426.87 Billion has been allocated to fund ongoing development schemes
PKR 941.34 billion is allocated to current expenses
PKR 1 billion to fund the creation of the fund for journalist endowment
PKR 70 billion is allocated for social welfare
PKR 120.4 billion was given for the delivery of services
The PKR 16.4 billion in capital expenditure has been approved in the energy sector
PKR 47.6 billion is authorised for agriculture sector development
PKR 5 billion has been allocated to education.

Govt approved the Rs 1100 bln development budget

PKR the 183 billion allocated for health

PKR 65 billion earmarked for agriculture
PKR 18 billion has been set aside for irrigation
PKR 5.3 billion is set aside for the IT industry

Chief Minister Mohsin Naqvi assured the public that no new taxes were implemented. He stressed the government’s determination to assist during difficult times.

PDWP gives nod to two development projects

Lahore, the Punjab Provincial Development Working Party (PDWP) has approved two new development plans in the roads and health sectors for PKR 8,399.933 million, the news outlet reported on June 22.

A 67th session of the PDWP in the year 2022-2023 led by P&D Board Chairman Ali Sarfraz Hussain. At the meeting, the PPDWP approved two schemes:

A dualizing of the highway that runs from GT Road (Benazir Chowk) to the Lahore-Sialkot Motorway (Wahndo Interchange) in District Gujranwala, at the total cost of PKR 7,811.240 million
The purchase of the equipment needed for 150 beds at the Institute of Ophthalmology and Allied Vision Sciences located in Nishtar, Multan (Revised), with a price of PKR 588.693 million

P&D Board Secretary Sohail Anwar, together with the other participants of the P&D Board, provincial secretaries of the relevant departments, as well as other top representatives from the local departments, were present at the meeting.

FBR introduces new tax return form for SMEs

Islamabad Federal Board of Revenue (FBR) has recently launched an income tax form for small and Medium enterprises (S.M.E.s) for the fiscal year 2023, according to the news released on the 21st of June.

In an official announcement on Wednesday, the FBR announced the publication of draft tax returns for various entities, such as salaried individuals and associations of people (A.O.P.s) and companies and business owners, in the coming tax year.

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To implement these changes to be effectively, for the implementation of these amendments, FBR published an S.R.O. 746(l)/2023 that outlines the draft amendments proposed to the Income Tax Rules of 2002. The proposed changes are aimed at taxes for 2023.

The FBR has made available various electronic return forms that cater to different tax-payer groups. The records include the electronic return forms for businesses, Association of Persons (A.O.P.s) business people and salaried individuals, small-scale enterprises retailers, non-residents of Pakistan origin, people who do not earn income from Pakistan Non-resident ship owners/charterers, non-resident owners of aircraft/charterers as well as manufacturers.

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Government unveils tax incentives for builders: Budget 2023-24

Islamabad: A news agency published on June 9 that the government unveils tax incentives for contractors and those involved in future construction projects to recognize their essential part in the country’s growth.

Based on the budget information for 2023-24, construction companies will be eligible for tax relief of 10 percent or five million Pakistani dollars on income from the business over 3 years. Construction workers will get a 10% or 1,000,000 tax credit for three years. The tax benefits will be practical from July 1, 2023.

To spur growth for two more months, the federal government increased the concessional tax rate to banks offering loans to the construction industry, agriculture, and small and medium-sized companies. In the beginning, the tax concession was available from 2020 until 2023. It is crucial to remember that this program enabled banks to receive a reduction in the income generated by loans.

The government has also enacted the first tax system specifically for land developers. The new law will treat them as separate businesses and taxed project-by-project. Companies involved in land development, including banks and insurance firms, will be taxed according to the scheduler. As per section 113 (Turnover Tax), the minimum amount of tax for those who develop land will be five percent of their gross revenue. This is considerably lower than the current tax rate of 1.25 percent, which applies to AOPs, individuals, and companies.

Additionally, a Project Advance Tax is proposed where the Approving Authority will collect an advance tax on income of 7.5 percent from the value at fair market, according to the Federal Board of Revenue (FBR) Table value following the first approval of the Layout Plan (LoP). This amount can be applied for three-year periods to the annual tax bill.

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A new Gwadar International Airport to get 12 MW of uninterrupted electricity

Gwadar The news is an extraordinary advancement; approval was granted for an uninterrupted power supply of 12MW for a New Gwadar International Airport (NGIA) to ensure smooth operation, according to a report published on June 7.

The Ministry of Planning has decided to revitalize the NGIA and fulfill its energy needs. The Quetta Electric Supply Company (QESCO), with the National Power Distribution Company, which is officially 12 MW, has been approved to be used at the New Gwadar International Airport. Teams have been assigned to the airport for the full-scale implementation of this project.

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According to an official from a QESCO spokesperson (whose names were not made public), The construction and commissioning of the tent are expected to be completed in 10 days. The infrastructure needed, including pole transmission lines, poles, and electrical circuits, has already been aligned with the power system. To ensure a continuous power supply with no interruptions, NGIA will have access to 12 MW around the clock. Three power transmission lines are connected to NGIA. They will provide backup options in the event of any issues that arise with one line.

The three lines for power transmission are as the following:

The first line spans 286 kilometers and is a 132kV dual-circuit transmission line through Naal-Basima-Naag-Panjgur.
The second line is derived from the Mund-Pishin Turbat from the Mund-Pishin-Turbat transmission line Gwadar Grid Station.
The third line is it. The Gabd-Remden energy transmission line, which connects the Jiwini-Gwadar Grid Station

After electrification, NGIA will begin operations and accept international and national flights by mid-September. This marks the beginning of a new era of modern aviation, connecting Gwadar and other countries.

According to an official from the Gwadar Development Authority (GDA), construction work for NGIA that includes mechanical, structural, civil, and engineering elements (excluding communications and navigational work) is close to being completed.

ECC approves PKR 9.5bn guarantee for Hyderabad-Sukkur Motorway

Islamabad Agra: Economic Coordination Committee (ECC) of the Cabinet approved the Hyderabad-Sukkur Motorway Project, offering a guarantee from the government amounting to PKR 9,500 million, according to a report that was released in the news on 5 June.
An ECC meeting was held in which it was shared that the Hyderabad-Sukkur motorway project gets govt guarantee and will be executed under a build-operate-transfer framework. It was reported that the Ministry of Communications presented a complete summary of the project, highlighting the importance of this project.
By the specifications of the Hyderabad-Sukkur Motorway Project, it will be executed through the Public-Private Partnership (PPP) method, which includes the active participation of the National Highway Authority (NHA) and TECMC. The PPP agreement requires the NHA to offer the concessionaire a Government of Pakistan (GOP) guarantee of PKR 9,500 million, backed by a sovereign guarantee and acceptable to the project’s financial sponsors. This guarantee is an obligation to ensure the project’s financial closure is successful.

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To help the concessionaire in the quick completion of its financial closing and financial close, to facilitate the concessionaire’s timely achievement of financial close, the Ministry of Communications has requested the ECC’s permission the issue a government security guarantee that the Ministry of Finance will issue. This move intends to provide assurance and security to commercial lenders involved in the Hyderabad-Sukkur Motorway.

Govt approved the Rs 1100 bln development budget for the next fiscal year: Ahsan Iqbal

The Minister for Planning, Development, and Special Initiatives in Pakistan, Professor Ahsan Iqbal, announced that Govt approved the Rs 1100 bln development budget for the next fiscal year.

Out of this budget, Rs 950 billion will be allocated to the Public Sector Development Programme (PSDP 2023-24), and Rs 150 billion will be utilized through public-private partnerships for various development projects.

Initially, the Finance Ministry had proposed a budget of Rs 700 billion for the PSDP, which was deemed insufficient. A written request was made to Prime Minister Shehbaz Sharif to increase the development budget, and he approved the allocation of Rs 1,100 billion. The minister highlighted that this reflects the government’s priority for national development and emphasized the need for economic growth.

The minister also mentioned the economic difficulties faced by the country, which he attributed to the failed policies of the Pakistan Tehreek-e-Insaf (PTI) government. He stated that the PTI government allowed a significant import of luxury items, leading to a trade deficit of $50 billion and a severe economic crisis. However, he expressed optimism that the country has been steered out of the crisis through corrective measures and effective management of imports.

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The Annual Plan Coordination Committee (APCC) has set growth targets for various sectors in the next fiscal year. These include 3.5% growth targets for GDP and agriculture, 4.3% for manufacturing, and 3.6% for services. The government aims to reduce the inflation rate from 29.2% to 21%, increase national savings from 12.5% to 13.4%, achieve exports of over $30 billion, and manage imports worth $58.7 billion. They also plan to reduce the trade deficit and focus on economic revival.

The minister emphasized the government’s pursuit of the five Es framework: Exports, E-Pakistan, Equity, Energy, and Environment, which are crucial for national development and stabilizing the economy. The government intends to prioritize ongoing projects to reduce the burden of pending development schemes.

CDA proposes stringent regulations for housing societies

The CDA proposes regulations for housing societies in Islamabad, as reported on May 29, include the following:

Plots will be allowed to allottees once the housing scheme is fully developed and a completion certificate is acquired from the Capital Development Authority (CDA). This is to prevent the practice of overselling plots.
Transfer letters of plots should be reviewed and approved by the CDA. This ensures that the civic agency is involved in the transfer process and can verify the authenticity of the transfer.
Prior permission from the CDA is required before handing over plots to transferees, sponsors, or allottees. An undertaking to complete the development work after issuing the No Objection Certificate (NOC) must be submitted.
In case of default by sponsors, the interest of the general public and allottees will be protected. Individual allottees/transferees can construct their houses/buildings by the authority’s bylaws.
Sponsors of housing schemes/projects are prohibited from advertising, accepting deposits or advances, and making bookings until the CDA approves the layout plan. Depending on the type of project, they must also execute transferred and mortgaged deeds or building plans.
Sponsors must provide details of all bank accounts and annual audit reports of the housing scheme to the CDA. This ensures transparency and accountability.
Allotment letters from sponsors must be shared with the CDA within three days of issuance. This allows the CDA to keep track of allotments and ensure compliance with regulations.

The allotment letters to be issued by the sponsors must be shared with the CDA within three days of issuance.

Only plots that are part of the approved layout plan of the housing scheme will be allowed for allotment or transfer. This ensures that the scheme follows the approved plan and prevents unauthorized allotments.

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The CDA Board has also fixed the commercialization fee at PKR 3,500 per square yard for housing societies. This fee is applicable for commercial properties within the approved housing schemes.

Lahore Authorities Boost Actions Against Encroachment, Issue Notices to Commercial Properties

The Lahore authorities have launched a comprehensive campaign to tackle the encroachment issue in the city. The Commissioner of Lahore and the Director General of Lahore Development Authority (LDA) are leading this initiative. The campaign includes taking legal action on nine model highways and issuing notices to over 80 commercial properties along Jail Road Main Boulevard. Additionally, strict enforcement of parking rules will be a priority.

The primary goal of this campaign is to reclaim public spaces and ensure smooth traffic flow in Lahore. Encroachments on significant highways have caused congestion and inconvenience for commuters. The authorities aim to address this issue through legal action and restoring order to the city’s thoroughfares.

In addition to combating encroachment, the Lahore Authorities also focus on implementing environmentally friendly measures. They have provided guidelines for rooftop gardening, installation of solar panels, and plantation to promote sustainable practices. These measures aim to enhance the city’s green spaces and reduce its carbon footprint.

To ensure the effective execution of the campaign, the Lahore Development Authority’s Town Planning Zone One has taken proactive measures. LDA teams have been mobilized to enforce court orders and oversee the implementation of the initiatives.

By actively engaging in these efforts, the Lahore Development Authority aims to create a positive and sustainable environment for the residents of Lahore.

FBR Issues Updated Sales Tax and Federal Excise Acts

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Punjab presents 4-month budget 2023-24 with outlay of PKR 1.719t

PKR the 183 billion allocated for health

PDWP gives nod to two development projects

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FBR introduces new tax return form for SMEs

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A new Gwadar International Airport to get 12 MW of uninterrupted electricity

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Govt approved the Rs 1100 bln development budget for the next fiscal year: Ahsan Iqbal

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