Fiscal Budget 2019-20

[Shahzaz ud din]

Here Are The New Tax Slabs For Salaried And Non-Salaried Persons
Pakistan Tehreek e Insaf announced its first budget yesterday, redefining new tax slabs for salaried and non-salaries persons.
By Mishal Ali On Jun 12, 2019
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Source: DAWN

• The federal government announced the budget for the year 2019-2020.
• The new tax slabs have been announced after several tax adjustments.
• Federal Board of Revenue (FBR) aims to get Rs50 billion closer to its overambitious revenue collection.
• Taxes on earnings exceeding taxable income ceiling of Rs600,000 and Rs400,000 respectively have been proposed.
• The FBR has proposed a tax rate of 5 to 35 per cent on twelve different slabs of the salaried class.

The Federal Board of Revenue (FBR) has set the target to get Rs 50 billion closer to its overambitious revenue collection. The target is planned to be achieved by squeezing the pockets of salaried and non-salaried class, which has already been worst affected by inflation.

The Federal Board of Revenue (FBR) has proposed taxes on earnings exceeding taxable income ceiling of Rs 600,000 and Rs 400,000 respectively. The FBR has further proposed a tax rate of 5 to 35 per cent on twelve different slabs of salaried class through Finance Bill 2019-20.

The incumbent government has withdrawn increased limit of the taxable ceiling to Rs 0.6 million from Rs1.2 million per annum. For the salaried class whose annual income exceeds Rs 600,000, eleven tax slabs with progressive tax rates ranging from 5 per cent to 35 per cent have been introduced under the budget.

The new budget has been announced with several tax adjustments, including adjustments in income tax slabs for individuals and association of persons.

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[I.R.A]

I know it's about Sales Tax - However, it's not clear that refund will be on spot or should be via return filing.

The word cash points to on spot discount.

 

[I.R.A]

@Dubious @Samlee @I.R.A @shahbaz baig @The Accountant @ps3linux

Thank you for heads up ....... I will try but I am not sure if I will be able to make it. In any case it will get televised and we will get the details by other means too.

 

[KhanBaba2]

Incentives for short term export growth to stabilize economy and investment in cheap electricity while trying to lower down cost of doing business in Pakistan

Investment in cheap electricity may no longer be possible as you already have enough capacity and have given guarantees. You can have investment in better distribution and lowering theaft.

 

[ps3linux]

@Dubious @Samlee @I.R.A @shahbaz baig @The Accountant @ps3linux

I am not an ICAP member (Actually I am a CFA charterholder) but one of the ICAP members forwarded the following.

I am forwarding it in case anyone wants to cough up some dough and want to attend below event to listen to Shabbar zaidi or Dr. Abdul Hafeez Sheikh.

If anyone does, please do give us a summary in the thread.


"On June 15, 2019, for the first time in the history of the ICAP Post Budget Conference is being organized with nation-wide live transmission provided by our media partner AAJ News.

The event is planned to be held simultaneously in Lahore Islamabad and Karachi. A large number of professionals associated with ICAP members and other professional bodies are expected to attend and benefit from this unique opportunity of being connected with other locations on a real-time basis. At each location presentation by experts on allocated subject will be delivered followed by panel discussion and Q&A session. Session at one each location will be watched live by the audience at various locations and the said pattern will be replicated turn by turn for each participating locations of Lahore, Islamabad and Karachi.

The Honorable Advisor to PM on Finance, Revenue and Economic Affairs, Dr. Abdul Hafeez Sheikh, has kindly consented to act as the Chief Guest at the occasion. Mr. Shabbar Zaidi, Chairman Federal Board of Revenue (FBR) will act as the Guest of Honour, along with the Secretary Finance and other senior officials of the Government will also attend this national level Event. Details about the other speakers and panellists are mentioned in the attached flyer.

The event brochure can be downloaded by clicking on the following link https://www.icap.org.pk/cpd/schedule-of-events/

The conference investment is mentioned below for your ready reference:

Rs. 4,500/- for ICAP Members/ ICAP Affiliates
Rs. 5,000/- for IFAC Body Members
Rs. 5,500/- for Non-Members
Rs. 2,500/- for ICAP Students
Life Members may attend for free

An early bird discount of 10% will be offered in case of pre-registration and payment made on or before June 14, 2019.


For registration at Lahore please contact Mr. Asif Hamesh NRC office Tel: 042-111 000 422 Ext: 128 or email at asif.hamesh@icap.org.pk
For registration at Islamabad please contact Mr. Asad Ali NRC office Tel: 051-111 000 422 Ext: 29 or email at asad.ali@icap.org.pk "

Thanks, a letter requesting sponsorship of the event is on my table pending approval, will likely attend the lahore event. Shabbar is a better speaker, Hafeez Sheikh speaks in monotones something called "droning on and on" his brother Rehan Sheikh although is a much improved version.

@Verve Nice idea and putting such software sometime need the effort of only one man like Ashir Azeem did in late 90's for Pakistan custom. Problem is undocumented economy if everything comes under radar,check China corruption detecting algorithm ""Zero trust""they used it to detect both private and govt sector financial corruption with so much success

Yaar its not the software its the will/determination/vision and above all corruption negation, FBR is not part of the solution, it is not even part of the problem, it is the problem itself.

If only one could work in FBR on such a project ...

Same thing bhai, I have first hand experience with FBR both from the corporate world and family business trust me they are the problem themselves, biggest hurdle in improving tax collection.

 

[Kashir]

We should do something like what KSA did, take all those corrupt Politicians into custody , have them sign checks and drafts for Billions of dollars or face the jail time with all property surrendered to the State . Take their money and than release them , let them go anywhere they want to with a promise that their political career is now ended .

Exactly! The only solution left to save and stabilize Pakistan.

 

[zulu]

restructuring of FBR ??? Sorry bhai namumkin ky khawab dekhna chor diye .Shabbar Zaidi ny start main aisi koi baat kahi thii logon ny unhain bhi chup kara diya simple py rahoo khush rahoo.I think @Verve suggesting to design and put GST system online by FBR fast,convenient and transparent system (agar iss saal yeh tax net barha lain tu bring middle business section under the system )

Yaar its not the software it the will/determination/vision and above all corruption negation, FBR is not part of the solution, it is not even part of the problem, it is the problem itself.

 

[ps3linux]

restructuring of FBR ??? Sorry bhai namumkin ky khawab dekhna chor diye .Shabbar Zaidi ny start main aisi koi baat kahi thii logon ny unhain bhi chup kara diya simple py rahoo khush rahoo.I think @Verve suggesting to design and put GST system online by FBR fast,convenient and transparent system (agar iss saal yeh tax net barha lain tu bring middle business section under the system )

Sir I have given following suggestions for improving tax collection many a times repeating here again:

• FBR should be made averse to political/fauji/bureaucratic pressures, with annual ACR based upon 360 degrees.
• For production units tax should be on the basis of electricity/raw material consumed as is the case in many developed countries, SBP has some excellent formulas to work back amount of lending a bank can give to a unit based upon processing capacity, number of electricity units consumed during the year. With some modifications same formula could be utilized to calculate approximate taxes.
• All business must have a license to operate that license should be given by SECP only after tax registration, tax return must be a compulsion for every business no matter how small (SME and above)
• Business property/rent (commercial valuation and not business declarations) should be factored in by FBR for authentication of return. If the rent is high and yet business is reporting cash-flows which are not at par with tax return, bingo you have got another evader.
• Like other parts of the world if a business is reporting continuous losses or barely making it break even that should be the first on the list of FBR for forensic audit.
• Over a period of 5 years, cash transactions should be abolished to be replaced by plastic/payment solution, india has done wonders in this area just like rest of the developed world.
• Property laws should be amended inline with US practices, rental, investment and more than 1 residence property should be heavily taxed, any property transfer/sales even from father to son must be taxed on the basis of capital gains.
• Every business must have insurance, in case of any theft/calamity businessmen usually claim billions of losses and normally govts compensate them but I proposed that any such claim should be equated with their tax returns.
• Any sales/purchase of real estate must be reported to FBR by revenue authority against CNIC number, housing societies (real estate) act to be reviewed and all tax evasion loopholes given to be canceled immediately.
• All vehicles sales/purchase 1300 cc and above should be linked with FBR, no matter even if they are purchased via hire purchase/lease, they should be let go after one payment of tax for vehicle purchase rather a permanent record should be created in FBR against CNIC, see out of 2 million filer about 800,000 are salaried. Auto manufacturers are selling over 100,000 units p.a both personal and commercial vehicles all should be brought into the tax net. Filer non-filer is altogether a different matter, if someone is purchasing a premium vehicle/property/commercial vehicle where did the money come from? if undocumented go to amnesty otherwise pay full taxes@45%.
• Source and proof of income should be a must for any vehicle/property sales/purchase. No purchase in the name of house wife, students, minor children should be allowed.

These are the loop holes in out tax system and now think for a moment will someone fix them nah, i don't think so generals, politicians, bureaucrats, business conglomerates are leehes sucking the lifeline of this nation through these loopholes. Find me 10 liars (lawyers) paying taxes.

 

[Baby Leone]

Source? Kindly ALWAYS provide sources!

 

[ps3linux]

Cant expect much from an article that interested an indian abt a neighboring country they so frequently talk abt bombing

In my opinion, an article not worth discussing!

Best option is to just ignore them along those baboon-negro hybrid breed called bengalis, no idea about Pakistan, its demographics, geography besides their media and net searches, hate us and yet hang out in our discussion boards, web portals, websites etc doing nothing except giving their "expert opinions" read "ignorant opinions" and expressing bigotry. Just have a look at bangladeshi forum which is supposed to be a defense forum and yet used as a propaganda machine for the "wonders" their country is performing and somehow finding to link it with pakistan, pass on a mean remark, disgusting.

Although Budget 2019-20 is still a proposal pending approval fro parliament/president but if someone wants I can share two very good analysis on key points of Budget. From my perspective following are the most positive points:

• Eliminate zero rating for five export oriented sectors,
• Increase in additional custom duty from 2% to 4% and 7% on slabs of 16% and 20%, respectively
• Higher income tax rates on salaried and non-salaried persons,
• Streamline taxation regime for the Real Estate Sector,
• Impose higher tax rate on rental incomes.
• Allot 40% higher Federal PSDP allocation from PKR 500bn to PKR 701bn,
• Impose higher tax rate on investment in Government Securities for banks to potentially increase lending to private sector,
• Exempt custom duty on import of raw materials for various industries,
• Supply of energy i.e. electricity (Usd7.5/KWh) and gas (USD 6.5/mmbtu) at subsidized rates to be continued for exporters,
• Automate GST refunds to improve liquidity of export oriented sectors,
• Streamline FBR processes related to import and export to reduce time and procedures for assistance of exporters, and
• Reduce customs duty on import of raw materials for export oriented sectors.
• Enlarge tax net and increase the number of tax payers to 4mn by utilizing the NADRA database,
• Enhance FBR real estate valuation to 85% of market values,
• Withdraw of Amnesty for legalizing the difference between DC value and FBR Value at 3%,
• Increase capital gains from income arising out of sale of property at normal tax rates,
• Restrict purchase of property only through banking instrument
• Treat receipt of gift as normal income,
• Reduce limit for not explaining source of investment through foreign remittance from PKR 10mn to PKR 5mn,
• Charge 5% Additional sales tax on unregistered electricity and gas consumers whose bill exceeds PKR 15,000/month,
• Completely documented transactions for real estate sector to be settled through banking instruments to bring them at par with investment in equities in terms of KYC requirements. Previously real estate was the preferred asset class for High Net Worth Individuals due to lax requirements of disclosure and documentation along with lower FBR and DC valuations.

I can explain the benefits point by point, but I don't have time for petty squabbling without deep understanding of the proposal and its implications on the economy.

Oh and I don't reply to idiotic comments.

 

[Arsalan]

As long as the protests do not include shutting down production. Then we all lose huge amounts of economic activity.

Not planned! Wont be happening.

 

[VCheng]

Not planned! Wont be happening.

That can only be good.

 

[Abdussamad]

Exactly! The only solution left to save and stabilize Pakistan.

fascism is the only solution? let the process run its course through the judicial system.

Sir I have given following suggestions for improving tax collection many a times repeating here again:

Sounds like a wish list more than anything else. The trick is in figuring out how to make this happen.

BTW demonetization was a disaster for the Indian economy and it didn't change things much as far as adoption of financial services is concerned. It's still a cash heavy economy. The shift to digital payments was just a temporary coping mechanism during the cash shortage and now they've shifted back to cash. That's because danda baazi aka fascism doesn't work!

Also in case you didn't know there are taxes on business turnover in addition to profit. So even if a business is running at a loss or pretending to do so it still pays taxes. The problem in Pakistan is that most businesses don't pay taxes at all and the FBR has no access to their books. Businesses cooking their books is a relatively smaller problem.

 

[ps3linux]

@Dubious @Arsalan

Yaar 30th June is approaching and before payroll is run by the finance/payroll/HR people can reduce their tax liability for this year, under section 62, 63 of the income tax ordinance, also if someone is availing a commercial mortgage there is a tax deduction available for markup paid on mortgage (home finance) , premium on life insurance policy and few others.

Normally my tax deductions in the month of April, May and June are almost zero despite being in a higher tax bracket.

All you have to do is talk to your finance/hr/payroll guys mention what I have said above and they will guide you and you may have zero tax deduction in the month of June. This is not tax evasion rather a tax efficiency facility offered by GoP like rest of the world, despite being more cumbersome and difficult to understand. Although my knowledge on income tax is limited to tax laws of Pakistan, USA, Canada, UK and Singapore only.

Since you are the mods you know better about members here this facility is both for salaried and self employed filers.

 

[Samlee]

Where r u from ?

Ancestrally From Quetta But Living In Rawalpindi