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    Tax Highlights 2020

    Uploaded by

    Jehanzaib
    The document summarizes key amendments made to Pakistan's income tax laws, sales tax laws, customs duties, and federal excise duties in 2020. For income tax, import taxes were standardized, e-audits were introduced, and capital gains tax rates and holding periods were reduced. Sales tax changes included increasing retailer thresholds and exempting raw material imports. Customs duty reductions targeted various industries. Federal excise duties were increased for cigarettes and caffeinated drinks but reduced for cement.

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    © All Rights Reserved
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    Tax Highlights 2020

    Uploaded by

    Jehanzaib
    51 views4 pages
    The document summarizes key amendments made to Pakistan's income tax laws, sales tax laws, customs duties, and federal excise duties in 2020. For income tax, import taxes were standardized, e-audits were introduced, and capital gains tax rates and holding periods were reduced. Sales tax changes included increasing retailer thresholds and exempting raw material imports. Customs duty reductions targeted various industries. Federal excise duties were increased for cigarettes and caffeinated drinks but reduced for cement.

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    The document summarizes key amendments made to Pakistan's income tax laws, sales tax laws, customs duties, and federal excise duties in 2020. For income tax, import taxes were standardized, e-audits were introduced, and capital gains tax rates and holding periods were reduced. Sales tax changes included increasing retailer thresholds and exempting raw material imports. Customs duty reductions targeted various industries. Federal excise duties were increased for cigarettes and caffeinated drinks but reduced for cement.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    51 views4 pages

    Tax Highlights 2020

    Uploaded by

    Jehanzaib
    The document summarizes key amendments made to Pakistan's income tax laws, sales tax laws, customs duties, and federal excise duties in 2020. For income tax, import taxes were standardized, e-audits were introduced, and capital gains tax rates and holding periods were reduced. Sales tax changes included increasing retailer thresholds and exempting raw material imports. Customs duty reductions targeted various industries. Federal excise duties were increased for cigarettes and caffeinated drinks but reduced for cement.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 4

    Chartered Accountants

    Tax Highlights 2020

    Moore Shekha Mufti is an independent member firm of Moore Global International,


    members in principal cities throughout the world.
    Chartered Accountants

    SALIENT FEATURES OF AMENDMENTS MADE IN INCOME TAX LAWS

    Income Tax on Imports

    ▪ Exemption certificates have been done away with on imports


    ▪ Person specific rates to goods specific rates at import stage have been proposed by way of a
    detailed schedule.
    ▪ Tax on imports may vary between 1% --- 5.5%.
    ▪ Minimum taxation on import of Edible Oil, packing material and plastic raw material don away
    with.

    Income Tax Audit and Assessment

    ▪ Concept of E-audit has been proposed.


    ▪ Audit proceedings can be finalized on the basis of sectoral benchmark ratios.
    ▪ Concept of Automated Adjustment in tax return by the system has been proposed.
    ▪ Concept of tax settlement offer has been proposed to finalize assessment.

    Appeal Right

    Right of appeal before Tribunal has been taken away without 10% tax payment.

    Withholding Provisions

    ▪ Filing requirement of withholding statements has been shifted back to quarterly intervals.
    ▪ Exemption Certificate has been proposed to be issued to Listed Companies within fifteen (15)
    days.
    ▪ Withholding Agent (Individual & AOP) to withhold only if their annual turnover crosses hundred
    million (100M).
    ▪ Withholding on Foreign Education, Functions, Insurance Premium have been done away with.
    ▪ 2% tax on purchase of locally produced Oil & Ghee has been done away with.

    Capital Gain on Property

    ▪ Holding period of Plot and Constructed property unified.


    ▪ Holding period for Capital Gain Tax on Property has been reduced from eight (08) years to
    four (04) years.
    ▪ Tax rate on Gain on property reduced by 50% to a maximum rate of 10%.

    Cash Payments

    ▪ Salary can be paid in cash for up-to 25,000/- Rupees per month.
    ▪ Expenses can be paid in cash for up-to 25,000/- Rupees per payment.
    ▪ Cash expenses can accumulate under a single head of account for upto Rs. 250,000 pa.

    2|P ag e
    Chartered Accountants

    SALIENT FEATURES OF AMENDMENTS MADE IN INDIRECT TAXES

    Sales Tax

    ▪ Minimum threshold of supplies by retailers for obtaining CNIC of the buyers increased from
    Rs. 50,000 to 100,000.
    ▪ Retail sector engaged in Textile and Leather and is integrated online with FBR through Point
    of Sale to pay sales tax @ 12% instead of 14%.
    ▪ Value Addition Tax exempted on import of industrial raw material by manufacturers.
    ▪ Sales Tax Withholding also extended to taxable services.
    ▪ Scope of Section 73(4) extended to all registered persons.
    ▪ Condition of CNIC extended to taxable services without which input tax shall not be admissible.
    ▪ Partial filing of tax return not acceptable any longer.
    ▪ Introduction of audit proceedings through electronic means.
    ▪ Right of appeal awarded to the aggrieved person emanating out of Alternate Dispute
    Resolution process.
    ▪ FBR empowered to fix minimum production on the basis of single or more inputs and for
    fixation of wastage.
    ▪ Real-time access to information and databases to the Board by various authorities such as
    NADRA, FIA, provincial excise & taxation departments.
    ▪ Vehicles’ Second Hand Market to pay sales tax only on value addition.
    ▪ Exemptions and Zero ratings offered to Gwader Free Zone.

    Customs Duty

    ▪ Exemption of additional custom duties on tariff lines which are now @ 0% customs duty in
    tariff.
    ▪ Reduction of custom duty on 40 raw materials of various industries.
    ▪ Tariff rationalization on 90 tariff lines from 11% to 3% and 0%.
    ▪ Intermediary raw materials allowed concessional import through IOCO quota determination.
    ▪ Reduction in regulatory duty on smuggling prone items.
    ▪ Regulatory duty on several industrial inputs reduced.
    ▪ Tariff protection for domestic industry by increasing / levy of regulatory duty on import of those
    items which are also locally manufactured.
    ▪ Enhancing scope of concessions available to Special Economic Zones.

    3|P ag e
    Chartered Accountants

    Federal Excise Duty

    ▪ Increase in FED on cigars, cheroots, cigarillos and cigarettes from 65% to 100% of retail price.
    ▪ FED on cement reduced from Rs. 2 per kg to Rs. 1.75 per kg.
    ▪ Levy of FED @ 7.5% ad valorem in case of locally manufactured double cabin pick-up
    vehicles; @ 25% in the case of imported ones.
    ▪ FED levied on e-liquids of electric cigarettes @ Rs 10 per ml.
    ▪ FED levied on caffeinated energy drinks @ 25%;
    ▪ The scope of seizure of non-duty paid goods is extended to all products subject to FED.

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