Assignment of Laws of Business and

Taxation
Submitted To: Sir Hassan Solangi
Submitted By: Komal Zour
Roll No: 2k19/TBBA/24

What are measures taken by FBR in form of Tax Exemptions during this ongoing
pandemic as relive for tax payers and individual?
FBR had released 2 kind of relief packages in 2 different sectors, first one is medical sector and
second one is industry sector. FBR has allowed exemption from duty and taxes on import of
medical and testing equipment specific to the outbreak of Coronavirus. The FBR issued three
different sros of income tax, sales tax and customs duties to allow the full import of medical and
testing equipment’s. FBR allowed the exemption initially for three months which would be
further extended on the recommendations of the health ministry. The exemption from duty and
taxes has been allowed on the following 61 items.
1. Life technologies 7500 Real Time PCR with rnasep instrument verification kit and
complete
1. Guides documentation and software.
2. Biosafety Cabinets Class II Types A2, EN 12469, Europe NSF/ANSI 49, USA JIS K3800
Japan.
3. Auto Clave 50 Liter Capacity.
4. Multi Channel Pipette 5-10 ml.
5. Single Channel pipette set of four .2, 10, 200, 1000ml.
6. Multi Channel pipette 20-200 ml.
7. Vacuum fold.
8. Mini spin.
9. PCR Chambers.
10. PCR Kits (95 tests) for suspects diagnosis (Altona).
11. QIAMP Viral RNA Mini Kit (250) reaction.
12. VTM (Viral Transport Medium)
13. Dr Oligo Synthesizer
14. Refregirator/freezer-20 cmodel MPR-414 Panasonic
15. Vortex Machine 0-3000 RPM 220V, Velp Italy
16. Refrigerated Centrifuge Machine Temperature Rang 20 to +40 Model Z 326 K, Hermle
IEC 1010
17. UPS 6 KVA APC smart-UPS RVA 6000VA 230V
18. Tyvek Suits
19. N-95
20. Biohazard Bags (18 liters)
21. PAPR (Powdered Air Purifying respirators)
22. Multimode ventilator with air compressor
23. Vital sign monitor with 21bpand etco2 two temp.
24. ICU motorized patient bed with side cabinet and over bed table
25. Syringe infusion pump
26. Infusion pump
27. Electric suction machine
28. Defibrillator
29. X-Ray mobile machine
30. Simple nebulizer
31. Ultrasound machine
32. Noninvasive BIPAP
 33. ECG Machine
34. Pulse Ox meters
35. Ripple mattress
36. Blood gas analyzer
37. AMBU bag
38. Nitrile gloves
39. Latex gloves
40. Goggles
41. Face shields
42. Gum boots
43. Mackintosh bed sheets
44. Surgical masks
45. Air ways
46. Diaflow
47. Disposable nebulizer mask kit
48. ECG electrodes
49. ETT Tube (Endotracheal Tube) all sized
50. Humidifier disposable, flexible type
51. IV Cannula all sizes
52. IV Chambers
53. Oxygen Recovery Kit
54. Padded Sheets
55. Stomach Tube
56. Styled for endotracheal tube
57. Suction tube control valve
58. Tracheostomy tube 7, 7.5, 8
59. Ventilator circuit
60. Venture masks
61. Disposable shoes cover (water proof)

KARACHI: A senior official of the Federal Board of Revenue (FBR) has informed the officials
of the Karachi Chamber of Commerce and Industry (KCCI) that the business community should
work together to reduce the harmful effects of the corona virus epidemic. A tax relief package is
being considered for (COVID-19).
“The relief measures in Sales Tax and other levies are under consideration during the prevailing
crisis situation due to Covid-19, which are outside the scope of Federal Budget 2020-2021.
These relief measures will be revisited in January 2021 again and decisions will be made in
accordance with the situation at that time,” a statement issued by the KCCI quoting Member
Inland Revenue (Policy) Dr. Hamid Ateeq Sarwar. A meeting was held on April 16, 2020
between the KCCI and FBR to discuss the proposals for the Federal Budget 2020-21.
Siraj Kassam Teli, Chairman-Businessmen Group and Former President KCCI led the KCCI
team which included Agha Shahab Ahmed Khan, President-KCCI and Ibrahim Kasumbi, Former
SVP and Convener-
Budget Standing Committee. The FBR team was headed by Noshin Javed Amjad, which was
attended by Dr. Hamid Atiq Sarwar Member IR Policy, Mohammad Javed Ghani, Customs
Policy and Member, Mohi-ud-Din Alvi, Chief Secretary, Sales Tax Policy, Mohammad. Of Ali
Khan, Secretary Sales Tax Policy.
KCCI proposes to reduce sales tax from 17% to single digit. Member IR Policy agreed that the
FBR would review this rate and propose to rationalize it in Budget 2020-21.
The member further said that the proposals submitted to the Prime Minister by Siraj Kasam Teli,
Chairman BMG are also being considered while working on relief packages. Initiating a
discussion on the KCCI's budget proposals, he now raised issues related to sales tax, income tax,
customs and FED, as well as significant inconsistencies in tax government and discretionary
powers.
Dr. Hamid Atiq Sarwar, Member IR Policy, gave his comments and briefed on the steps being
taken by the FBR in respect of each proposal, which is stated here:
The KCCI proposed a 3% additional tax rebate on unregistered purchases to unregistered buyers,
which was initially imposed by the Finance Act, 1%. Member-FBRI policy states that the rate is
being considered to be 1% instead of 3% in the financial year 2020-21 and zero percent in the
next financial year.
In addition, the KCCI had suggested that where a CNIC number is provided to unregistered
persons by a supplier for sale, a further 3% tax should not be levied. Member IR Policy endorsed
the proposal, saying that in the financial year 2020-21, the additional tax rate of 3% will be
increased to 1% and it will be phased out next year.
He said that under the provision of detailed data related to the paper converter industry, the FBR
would consider reducing the value addition tax from 10 per cent to 5 per cent basic sales tax.
Member IR Policy informed the KCCI team that the system is being automated and the rules are
being amended to allow registered persons to review their sales tax returns online and under the
rules. Clerk errors can be corrected. 14 (a) in response to a proposal put forward by the CCI,
without the need for prior approval from the Commissioner of Inland Revenue.
The KCCI had suggested that taxpayers should not be audited more than once in three years and
the discretionary powers of the commissioners should be revoked in addition to the abolished
standards.
The Member IR Policy states that the FBR has limitations on audits under the FATF and cannot
exempt anyone from audits. However, Member IR Policy asked the KCCI team to provide
feedback and feedback to prevent misuse of powers and harassment for conducting multiple
audits and suggest solutions. Commenting on the KCCI's proposal to reduce the time period for
maintaining records from 6 years to 3 years, Member IR Policy said that in some cases where
refund is acceptable or pending. It must maintain A record for more than 3 years.
In such cases, a separate government could be formed for such exporters, as the majority of
taxpayers do not fall into the category of exporters or are not entitled to a refund, Ibrahim
Qassumbi said. The KCCI had raised the issue of not allowing tax credit on purchases of
building materials and accessories under the Sales Tax Act under Section 8 (1) H&I, as
amended by the Finance Act, 2014. Was Member IR Policy commented that the consumer
cannot be entitled to input tax against sales tax liabilities till the end of any purchase.
 Therefore, the FBR is unable to accept the proposal at this time. Instead, a proposal to shift
construction tax policies to the provinces is under consideration.
The KCCI had pointed out irregularities in the classification of LED lights / bulb housings
which was incorrectly classified as HS code 9405.1090 which is related to completion of
chandeliers and is subject to higher rate of duty. ‫۔‬
Member IR Policy asked the KCCI team to explain the disproportion and provide further details
so that it could be rectified.
In response to KCCI's proposals to eliminate IR officials and field formations under Sections
37, 37A, 37B,
38 and 45B, Member IR Policy assured the team that reforms have been made. Where the
human interface has been minimized and checks and balances are being introduced to prevent
misuse of these provisions.
In this regard, the FBR will consult the draft rules with stakeholders, including the KCCI, to
provide input to prevent misuse of such powers and ensure accountability of the officers
concerned.
Comment on KCCI's proposal to rationalize sales tax and further tax on DC products, including
flavored milk, yogurt, cheese and butter. Member-IR Policy informed that further tax will be
reduced to 1% in the financial year 2020-221. Phased in the next financial year
In response to the proposal for restoration of 10% tax credit where 90% of sales are made to
registered persons, the member IR stated that the FBRI is bound by the IMF not to allow tax
credit. However, he assured that in the current circumstances of Covid, 19, the FBR would try
to restore the provision of the said tax credit. Under Section 153 (a), holding tax is deducted at
the rate of 4.0% to 4.5% on supply of goods by filer companies and registered persons
respectively. This is a very high WHT rate and the KCCI has proposed to reduce this rate to 1%.
Member IR Policy has assured that the rate of WHT on local supply of proposed goods will be
considered rational.
The KCCI had raised the issue of discretionary powers given to the Directorate of Intelligence
and
Investigation under SRO 1301 (I) / 2019 dated 29.10.2018 under which officers at the level of
Assistant Director raided the premises. , Can audit, seize records and conduct criminal
investigations. . Such powers are seriously abused and should be revoked. Member Policy
explained that this is part of anti-trafficking measures and that such powers do not apply to
domestic trade. The government is seeking to strengthen anti-trafficking measures through an
ordinance that could be issued soon. He suggested to the KCCI team to suggest ways and means
to prevent abuse of power under SRO 11301 so as to allay the concerns of the business
community.
The KCCI submitted that there is a huge difference in the holding tax rates on imports of raw
materials by commercial importers and manufacturers as a result of misuse of waivers by
unscrupulous individuals.
Many bogus companies have been registered as manufacturers to avail the exemption under Rule
72B,
Part IV of the Second Schedule to the Income Tax Ordinance.
Therefore, the same WHT rates may apply to both types of raw material importers.
Member-IR Policy agreed with this proposal and assured that the same will be adopted in Budget
2020-
2021.
Under SRO.1190 (I) / 2019, the FBR had restricted 90 per cent adjustment in input tax on
imports of commercial importers, creating irregularities and imposing an additional 1.7 per cent
on raw material importers. Have to pay
The KCCI claimed that since commercial importers do not raise prices, a 100% ban is
unwarranted.
Member IR Policy agreed to allow importers to make adjustments for an additional 1.7%
increase in payments with tax returns.
Due to the inclusion of automobile and motorcycle spare parts in the Third Schedule, importers
face severe difficulties in printing MRP (maximum retail price) on auto parts due to various
factors. The KCCI had defined persons with disabilities in compliance with such a requirement
and suggested to the FBR to remove automobile and motorcycle parts from the third schedule
and treat them under the general import system. ‫۔‬
The member IR policy states that some facilities have been provided to importers but the FBR
will review the policy in consultation with stakeholders.

The KCCI team submitted that the entries relating to PVC and PMC materials were deleted by
the
Finance Act 2012019 by amending SV.190 (I) / 2002, thus restricting the export of polyethylene
and polypropylene. Zero rating allowed.
This section has paved the way for theft and misuse as Pakistan does not have the capacity to
manufacture polyethylene or polypropylene. The KCCI suggested that entries relating to
polyethylene and polypropylene could be included in the list of those excluded from zero rating
in SRO.190 (I) / 2002.
Member IR Policy informed the KCCI team that the said step has been taken on the
recommendation of the Ministry of Commerce and the KCCI should take up the matter with the
Ministry to resolve the matter.
The KCCI had proposed in the Budget 2020-21 to withdraw the withholding tax exemption
under section
148 (7) D for imported houses, which was agreed upon by Member IR Policy.
Responding to the suggestion regarding section 108B, under which the commission paid by the
supplier to the unregistered dealer will not be allowed as expenses from the financial year 2020-
21. Member IR
Policy suggested further discussion of the issue through representation so that the clause could be
withdrawn.
In response to the suggestion of requiring CNIC number from consumers on purchase of gold
jewelery more than Rs. 50,000 / -, Member IR Policy states that strict restrictions have been
imposed under FATF and further details and undercanding are required from gold buyers /
suppliers. He suggested that representatives of the jewelery trade could hold a meeting with the
FBR on a video link to find a workable solution.
In this regard, KCCI will facilitate the representatives of the jewelery trade in presenting their
views and proposing viable solutions to their problems.
By amending Section 148 of the Finance Bill 2018-19, the holding tax on commercial importers
has been reduced from 4.5 to 6.0 per cent to the minimum tax which was earlier a fixed tax. The
KCCI had earlier proposed to either reduce the tax rate or treat it as a fixed tax. Member IR
Policy agreed that in the next
Budget 2020-21, the WHT rate would be considered reasonable but would be maintained as a
minimum tax.
The KCCI raised various audit issues under the various provisions of the Income Tax Ordinance,
Sales Tax
Act and Federal Excise Act. Numerous audits were a source of pressure and frustration for
taxpayers.
The KCCI suggested that all provisions for audit could be consolidated and clear parameters set.
Member IR Policy suggested that the FBR was working on developing a joint pool and
procedures for conducting stable audits for sales tax, income tax and FED to eliminate multiple
audits.
Commenting on the KCCI's proposal to restore the provision of tax credit on investments under
Section
65B of the ITO, the Member-IR Policy states that under the IMF program, the FB There are
limits to allowing tax credits to R.

The KCCI had suggested that a sales tax of 17% on imports of industrial machinery was too high
and unfair. Ultimately, all machinery is used for the manufacturing process and contributes to
GDP and creates jobs. Member IR Policy agreed with the proposal and said that the rates would
be revised in slabs of 10%, 5% and 1% according to different types of machinery.
Under current law, payments collected by airlines from clients through travel agents are
considered travel agents' business and are subject to an 8% turnover tax, which is unfair. The
KCCI had suggested that only travel agents' margins are traded in aggregate receipts and a
minimum tax can be levied.
Member IR Policy agreed with the proposal and suggested that representatives of travel agents
may meet with the FBR and provide all required information and data to enable the FBR to
prepare budget
‫ ۔‬.recommendations
In its proposals, the KCCI raised the issue of highly complex income tax return forms and
suggested that the form could be made easier for taxpayers. It was suggested that separate forms
could be designed for companies, aops and individuals / sole proprietors to facilitate the
taxpayers.
Member IR Policy agreed with the proposal and assured that simple forms would be issued for
different types of taxpayers.
The provision of WHT under Section 236G and H Income Tax Ordinance on drinks falling under
the category of FMCG is being misused. The KCCI proposed to exclude beverages from the
scope of 23G & H, which was agreed to by Member IR Policy.