Case No.F.4-19/2015-R. (1/2015). ONE HUNDRED AND NINETY EIGHT INSPECTORS
INLAND REVENUES (BS-16), PERMANENT, REVENUE DIVISION, FEDERAL BOARD OF
REVENUE. MINIMUM QUALIFICATION: Second Clas or Grade ‘C’ Bachelor’s degre with
Economics/ Busines Administration/ Commerce/ Statistics/ Law from a university recognized by
HEC. AGE LIMIT: 20-28 years plus five (5) years general relaxation in uper age limit.
DOMICILE: Merit= Fiften, Punjab= Ninety nine (Open merit=Eighty four, Women quota=Ten and
Minorites/Non-Muslims quota=Five), Sindh(Rural)=Twenty two (Open merit=Nineten, Women
quota=Two and Minorites/Non-Muslims quota=One), Sindh(Urban)=Fiften (Open merit= Thirten,
Women quota=One and Minorites/Non-Muslims quota=One), Khyber Pakhtunkhwa=Twenty thre
(Open merit=Twenty, Women quota=Two and Minorites/ Non-Muslims quota=One),
Balochistan=Twelve (Open merit=Ten, Women quota=One and Minorites/ Non-Muslims
quota=One), GBFATA=Eight (Open merit=Seven and Women quota=One) and AJK=Four (Open
merit=Thre and Women quota=One). (Both male and female candidates are eligible).
Closing date……………………………………………………………………….……….19.1.2015

Introduction to FBR

The Central Board of Revenue (CBR) was created on April 01, 1924 through enactment of the Central Board of Revenue Act, 1924. In 1944, a full-fledged Revenue Division was created under the Ministry of Finance.

After independence, this arrangement continued up to 31st August 1960 when on the recommendations of the Administrative Re-organization Committee, FBR was made an attached department of the Ministry of Finance.

In 1974, further changes were made to streamline the organization and its functions. Consequently, the post of Chairman FBR was created with the status of ex-officio Additional Secretary and Secretary Finance was relieved of his duties as ex-officio Chairman of the FBR.

In order to remove impediments in the exercise of administrative powers of a Secretary to the Government and effective formulation and implementation of fiscal policy measures, the status of FBR as a Revenue Division was restored under the Ministry of Finance on October 22, 1991. However, the Revenue Division was abolished in January 1995, and FBR reverted back to the pre-1991 position. The Revenue Division continues to exist since from December 01, 1998.

Function of FBR / Revenue Division

In the existing setup, the Chairman, FBR, being the executive head of the Board as well as Secretary of the Revenue Division has the responsibility for

(i) Formulation and administration of fiscal policies,
(ii) Levy and collection of federal taxes and
(iii) Quasi-judicial function of hearing of appeals.

His responsibilities also involve interaction with the offices of the President, the Prime Minister, all economic Ministries as well as trade and industry.


Federal taxes in Pakistan like most of the taxation systems in the world are classified into two broad categories, viz., direct and indirect taxes.

A broad description regarding the nature of administration of these taxes is explained below:

Direct Taxes
Direct taxes primarily comprise income tax, along with supplementary role of wealth tax. For the purpose of the charge of tax and the computation of total income, all income is classified under the following heads:

• Salaries
• Interest on securities
• Income from property
• Income from business or professions
• Capital gains; and
• Income from other sources

Personal Tax
All individuals, unregistered firms, associations of persons, etc., are liable to tax, at the rates ranging from 10 to 35 per cent.

Tax on Companies
All public companies (other than banking companies) incorporated in Pakistan are assessed for tax at corporate rate of 39%. However, the effective rate is likely to differ on account of allowances and exemptions related to industry, location, exports, etc.

Inter-Corporate Dividend Tax
Tax on the dividends received by a public company from a Pakistan company is payable at the rate of 5% and at the rate of 15% in case dividends are received by a foreign company.

Inter-corporate dividends declared or distributed by power generation companies is subject to reduced rate of tax i.e., 7.5%. Other companies are taxed at the rate of 20%.

Dividends paid to all non-company shareholders by the companies are subject to with holding tax of 10% which is treated as a full and final discharge of tax liability in respect of this source of income.
Treatment of Dividend Income

Dividend income received as below enjoys tax exemption, provided it does not exceed Rs. 10,000/-.

1. Dividend received by non-resident from the state enterprises Mutual Fund set by the Investment Corporation of Pakistan.

2. Dividends received from a domestic company out of income earned abroad provided it is engaged abroad exclusively in rendering technical services in accordance with an agreement approved by the Central Board of Revenue.

Unilateral Relief
A person resident in Pakistan is entitled to a relief in tax on any income earned abroad, if such income has already been subjected to tax outside Pakistan. Proportionate relief is allowed on such income at an average rate of tax in Pakistan or abroad, whichever is lower.

Agreement for avoidance of double taxation
The Government of Pakistan has so far signed agreements to avoid double taxation with 39 countries including almost all the developed countries of the world.
These agreements lay down the ceilings on tax rates applicable to different types of income arising in Pakistan. They also lay down some basic principles of taxation which cannot be modified unilaterally. The list of countries with which Pakistan has concluded tax treaties is given below:

Austria Belgium Bangladesh Canada China
Denmark Egypt France Finland Germany
Greece India Indonesia Iran Ireland
Italy Japan South Korea Lebanon Libya
Malta Mauritius Saudi Arabia Singapore Poland
Romania Switzerland Thailand Sri Lanka Sweden
Turkmenistan U.K. Turkey Tunisia Kazakistan
U.A.E. U.S.A


Customs
Goods imported and exported from Pakistan are liable to rates of Customs duties as prescribed in Pakistan Customs Tariff.

Customs duties in the form of import duties and export duties constitute about 37% of the total tax receipts.

The rate structure of customs duty is determined by a large number of socio-economic factors. However, the general scheme envisages higher rates on luxury items as well as on less essential goods. The import tariff has been given an industrial bias by keeping the duties on industrial plants and machinery and raw material lower than those on consumer goods.

Central Excise
Central Excise duties are leviable on a limited number of goods produced or manufactured, and services provided or rendered in Pakistan. On most of the items Central Excise duty is charged on the basis of value or retail price. Some items are, however, chargeable to duty on the basis of weight or quantity. Classification of goods is done in accordance with the Harmonized Commodity Description and Coding system which is being used all over the world. All exports are exempted from Central Excise Duty.

Sales Tax
Sales Tax is levied at various stages of economic activity at the rate of 17 per cent on:
• All goods imported into Pakistan, payable by the importers;
• All supplies made in Pakistan by a registered person in the course of furtherance of any business carried on by him;
• There is an in-built system of input tax adjustment and a registered person can make adjustment of tax paid at earlier stages against the tax payable by him on his supplies. Thus the tax paid at any stage does not exceed 17% of the total sales price of the supplies.

As per the Finance Act passed by Government of Pakistan, following slabs and income tax rates shall be applicable for salaried persons and salaried class for the year 2014-2015:

Where the taxable salary income does not exceed Rs 400,000, the rate of income tax is 0%;
Where the taxable income exceeds Rs 400,000 but does not exceed Rs 750,000, the rate of income tax is 5% of the amount exceeding Rs 400,000.
Where the taxable income exceeds Rs 750,000 but does not exceed Rs 1,400,000,the rate of income tax is Rs 17,500 + 10% of the amount exceeding Rs 750,000.
Where the taxable income exceeds Rs 1,400,000 but does not exceed Rs 1,500,000, the rate of income tax is Rs 82,500 + 12.5% of the amount exceeding Rs 1,400,000.
Where the taxable income exceeds Rs 1,500,000 but does not exceed Rs 1,800,000, the rate of income tax is Rs 95,000 + 15% of the amount exceeding Rs 1,500,000.
Where the taxable income exceeds Rs 1,800,000 but does not exceed Rs 2,500,000, rate of tax is Rs 140,000 + 17.5% of the amount exceeding Rs 1,800,000.
Where the taxable income exceeds Rs 2,500,000 but does not exceed Rs 3,000,000, the rate of income tax is Rs 262,500 + 20% of the amount exceeding Rs 2,500,000.
Where the taxable income exceeds Rs 3,000,000 but does not exceed Rs 3,500,000, the rate of income tax is Rs 362,500 + 22.5% of the amount exceeding Rs 3,000,000.
Where the taxable income exceeds Rs 3,500,000 but does not exceed Rs 4,000,000, the rate of income tax is Rs 475,000 + 25% of the amount exceeding Rs 3,500,000.
Where the taxable income exceeds Rs 4,000,000 but does not exceed Rs 7,000,000, the rate of income tax is Rs 600,000 + 27.5% of the amount exceeding Rs 4,000,000.
Where the taxable income exceeds Rs 7,000,000, rate of tax is Rs 1,425,000 + 30% of the amount exceeding Rs 7,000,000.

About Income Tax

Taxation according to a person’s ability to pay is universally accepted principle, and income is considered a satisfactory though not a sufficient index of such ability to pay. Income Tax is, therefore, generally recognized as a highly equitable form of taxation. A tax levied on income can normally be shifted to others and thus its incidence is on those for whom it is intended. Since income tax is progressive in nature, it tends to reduce economic disparity. Tax rates and method of calculating taxable income varies with fiscal status of the tax payer.

Following are the broad categories of taxpayers:-

Companies
Association of Persons (AOP)
Non Salaried Individuals
Salaried individuals



Capital Value Tax
It is payable by individuals, firms and companies which acquire an asset by purchase or a right to use for more than 20 years.


Corporate Asset Tax

It is levied through section 12 of the Finance Act, 1991. This is one time levy payable by a company as defined in Companies Ordinance, 1984, on the value of fixed assets held by the company on the "specified date".

New PROPOSED INCOME TAX SLAB RATES FOR BUSINESSMEN AND AOP’s IN PAKISTAN FOR YEAR 2013-14

POSTED IN: M&M EXCLUSIVE, PAKISTAN FEDERAL BUDGET 2013-14 --NEW
These are the New PROPOSED INCOME TAX SLAB RATES FOR BUSINESSMEN AND AOP’s IN PAKISTAN FOR YEAR 2013-14 through Finance Bill 2013-14.

S.No. Taxable income Rate of tax

1 Where the taxable income does not exceed Rs.400,000 0%

2 Where the taxable income exceeds Rs.400,000 but does not exceed Rs.750,000 10% of the amount exceeding Rs.400,000

3 Where the taxable income exceeds Rs.750,000 but does not exceed Rs.1,500,000 Rs.35,000 + 15% of the amount exceeding Rs.750,000

4 Where the taxable income exceeds Rs.1,500,000 but does not exceed Rs.2,500,000 Rs.147,500 + 20% of the amount exceeding Rs.1,500,000

5Where the taxable income exceeds Rs.2,500,000 but does not exceed Rs.4,000,000 Rs.347,500 + 25% of the amountexceeding Rs.2,500,000

6Where the taxable income exceeds Rs.4,000,000 but does not exceed Rs.6,000,000 Rs. 722,500 + 30% of the amount exceeding Rs.4,000,000

7Where the taxable income exceeds Rs.6,000,000 Rs. 1,322,500 + 35% of the amount exceeding Rs.6,000,000”;

Tax Year 2014: Company tax rate to be 34 percent under Finance Act

The rate of tax imposed on the taxable income of a company other than a banking company, shall be 34 percent for the Tax Year 2014 under Finance Act 2013. The income tax circular issued on Friday said that through Finance Act, 2013 a proviso has been added to Division II of Part-I in the First Schedule to the Income Tax Ordinance, 2001 providing that the rate of tax imposed on the taxable income of a company other than a banking company, shall be 34 percent for the tax year 2014.

This means that the rate of Income Tax for the Tax Year 2013 shall be 35 percent and for the Tax Year 2014 the rate of income tax shall be 34 percent on the taxable income of a company other than a banking company. Explaining the Cash Withdrawal from a bank (Section 231A], the FBR said that the rate of deduction of income tax by every banking company has been increased to 0.3 percent.

Dear supernova, plz, post the stuff for other subjects like Tax structure, reforms and administration, and fiscal policy of Pakistan. Other members are rquested to post their notes specially, if they are provided by academies. thanks and jazakallah.

Monetary policy

Monetary policy is the process by which the monetary authority of a country controls the supply of money,
often targeting inflation rate or interest rate to ensure price stability and general trust in the currency.

Further goals of a monetary policy are usually

to contribute to economic growth and stability,
to low unemployment, and
to predictable exchange rates with other currencies.

Monetary economics provides insight into how to craft optimal monetary policy.

Monetary policy is referred to as either being expansionary or contractionary,

Expansionary policy increases the total supply of money in the economy more rapidly than usual, and

Contractionary policy expands the money supply more slowly than usual or even shrinks it.


Fiscal policy

Fiscal policy is the use of government revenue collection (mainly taxes) and expenditure(spending) to influence the economy.

According to Keynesian economics, when the government changes the levels of taxation and government spending, it influences aggregate demand and the level of economic activity.

Fiscal policy can be used to stabilize the economy over the course of the business cycle.

The two main instruments of fiscal policy are changes in the level and composition of taxation and government spending in various sectors. These changes can affect the following macroeconomic variables, amongst others, in an economy:

•Aggregate demand and the level of economic activity;
•Savings and Investment in the economy
•The distribution of income
Fiscal policy can be distinguished from monetary policy, in that fiscal policy deals with taxation and government spending and is often administered by an executive under laws of a legislature, whereas monetary policy deals with the money supply, lending rates and interest rates and is often administered by a central bank.

The three main stances of fiscal policy are:

Neutral fiscal policy is usually undertaken when an economy is in equilibrium. Government spending is fully funded by tax revenue and overall the budget outcome has a neutral effect on the level of economic activity.

Expansionary fiscal policy involves government spending exceeding tax revenue, and is usually undertaken during recessions.

Contractionary fiscal policy occurs when government spending is lower than tax revenue, and is usually undertaken to pay down government debt.

Direct vs Indirect tax

Taxation is an extremely important source of funding for any state to finance the running of the governmental functions. Even the oil rich Arab states are now beginning to recognise the importance of this and starting to shift towards a lasting economy with citizens contributing to the national treasury with their share of the taxes.
To put it simply, in all global economies there is taxation, both direct and indirect (in different combinations).

Direct taxation is a tax directly levied on an individual or business’s income

while indirect taxation entails taxes on products and services whereby consumers are made to pay taxes when they consume these.

During the last financial year, the share in the GDP of direct taxes in the national tax revenue was 3.50pc and of indirect taxes 6.40pc.

Big companies pay billions in taxes which are collected from customers through the supply chain, as companies merely act as collectors and consolidators of those tax sums.

About 25 pc tax revenue is collected through direct taxes and the remaining 75 pc through indirect taxes.

Consumers mostly do not know as to whose burden they are made to carry. Even if some of them realise it, the individual burden is so small that they do not consider it worthwhile to mount a challenge socially or legally.

In Pakistan, ordinary people are taxed indirectly on just about everything.
Nowhere in the developed world is indirect taxation utilised as heavily as in Pakistan due to the negative effects that it creates for the economy. In Pakistan’s case (and that of many other developing countries following this strategy) the negative impacts far outweigh the contributions raised in this manner due to the missed opportunity costs.

For example, 25-30% had been routinely charged as an indirect tax on every litre of fuel (mainly petrol, diesel, etc) in Pakistan which is a basic necessity for everyday life compared to only 13% in the USA.

This way of collecting taxes indirectly leads to inflationary pressures in the economy as the increased transportation costs translates into increased prices for just about everything including the commonly used commodities.

The effects are hyper-inflationary in nature because there is a multiplicative rather than an additive element in the inflation passed-on at every level.
Furthermore the pay-rises are not proportionate to inflation thereby

forcing people to rely on expensive credit to make their ends meet.

Similarly businesses also require more finance to run their operations.

This hyper-inflationary environment then leads to higher interest rate which negatively affects the businesses.

With higher finance costs many business projects which would otherwise be viable becomes non-feasible.

The resulting lack of employment opportunities combined with the limited money-supply puts recessionary pressures on the market.

The above issues lead to the devaluation of the currency which in turn results in increased foreign debt burden.

As a result, financing costs of the foreign debts rise leading to a higher proportion of GDP spent on debt financing.

All this combined with hyper-inflation drags the already estranged economy further back in Pakistan’s case.
The above is a summary of the mess created by the taxation policies pursued by the previous government which are unfortunately continued by the incumbent finance ministry.

Pakistan Latest Economic Indicators



GDP 237 USD Billion

GDP Growth Rate 4.14 percent

Gross National Product 11175600 PKR Million

GDP per capita 806 USD

GDP per capita PPP 4549 USD

Import Prices 159 Index Points

Food Inflation 1.19 percent

Inflation Rate Mom -0.9 percent

Interest Rate 8.5 percent

Interbank Rate 8.96 percent

Foreign Exchange Reserves 12987 USD Million

Balance of Trade -100609 PKR Million

Exports 207806 PKR Million

Imports 308415 PKR Million

Current Account -715 USD Million

Current Account to GDP -1.1 percent

External Debt 64338 USD Million

Remittances 4287 USD Million

Gold Reserves 64.43 Tonnes

Crude Oil Production 92.3 BBL/D/1K

Foreign Direct Investment 2816 USD Million

Government Budget -8 percent of GDP

Government Debt to GDP 63.3 percent

Government Budget Value -1833864 PKR Million

Government Spending 3047404 PKR Million

Credit Rating 10.84

Industrial Production 4.44 percent

Corporate Tax Rate 34 percent

Personal Income Tax Rate 20 percent

Sales Tax Rate 17 percent

Excise Duty

An excise or excise tax (sometimes called a special excise duty) is an inland tax on the sale, or production for sale, of specific goods or a tax on a good produced for sale, or sold, within a country or licenses for specific activities.

Excises are distinguished from customs duties, which are taxes on importation.

Excises are inland taxes, whereas customs duties are border taxes.

An excise is considered an indirect tax, meaning that the producer or seller who pays the tax to the government is expected to try to recover or shift the tax by raising the price paid by the buyer.

Excises are typically imposed in addition to another indirect tax such as a sales tax or value added tax (VAT).

In common terminology (but not necessarily in law), an excise is distinguished from a sales tax or VAT in three ways:

(i) an excise typically applies to a narrower range of products;
(ii) an excise is typically heavier, accounting for a higher fraction of the retail price of the targeted products; and
(iii) an excise is typically a per unit tax, costing a specific amount for a volume or unit of the item purchased, whereas a sales tax or VAT is an ad valorem tax and proportional to the price of the good.

Typical examples of excise duties are taxes on gasoline and other fuels, and taxes on tobacco.