Day: March 27, 2019

SBP to announce monetary policy on March 29; experts expect 75bps increase

KARACHI: State Bank of Pakistan (SBP) will announce Monetary Policy for the next two months on Friday, March 29, 2019, a statement said on Wednesday.

In the last monetary policy announcement, the central bank increased the policy rate by 25 basis points to 10.25 percent effective from February 01, 2019.

The monetary policy committee (MPC) decided to increase the rate on the basis of: (i) the fiscal deficit is yet to show signs of consolidation despite a reduction in PSDP spending; (ii) although a gradual improvement in current account deficit is visible, it remains high; (iii) a marked shift in the pattern of government borrowing from scheduled banks to SBP entails inflationary concerns; and (iv) even as stabilization measures gradually work through the economy, underlying inflationary pressures persist.

Analysts at Arif Habib Limited said that the SBP to increase policy rate by 75 basis points to 11.00 percent (Discount rate 11.50 percent) in the upcoming monetary policy statement.

This might be the last rate hike before Pakistan enters the International Monetary Fund (IMF) program whereas inflation will remain moderate after making its peak in the ongoing month.

The monetary tightening is expected on the back of i) rising inflationary pressure due to recovery in prices of petroleum products and essential food items, ii) mounting Fiscal deficit despite sharp cut in PSDP and rationalization of tariffs and duties, and iii) narrowing real interest rate as it declined to 1.6 percent compared to last four year average of 2.85 percent.

March 27, 2019
Income Tax Ordinance 2001: total exemption on payment of pension, retirement

KARACHI: Any income representing any payment received by way of gratuity or commutation of pension by an employee on his retirement is exempted from income tax.

The Second Schedule of Income Tax Ordinance, 2001 explained the exemption from total income.

Any income representing any payment received by way of gratuity or commutation of pension by an employee on his retirement or, in the event of his death, by his heirs as does not exceed –

(i) in the case of an employee of the Government, a Local Government, a statutory body or corporation established by any law for the time being in force, the amount receivable in accordance with the rules and conditions of the employee’s services;

(ii) any amount receivable from any gratuity fund approved by the Commissioner in accordance with the rules in Part III of the Sixth Schedule;

(iii) in the case of any other employee, the amount not exceeding three hundred thousand rupees receivable under any scheme applicable to all employees of the employer and approved by the Board for the purposes of this sub-clause; and

(iv) in the case of any employee to whom sub-clause (i), (ii) and (iii) do not apply, fifty per cent of the amount receivable or seventy-five thousand rupees, whichever is the less:

Provided that nothing in this sub-clause shall apply –

(a) to any payment which is not received in Pakistan;

(b) to any payment received from a company by a director of such company who is not a regular employee of such company;

(c) to any payment received by an employee who is not a resident individual; and to any gratuity received by an employee who has already received any gratuity from the same or any other employer.

March 27, 2019
FIA summons fashion designers in PIA premier service case

KARACHI: Federal Investigation Agency (FIA) has summoned leading fashion designers in inquiry related to losses to PIA in Premier Service Operations.

The FIA summoned the fashion designers in connection that PIA had acquired their services for design of ‘PIA Premier Service Uniform’ for its cabin crew.

The agency said the designers were acquainted with the facts of the enquiry. Therefore, the designers have been asked to record their statements on April 03 and 04.

The designers are included Noman Ansari, Yasmin Sheikh, Saniya Maskatiya and Pinto Kazmi.

Sources said that the PIA acquired services of these designers in 2015. The PIA organized a fashion show abroad for the uniforms designed by such designers.

The sources said that the PIA issued large number for free tickets to members of a local television channel.

March 27, 2019
FPCCI to draft proposals for new tax amnesty scheme

KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has decided to finalize draft proposals for new tax amnesty scheme.

FPCCI President Engr. Daroo Khan Achakzai called a meeting of stakeholders on Tuesday to discuss the proposals for New Tax Amnesty Scheme 2019 at Federation House, Karachi, Regional office Lahore and Capital Office Islamabad via video link.

The meeting decided that a committee will be formed consisting of experts which will be headed by President FPCCI for the finalization of draft of new amnesty scheme.

The meeting was attended by S. M. Muneer, former President FPCCI, Iftikhar Ali Malik, Sr. Vice President SAARC-CCI & Former President FPCCI, Dr. Mirza Ikhtair Baig, Sr. Vice President FPCCI, all Vice Presidents of FPCCI and the representatives of different chambers and associations.

While welcoming the participants of meeting, Engr. Daroo Khan Achakzai informed the house about the outcomes of last amnesty schemes and focused on the need of new amnesty scheme for the documentation of economy and enhancement of tax revenue.

He also highlighted his discussion with the Prime Minister of Pakistan who showed his desire to launch another amnesty scheme and advised President FPCCI to formulate recommendations in consultation with stakeholders with the aim to document the economy by declaring of foreign and domestic assets.

In his remarks, Iftikhar Ali Malik emphasized to create awareness about converting the black money into white money, to increase the confidence of tax payer, incentives for the SMEs, exports warehouses, agriculture sector, removal of piracy, mis-declaration and smuggling.

S. M. Muneer underlined the need of revival of last amnesty scheme with some necessary amendments announced in April 2018 for three months.

Dr. Mirza Ikhtair Baig, Sr. Vice President FPCCI also stressed on the same tax rates of last amnesty scheme 2018 and continuation of Foreign Exchange Reforms Act which allowed opening of account, transactions and remittance facility in foreign currency.

During the meeting, the stakeholders suggested that the new scheme should be based on same rules, regulation and tax rates 2 percent, 3 percent and 5 percent announced in last amnesty scheme in 2018.

The stakeholders also stressed on the strict monitoring of tax collection system, measures of discretionary power to conduct audit of tax filers, removal of harassment and ease of documentation.

They argued that the tax collection system in Pakistan is very complicated which needs to be reviewed as per global requirement.

Moreover, the tax amnesty scheme should also boost industrialization and create new investment in other than real estate sector of economy and improve cost/ease of doing business.

The house also advocated imposing of taxes on agriculture and other sectors which are currently not under tax net instead of putting extra burden on minuscule number of existing tax payers.

They also suggested to announce incentives for filer/ taxpayers and should announce clean chit if taxpayers pay 2 percent or 5 percent additional tax and this scheme should be for three to five years.

March 27, 2019
FBR freezes 4,000 bank accounts for arrears recovery

KARACHI: Federal Board of Revenue (FBR) has frozen around 4,000 bank accounts of tax defaulters in a major crackdown, according to media reports on Tuesday.

These bank accounts have been attached during last three months to recover outstanding amount from tax defaulters.

In the major action against tax defaulters the FBR recovered around Rs8.2 billion through various means provided under income tax laws.

Besides freezing bank accounts, the FBR also attached 78 immovable properties and 46 vehicles for the recovery.

Further, about nine people were arrested in this recovery drive. The arrests have been made each in Faisalabad and Peshawar. Further, warrants for arrest in two cases have been issued.

March 27, 2019
Asad Umar meets IMF mission chief

ISLAMABAD: Finance Minister of Pakistan Asad Umar met the IMF Mission Chief Ernesto Ramirez Rigo in Islamabad, on Tuesday.

The minister and the Mission Chief discussed all issues including fiscal, monetary, structural reforms and energy sector, a statement said.

Asad Umar briefed Ramirez Rigo about the steps taken by the government for improving the economy of the country.

The minister informed that the structural reforms and other economic initiatives introduced by the government were yielding desired results.

The minister said that the government would continue to address the macroeconomic imbalances and would take necessary corrective measures in this regard.

March 27, 2019