Day: July 8, 2020

Finance ministry issues strategy for release of funds for development budget

ISLAMABAD: The finance ministry on Wednesday issued strategy for release of funds for development budget during fiscal year 2020/2021.

The undersigned is directed to refer to the subject mentioned above and to state that keeping in view the Public Finance Management Act (PFM) Act, 2019, the following strategy for release of funds relating to Development Budget for Financial Year 2020-21 shall be followed with immediate effect and until further orders:-

a) Funds for Development Budget shall be released by Finance Division at the level of 20 percent for the 1st Quarter, 30 percent each for 2nd and 3rd Quarter and 20 percent for 4th Quarter.

b) Ministry of Planning, Development and Special Initiative s shall devise project-wise/Division-wise strategy for release of funds for Public Sector Development Program (PSDP) within the appropriations approved by the National Assembly and included in the Schedule of Authorized Expenditure in terms of Article 83 of the Constitution.

c) All payments shall be made through the pre-audit system of the Accountant General Pakistan Revenue (AGPR)/ Military Accountant General (MAG)/ Accounting Offices/ Sub-Offices, or through Assignment Account procedure issued by the Finance Division. No direct payment through the State Bank of Pakistan shall be made, except with the prior approval of the Finance Secretary.

d) No authority shall incur or commit any expenditure from the “Federal Consolidated Fund” until the same has been sanctioned by the National Assembly and the expenditure has been provided for the financial year through (a) schedule of authorized of expenditure in terms of Article 83 of the Constitution, or (b) supplementary grant or technical supplementary grant as per Article 84 of the Constitution has been approved by the Federal Government, or (c) re-appropriation as per Sections 2(u) and 11 of the Public Finance Management Act, 2019.

e) There shall be no requirement of ways and means clearance from Budget Wing and endorsement of sanction letters by Expenditure Wing, Finance Division for the fund releases for PSDP approved projects.

f) All the sanctions for expenditure (in all forms) shall be issued and entered into SAP system by the Principle Accounting Officers (PAOs) before making payment by the Accounting Offices.

g) AGPR and other Accounting Offices shall not enter the sanction letters issued by the PAO into the SAP system and shall process the payments on verification of budget, fund release and sanction letter.

h) The provisions of Public Finance Management Act, 2019 shall be strictly adhered to by all the PAOs and the Accounting Offices.

i) The instructions with regard to all forms of supplementary grants shall be issued by the Budget Wing, Finance Division, separately.

j) The Development Wing of Finance Division shall coordinate and oversee the matters relating to release of funds for development of budget and other ancillary matters.

July 8, 2020
Assessment oversight committees formed to settle taxpayers’ cases

ISLAMABAD: Assessment oversight committees have been formed at all tax offices of Inland Revenue in order to settle the cases of taxpayers in expeditious manner, officials at Federal Board of Revenue (FBR) said.

The committees have been formed following amendment made to Income Tax Ordinance, 2001 through Finance Act, 2020, which was recently approved by the National Assembly.

The committee shall comprise the following tax authorities having jurisdiction over the taxpayer, namely:

(a) the Chief Commissioner Inland Revenue;

(b) the Commission Inland Revenue; and

(c) the Additional Commissioner Inland Revenue.

A new section 122D has been inserted to Income Tax Ordinance, 2001 for agreed assessment in certain cases.

Under this section where as taxpayer, in response to a notice under sub-section of Section 122, intends to settle his case, he may file offer of settlement in the prescribed form before the assessment oversight committee in addition to filing reply to the commissioner.

The committee after examining the offer may call for the record of the case and after affording opportunity of being heard to the taxpayer, may decide to accept or modify the offer of the taxpayer through consensus and communicate its decision to the taxpayer.

Where the taxpayer is satisfied with the decision of the committee:

(a) the taxpayer shall deposit the amount of tax payable including any amount of penalty and default surcharge as per decision of the committee;

(b) the commissioner shall amend assessment in accordance with the decision of the committee after tax payable including any amount of penalty and default surcharge as per decision of the committee has been paid;

(c) the taxpayer shall waive the right to prefer appeal against such amended assessment; and

(d) no further proceedings shall be undertaken under this ordinance in respect of issues decided by the committee unless the tax has not been deposited by the taxpayer.

According to the amendment, where the committee has been able to arrive at the cons or where the taxpayer is not satisfied with the decision of the committee, the case shall be referred back to the commissioner for decision on the basis of reply of the taxpayer in response to notice under section 122 notwithstanding proceedings or decision, if any, of the committee.

This section shall not apply in cases involving concealment of income or where interpretation of question of law is involved having effect on other cases.

Further, the FBR may make rules regulating the procedure of the committee and for any matter concerned with, or incidental to the proceedings of the committee.

July 8, 2020
Pak Qatar Family Takaful to offer products, services through digital media

KARACHI: Pak-Qatar Takaful Group has decided to use digital media to offer its products and services in the wake of COVID-19 in order to provide the best possible convenience to its valuable members and customers.
(more…)

July 8, 2020
Stock market gains 322 points on cut in refinance rate

KARACHI: The stock market gained 322 points on Wednesday owing to improved sentiments of investors after reduction in refinance rates announced by the State Bank of Pakistan (SBP).

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 35,695 points as against 35,374 points showing an increase of 322 points.

Analysts at Arif Habib Limited said that the market gained another 330 points during the session and closed near session’s high at +322 points.

Activity was observed almost across the board with Cement and Banks contributing the most. Steel, Pharma, Textile sectors also contributed to the rise.

SBP further reduced the rates for ERF facility to Banks, which improved the sentiment for the business community and indicates lowering of financial charges in FY21.

SBP is also scheduled for an MPC meeting in the ongoing month. Technology sector posted volumes of 67.7 million shares, followed by Cement (44.8 million) and Banks (31.8 million).

Among scrips, TRG topped 38.3 million shares, followed by PAEL (20.5 million) and MLCF (17.5 million).

Sectors contributing to the performance include Banks (+163 points), Autos (+30 points), Technology (+29 points), E&P (+21 points) and Pharma (+19 points).

Volumes declined slightly from 333.8 million shares to 317.7 million shares (-5 percent DoD). Average traded value, on the contrary, increased by 6 percent to reach US$ 78.2 million as against US$ 73.2 million.

Stocks that contributed significantly to the volumes include TRG, PAEL, MLCF, JSCL and WTL, which formed 34 percent of total volumes.

Stocks that contributed positively to the index include HBL (+75 points), UBL (+35 points), PPL (+25 points), TRG (+24 points) and MTL (+20 points). Stocks that contributed negatively include LUCK (-15 points), HUBC (-10 points), ENGRO (-6 points), OGDC (-5 points), and NESTLE (-5 points).

July 8, 2020
Rupee gains 19 paisas in interbank

KARACHI: The Pak Rupee gained 19 paisas against dollar on Wednesday owing to improved inflows of export receipts, dealers said.

The rupee ended Rs166.76 to the dollar from previous day’s closing of Rs166.95 in interbank foreign exchange market.

Currency experts said that during the past few days the demand for dollar was on the higher side resulting in ease in rupee value.

They further said that the inflows of export receipts and from international financial institutions had helped the rupee to gain the value.

July 8, 2020
SBP slashes refinance rate to five percent for temporary, long term schemes

KARACHI: State Bank of Pakistan (SBP) has decided to reduce the mark up rates on temporary economic refinance facility (TERF) to five percent from 7 percent and on long term financing facility (LTFF) from non-textile sector to five percent from six percent.

The central bank on Wednesday said that taking cognizance of the negative fallout of COVID-19 Pandemic for the economy, SBP has been constantly taking steps to safeguard the businesses and households and a reduction in the policy rate has been a key step since March 2020.

SBP has reduced the policy rate by 625 basis points since 17th March, 2020 to 7 percent.

To extend the benefits of this reduction in the policy rate to the users of its refinance schemes, SBP has now decided to align the end user markup rates on two of its refinance schemes for promoting investment in the country.

Temporary Economic Refinance Facility (TERF): SBP introduced this facility to provide stimulus to the economy by supporting new investment and balancing, modernization and restructuring (BMR) of the existing projects.

To further improve the incentive under the scheme, SBP has lowered the end user mark-up rates from existing 7 percent to 5 percent.

SBP will now be providing refinance to banks at 1 percent with banks’ maximum margin of 4 percent. Further, SBP has also allowed the TERF facility in cases where LCs/Inland LCs were opened prior, but retiring after the introduction of the scheme on March 17, 220.

These measures, in the backdrop of earlier policy action of allowing BMR under TERF, are expected to further support the economic activity, new long term investment and employment generation.

Under this scheme, up till 2nd July 2020, Rs10.5 billion have been approved by banks for 21 projects.

Long Term Financing Facility (LTFF): LTFF is one of the oldest refinance schemes of SBP under which financing is available for export-oriented projects for purchase of imported and locally manufactured new plant and machinery.

In March, 2020 SBP opened the LTFF to all sectors across the board. Earlier the end user markup rate under this scheme were 5 percent for textile sector and 6 percent for non-textile sectors.

State Bank has now reduced its refinance rate for non-textile sector by 1 percent and therefore the end user rate for all sectors across the board will be 5 percent.

It is expected that the above measures will help facilitate long term investment in both domestic and export market.

July 8, 2020
SBP appoints 12 primary dealers for government securities

KARACHI: State Bank of Pakistan (SBP) has appointed 12 financial institutions as primary dealers for government securities for the fiscal year 2020/2021.

The central bank said that applications were invited for selection of primary dealers for the Financial Year (FY) 2020-2021 vide DMMD Circular Letter No. 01 dated May 15, 2020 from all Banks, Development Finance Institutions, Investment Banks and Listed Brokerage Houses.

The central bank received twelve applications for appointment of Primary Dealers of Government Securities (PIB & MTB).

Upon evaluation of each applicant’s performance under the criteria laid down in the aforesaid rules, the following institutions have been selected as Primary Dealers of Government Securities (PIBs & MTBs) for FY 2020-2021

1. HABIB BANK LIMITED

2. NATIONAL BANK OF PAKISTAN

3. BANK AL-FALAH LIMITED

4. JS BANK LIMITED

5. ALLIED BANK LIMITED

6. PAK OMAN INVESTMENT COMPANY LIMITED

7. MCB BANK LIMITED

8. UNITED BANK LIMITED

9. FAYSAL BANK LIMITED

10. STANDARD CHARTERED BANK (PAKISTAN) LIMITED

11. CITI BANK N.A (PAKISTAN OPEARTIONS)

12. THE BANK OF PUNJAB

Top three performing PDs during FY 2019-2020 are as under:

Habib Bank Limited

National Bank of Pakistan

Bank Al-Falah Limited

July 8, 2020
Bank deposits reach record high at Rs16.23 trillion

KARACHI: The deposits of banking systems have reached record high at Rs16.23 trillion by end of June 30, 2020, according to data released by State Bank of Pakistan (SBP) on Tuesday.

The deposits of baking system registered 12.24 percent growth by end of June 2020 as compared with Rs14.46 trillion by end of same month last year.

Analysts at Topline Securities explained that during second quarter of 2020, the deposits have increased by higher-than-largely-expected 7 percent, as Net Domestic Assets (NDA) of the Banking System increased by 6 percent during this period, on the back of 11 percent increase in the government borrowings for budgetary support.

Investments have grown by 40 percent YoY and 3 percent MoM to Rs10.68 trillion by end June 2020. The same is up 21 percent YTD (vs. 6 percent YTD growth by end March 2020).

As a result, IDR has increased to 66 percent in June 2020 from 53 percent in June 2019 and 61 percent in March 2020.

On the other hand, Advances have grown by just 1 percent YoY, and have actually declined by 2 percent MoM in June 2020 despite the aggressive cuts in interest rates by the Pakistan Central Bank since March 2020.

This is due to the impact of the pandemic COVID-19, which has caused the overall slowdown in the economic activity. In YTD 2020, advances are up 1 percent.

As a result, ADR has dropped to 51 percent in Jun-2020 from 56 percent in Jun-2019 and 55 percent in March 2020.

The Currency in Circulation (CIC) has increased by 17 percent in YTD 2020 to Rs6.19 trillion, with CIC as a percentage of M2 clocking in at 31 percent, above past 5-year average of 27 percent.

Going forward, the analysts expect deposit growth in the range of 10-11 percent during 2020 (vs. historical 3-year average growth of 11 percent), while they expect advances to grow by around 5 percent during the year (vs. historical average 3-year growth of 14 percent).

July 8, 2020
Finance Act 2020: wealth statement cannot be revised after five years

ISLAMABAD: A wealth statement cannot be revised after the expiry of five years from the date of filing of income tax return, officials at Federal Board of Revenue (FBR).

The amendment has been approved by the National Assembly by passing the Finance Act, 2020. The amendment has been introduced in sub-section 3 of Section 116 to Income Tax Ordinance, 2001.

The sources said that under Income Tax Ordinance, 2001 taxpayers had already been allowed to revise their wealth statement by providing reasons for the revision and before any notice issued by a tax office in this regard.

However, through amendment Commissioner Inland Revenue has been empowered to declare the revised wealth statement if he found any ill intention of the taxpayer.

According to the amendment: “Provided that where the commissioner is of the opinion that the revision under this sub-section is not for the purpose of correcting a bona fide omission or wrong statement, he may declare such revision as void through an order in writing after providing and opportunity of being heard.”

An explanation has also been included through amendment which said: “For the removal of doubt it is clarified that wealth statement cannot be revised after the expiry of five years from the due date of filing of return of income for the tax year.”

A taxpayer is required to file wealth statement under Section 116 along with annual income tax return by providing particulars included:

(a) the person’s total assets and liabilities as on the date or dates specified in such notice;

(b) the total assets and liabilities of the person’s spouse, minor children, and other dependents as on the date or dates specified in such notice;

(c) any assets transferred by the person to any other person during the period or periods specified in such notice and the consideration for the transfer;

(d) the total expenditures incurred by the person, and the person’s spouse, minor children, and other dependents during the period or periods specified in the notice and the details of such expenditures; and

(e) the reconciliation statement of wealth.

July 8, 2020