Day: August 3, 2020

FBR exempts sales tax on import of oxygen gas, cylinders

ISLAMABAD: Federal Board of Revenue (FBR) on Monday granted sales tax exemption on import of oxygen gas and cylinders (for oxygen gas) for a period of three months.

The FBR issued SRO 649(I)/2020 dated August 03, 2020 to exempt the sales tax from June 23, 2020 on import of the following:

01. Oxygen gas under PCT 2804.4000

02. Cylinders (for oxygen gas) under PCT 7311.0090

03. Cryogenic tanks (for oxygen gas) under PCT 7311.0030

The FBR said that the said exemption shall apply in respect of the letters of credit opened or goods declaration forms filed on or after June 23, 2020.

Previously the FBR issued SRO 593(I)/2020 and exempted the import of oxygen gas and oxygen gas cylinders from customs duty for three months effective from June 23, 2020.

August 3, 2020
Stock market gains 613 points amid mixed trading

KARACHI: The stock market gained 613 points on Monday amid mixed trading activities during the day.

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 39,872 points as against 39,258 points showing an increase of 613 points.

Analysts at Arif Habib Limited said that the market opened on a positive note with +131 points and added a total of 670 points on the board to almost touch 40K level. The index also realized highest value traded of Rs 26 billion, which was last observed in 2017.

While E&P stocks saw selling pressure, Cement and banking sectors took the lead and carried the momentum. Release of inflation data caused some selling pressure, however, the same improved prospects for banking sector stocks, which are still trading at relatively low level compared with listed manufacturing sector stocks.

Cement sector garnered 125.5 million shares in trading volumes, followed by Technology (51.8 million) and Engineering (45.5 million). Among scrips, MLCF topped the volumes with 34.9 million, followed by POWER (32.5 million) and TRG (29.9 million).

Sectors contributing to the performance include Banks (+169 points), Cement (+126 points), Fertilizer (+39 points), O&GMCs (+37 points) and Pharma (+34 points).

Volumes increased again from 368.7 million shares to 539.3 million shares (+46 percent DoD). Average trade value also increased by 51 percent to reach US$ 154.2 million as against US$ 102.3 million.

Stocks that contributed significantly to the volumes include MLCF< POWER, TRG, PAEL and KEL, which formed 27 percent of total volumes.

Stocks that contributed positively to the index include HBL (+83 points), LUCK (+54 points), TRG (+35 points), ENGRO (+29 points) and UBL (+25 points). Stocks that contributed negatively include MARI (-14 points), PPL (-13 points), POL (-6 points), OGDC (-5 points), and MEBL (-5 points).

August 3, 2020
Rupee slips by 48 paisas against dollar on post Eid demand

KARACHI: The Pak Rupee slipped by 48 paisas against dollar on Monday due to higher demand for the foreign currency at the resumption of trading after Eid holidays.

The rupee ended at Rs167.46 to the dollar from closing on July 30, 2020 at Rs166.98 in interbank foreign exchange market.

Currency experts said that the market witnessed higher demand for the greenback for their payments for import and corporate. They said that the pressure would be eased in coming days due to sufficient inflows were observed during past days.

The State Bank of Pakistan (SBP) last week received $505.5 million from the World Bank.

The workers’ remittances rose by a significant 50.7 percent during June 2020 to reach monthly record high $2.46 billion compared with $1.63 billion in June 2019.

Similarly, on a cumulative basis, workers’ remittances increased to a historic high level of $23.12 billion during FY20, witnessing a growth of 6.4 percent over $21.74 billion during FY19.

According to Pakistan Bureau of Statistics (PBS) the import bill of the country fell by 18.6 percent to $44.57 billion as compared with $54.76 billion in the preceding fiscal year.

This helped the country to curtail the trade deficit for the year. The trade deficit of the country shrank by 27 percent to $23.18 billion during fiscal year 2019/2020 as compared with the deficit of $31.8 billion in the preceding fiscal year.

August 3, 2020
World Bank appoints Najy Benhassine as country director for Pakistan

ISLAMABAD: World Bank has appointed Najy Benhassine as new Country Director for Pakistan effective August 1. He succeeds Illango Patchamuthu, who completed his term on July 31, a statement said on Monday.

Benhassine most recently served as Regional Director for Equitable Growth, Finance and Institutions in the Middle East and North Africa. Prior to this, he was Director for the Finance, Competitiveness & Innovation Global Practice.

Since joining the World Bank in 2001, he has worked extensively on economic development, finance, private sector development and impact evaluations.

Benhassine’s appointment comes at a time when the government of Pakistan is confronting both the immediate and longer-term health and economic impacts of the COVID-19 crisis.

“It is critical that we help protect the lives and livelihoods of the people of Pakistan and support economic recovery in the wake of the COVID-19 pandemic,” said Benhassine.

“My first priority is to ensure that World Bank support helps to not only alleviate the immediate health and economic impacts of the crisis but at the same time support the Government’s ambitious social and economic reform program to promote a more resilient and inclusive economy so that Pakistan can build back better.”

The World Bank portfolio in Pakistan includes 56 active projects amounting to approximately $11 billion.

The portfolio supports reforms and investments to strengthen institutions, particularly in fiscal management and human development; multi-sectoral initiatives in children’s nutrition, education and skills, irrigated agriculture, tourism, disaster risk management, and urban development; and clean energy, and social and financial inclusion.

The World Bank is supporting the government of Pakistan through COVID-19 emergency response projects totaling almost half a billion to help the country prevent, detect and respond to the pandemic and strengthen public health preparedness.

August 3, 2020
Headline inflation grows by 9.3pc in July

ISLAMABAD: The headline inflation based on Consumer Price Index (CPI) has increased by 9.3 percent on Year-on-Year (YoY) basis in July 2020, according to data released by Pakistan Bureau of Statistics (PBS) on Monday.

The latest increase was compared to an increase of 8.6 percent in the previous month and 8.4 percent in July 2019.

On month-on-month (MoM) basis, it increased by 2.5 percent in July 2020 as compared to an increase of 0.8 percent in the previous month and an increase of 1.8 percent in July 2019.

CPI inflation Urban, increased by 7.8 percent on year-on-year basis in July 2020 as compared to an increase of 7.6 percent in the previous month and 8.7 percent in July 2019.

On month-on-month basis, it increased by 2.2 percent in July 2020 as compared to an increase of 0.7 percent in the previous month and an increase of 2.0 percent in July 2019.

CPI inflation Rural, increased by 11.5 percent on year-on-year basis in July 2020 as compared to an increase of 10.0 percent in the previous month and 7.9 percent in July 2019.

On month-on-month basis, it increased by 2.9 percent in July 2020 as compared to an increase of 1.0 percent in the previous month and an increase of 1.6 percent in July 2019.

Sensitive Price Indicator (SPI) inflation on YoY increased by 13.5 percent in July 2020 as compared to an increase of 11.5 percent a month earlier and an increase of 8.9 percent in July 2019.

On MoM basis, it increased by 2.8 percent in July 2020 as compared to an increase of 1.4 percent a month earlier and an increase of 1.0 percent in July 2019.

Wholesale Price Indicator (WPI) inflation on YoY basis increased by 3.2 percent in July 2020 as compared to an increase of 0.9 percent a month earlier and an increase of 13.3 percent in July 2019.

WPI inflation on MoM basis increased by 5.4 percent in July 2020 as compared to a decrease of 0.3 percent a month earlier and an increase of 3.1 percent in corresponding month of last year i.e. July 2019.

August 3, 2020
Withholding tax rates on dividend income updated for tax year 2021

ISLAMABAD: Federal Board of Revenue (FBR) has updated withholding tax card for dividend income to be applicable during Tax Year 2021 (2020-2021).

The FBR issued the withholding tax card 2020-2021 (updated up to June 30, 2020) after incorporating amendments made to Income Tax Ordinance, 2001 through Finance Act, 2020.

Under Section 150 of Income Tax Ordinance, 2001, every person paying dividend shall collect/deduct withholding tax at prescribed rates from recipient of dividend at the time the dividend is actually paid.

The tax shall be final under section 5 read with section 8 of the Income Tax Ordinance, 2001.

According to the updated withholding tax card:

Tax shall be deducted on the gross amount of dividend paid:

(a) In the case of dividend paid by Independent Power Purchasers (IPPs) whereas such dividend is a pass through item under an Implementation Agreement or Power Purchase Agreement or Energy Purchase Agreement and is required to be reimbursed by Central Power Purchasing Agency (CPPA-G) or its predecessor or successor entity:

The tax rate shall be 7.5 percent and 15 percent for persons not appearing on Active Taxpayers List (ATL).

(b) In mutual funds and cases other than mentioned at (a) above and (ba) below

The tax rate shall be 15 percent and 30 percent for persons not appearing on the ATL.

(ba) In case of person receiving dividend from a company where no tax is payable by such company, due to exemption of income or carry forward of business losses under Part-VIII of Chapter-III or claim of tax credits under Part-X of Chapter-III.

The tax rate shall be 25 percent and the rate shall be increased by 100 percent in case the person is not on the ATL.

Return on Investment in Sukuk under Section 150A

Special Purpose Vehicle, Company shall collect / deduct withholding tax at prescribed rates from Sukuk holders on payment of gross amount of return on investment at the time of actual payment

The tax shall be final under section 5AA read with section 8 of the Income Tax Ordinance, 2001.

On Payment of return on investment in Sukuks:

a) In case the Sukuk- holder is a company the tax rate shall be 25 percent and it shall be increased by 100 percent in case persons are not on the ATL.

b) In case the Sukuk – holder is an individual or an association of person, if the return on investment is more than one million, the tax rate shall be 12.5 percent and the rate shall be doubled in case persons not appearing on the ATL.

c) In case the Sukuk – holder is an individual and an association of person, if the return on investment is less than one million, the tax rate shall be 10 percent and will be doubled in case person is not on the ATL.

August 3, 2020