Pkrevenue.com

Month: March 2021

  • Share market plunges 786 points on high inflation risk, political uncertainty

    Share market plunges 786 points on high inflation risk, political uncertainty

    KARACHI: The share market plunged by 786 points on Monday owing to high inflation risk following rise in international oil prices and political uncertainty on possible change in Punjab setup.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 45,051 points as against last Friday’s closing of 45,837 points, showing a decline of 786 points.

    Analysts at Arif Habib Limited said that in the aftermath of PM’s vote of confidence from the Parliament, the market saw a heavy draw down with an oscillation of 1583 points posting an increase of 595 points in the early part of the session and dropping by 988 points during the session. The Index closed 786 points.

    Political uncertainty emanating from possible change in Punjab’s political setup perturbed investors, at the same time recent rapid upsurge in inflation (primarily international crude oil prices) also caused Investors to think twice about upcoming monetary policy and impact thereof on cyclicals.

    Resultantly, cement, steel, O&GMCs saw major attrition today. Over the weekend increase in international crude oil prices helped E&P stocks to stay afloat, however, selling pressure in other stocks also brought pressure in OGDC and PPL as well. Among scrips, ANL topped the volumes with 48.2 million shares, followed by UNITY (45.4 million) and TRG (35.4 million).

    Sectors contributing to the performance include Cement (-205 points), Banks (-104 points), Power (-67 points), Autos (-49 points) and Pharma (-46 points).

    Volumes increased from 317.2 million shares to 459.8 million shares (+45 percent DoD). Average traded value also increased by 55 percent to reach US$ 157.5 million as against US$ 101.5 million.

    Stocks that contributed significantly to the volumes include ANL, UNITY, TRG, PRL and BYCO, which formed 37 percent of total volumes.

    Stocks that contributed positively to the index include PAKT (+10 points), POL (+10 points), ANL (+7 points), MEBL (+3 points) and FCEPL (+2 points). Stocks that contributed negatively include LUCK (-85 points), HUBC (-48 points), HBL (-39 points), DGKC (-36 points) and INDU (-24 points).

  • EFU Life Assurance’s death, disability claim payment increases by 23 percent

    EFU Life Assurance’s death, disability claim payment increases by 23 percent

    KARACHI: EFU Life Assurance Limited has settled death and disability claims of Rs3.86 billion in the year 2020, which is 23 percent higher than the preceding year, according to the financial report of the company.

    It said that timely and efficient claims settlement is at the heart of the company’s business.

    In 2020, the company settled total death and disability claims of Rs. 3.86 billion (2019: 3.14 billion), an increase of 23 percent.

    Out of this, Individual Life claims were Rs1.32 billion and Group Life claims amounted to Rs. 2.54 billion.

    Both lines of business have been impacted by death claims due to COVID-19, however the incremental claims are within the mortality fluctuation tolerance levels set by the company.

    The company has appropriate and adequate reinsurance arrangements in place to mitigate the impact of these additional pandemic related claims.

    According to the results, the company achieved a gross premium (including Takaful contributions) of Rs32.55 billion (2019: 31.75 billion), a slight growth of 2.5 percent.

    The gross premium composition was as follows:

    Individual Life regular premiums (including Takaful contributions) grew by 4.6 percent, achieving a total premium of Rs.28.72 billion (2019: Rs. 27.45 billion).

    Individual life New Business was impacted by COVID-19 lockdowns during which our distribution channels were unable to reach out to retail clients.

    The new business premium contracted to Rs6.21 billion (2019: 6.99 billion).

    Bancassurance was impacted to a greater degree due to limited banking activities during the second and third quarter of the year, while the Agency Sales force was able to make a positive recovery towards the end of the year.

    Renewal premium is a critical indicator of customer satisfaction and grew to Rs. 22.5 billion (2019: Rs. 20.45 billion), a modest increase of 10 percent. Persistency is in the

    DNA of the Company and client retention activities continued throughout the year in parallel to the pandemic when various segments of clients found it to challenging to continue their policies.

    These retention activities, for both Sale Force and Bancassurance, yielded positive results and both channels, towards end of the year, were able to improve their respective persistency levels.

    Group Benefits gross premium, including Takaful contributions, contracted to Rs. 3.23 billion (2019: Rs 3.58 billion).

    The Window Takaful Operations of the Company, Hemayah, are in their sixth year of operations and have continued to show good growth.

    The increase in demand for Islamic financial products over the years has also benefited the Company’s takaful line of business. During 2020, the Company achieved a gross takaful contribution of Rs. 5.42 billion (2019: Rs. 4.21 billion), registering an impressive growth of 29 percent.

    The Individual Family takaful new business was Rs. 2.04 billion (2019: 1.77 billion), a growth of 15 percent. Renewal contribution was Rs. 2.83 billion (2019: Rs. 1.94 billion), recording a high growth of 46 percent.

    For Group Family Takaful, the Company achieved a business of Rs. 309 million. (2019: 326 million). Overall the company expects its Takaful line of business to continue its growth trajectory during 2021.

  • Hubco acquires Eni operations in Pakistan

    Hubco acquires Eni operations in Pakistan

    KARACHI: The Hub Power Holding Limited on Monday announced to acquire all upstream operations of Eni in Pakistan.

    In an information shared by the Pakistan Stock Exchange (PSX), the it said that the Hub Power Company Limited (HUBCO) together with ENI’s local employees (in a 50:50 joint venture) has executed definitive agreements to acquire all upstream operations in Pakistan of Eni and renewable energy assets owned by Eni in Pakistan.

    By way of background, Eni is global energy company, which has been operating in Pakistan since the year 2000 in the exploration and production sector.

    The company said that the transactions is subject to requisite compliance with applicable legal and regulatory processes and approval from competent authorities.

  • Rupee gains four paisas as positive sentiments

    Rupee gains four paisas as positive sentiments

    KARACHI: The Pak Rupee gained four paisas against the dollar on Monday owing to positive sentiments prevailed in the foreign exchange market.

    The rupee ended Rs157.08 to the dollar from previous day’s closing of Rs157.12 in the interbank foreign exchange market.

    Currency dealers said that foreign inflows of workers’ remittances and export receipts helped the rupee to make gain despite demand for import and corporate payments.

    The dealers said that the optimism prevailed on economic growth after confidence vote win by the prime minister in the parliament.

  • Business community hails decision to simplify tax laws

    Business community hails decision to simplify tax laws

    KARACHI: Business community has praised Prime Minister Imran Khan for issuing directives to the authorities for focusing on tax reforms, simplification of tax laws and plugging loopholes in existing tax system, a statement said on Sunday.

    Mian Nasser Hyatt Maggo President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) lauded Prime Minister Imran Khans directives to focus on reform in tax regime, simplification of tax laws, plugging existing loopholes, reduction in discretionary powers of tax collectors, automation to bring transparency in tax system.

    He said that it is heartening that Prime Minister is equally concerned with the tax reforms for accelerated growth. He said that understanding of Prime Minister in this regard shows his deep insight on the issues that are impeding economic growth with great attachment to the business community of Pakistan.

    He further stated that the Prime Minister has rightly taken up the issue of reforms in tax regime. The structure of taxation in our country is regressive, with indirect taxes accounting for major of total federal government tax collection.

    Tax collection is also disproportionate; industry being overburdened with tax payment of more than 60 percent against about 20 percent size in GDP. The present tax structure is complex because of overlapping jurisdictions with different laws and frequent policy changes through on almost daily basis by issuance of instructions, clarifications, changes in rules, CGOs, STGOs, ITGOs.

    The income tax, GST on goods, customs duties, federal excises is collected by the FBR while GST on Services is collected by provincial Revenue Boards/Authorities which also fragments Pakistan into five business market economies.

    The withholding tax regime of over 65 in numbers is also problematic and businessmen have been made withholding agents to deposit the tax for FBR.

    The President FPCCI said that the tax returns should be simplified and easily understandable particularly for SMEs and make it single page document. The present system requires almost all the tax returns filing persons to have further burden of associating the service charges of tax consultants and lawyers due to complicated tax operating system.

    He also informed that he has already written letter to Prime Minister for considering various suggestions on required tax reforms including complex Income Taxation to change to Flat Rate Taxation, taxation system to induce investments, multiple sales tax to change to single stage sales tax across the Board with exemptions on food, live saving drugs, educational instruments. Further the low rate Custom duties without additional custom duties, regulatory duties are answerable to impeding connived smuggling, mis-declaration. The Appellate tax system should be converted into independent tax judicial system in conformance with the requirement of constitution to increase the trust of businessmen in the taxation system.

    Mian Nasser Hyatt Maggo said that taxpayers bill of rights, protection of businessmen against retaliations by tax officials and accountability of tax officials should constitute fundamental to the requirements of tax reforms. The FPCCI has been demanding withdrawal of discretionary powers vested with the tax officials to avoid their misuse as presently FBR has become show-cause generating machinery for existing taxpayers, as are being informed to us at large.

    He stated that to wipe-out corruption there is need to improve automation in tax system and develop local software and Apps with simplified system so that interaction of human resource should be reduced and strengthening of information technology system can combat issuance of connived bogus sales tax refunds which not only affect government revenue but also damage business community credibility and trust.

    Mian Nasser Hyatt Maggo the President of the federation of Pakistan chambers of Commerce and Industry appreciated that a very good move has been done by present government by separating tax policy unit under Ministry of Finance and not under revenucracy adjustment methods of FBR who are only making tariff rate adjustments and making changes in statutes on compulsions due to observations of High courts and Supreme courts during budgetary exercises.

    He said that may be this year the budgetary exercise if is done by tax unit in Ministry of Finance may lead to compliance with directives of Prime Minister on tax reforms.

  • Computation of taxable income defined

    Computation of taxable income defined

    Income Tax Ordinance, 2001 has explained procedure for computation of taxable income.

    The Income Tax Ordinance, 2001 updated up to June 30, 2020 issued by the Federal Board of Revenue (FBR), explained COMPUTATION OF TAXABLE INCOME under Sections 9, 10 and 11 of the ordinance.

    9. Taxable income.—The taxable income of a person for a tax year shall be the total income under clause (a) of section 10 of the person for the year reduced (but not below zero) by the total of any deductible allowances under Part IX of this Chapter of the person for the year.

    10. Total Income.— The total income of a person for a tax year shall be the sum of the —

    (a) person’s income under all heads of income for the year; and

    (b) person’s income exempt from tax under any of the provisions of this Ordinance.

    11. Heads of income.— (1) For the purposes of the imposition of tax and the computation of total income, all income shall be classified under the following heads, namely: —

    (a) Salary;

    (b) Income from Property;

    (c) Income from Business;

    (d) Capital Gains; and

    (e) Income from Other Sources.

    (2) Subject to this Ordinance, the income of a person under a head of income for a tax year shall be the total of the amounts derived by the person in that year that are chargeable to tax under the head as reduced by the total deductions, if any, allowed under this Ordinance to the person for the year under that head.

    (3) Subject to this Ordinance, where the total deductions allowed under this Ordinance to a person for a tax year under a head of income exceed the total of the amounts derived by the person in that year that are chargeable to tax under that head, the person shall be treated as sustaining a loss for that head for that year of an amount equal to the excess.

    (4) A loss for a head of income for a tax year shall be dealt with in accordance with Part VIII of this Chapter.

    (5) The income of a resident person under a head of income shall be computed by taking into account amounts that are Pakistan-source income and amounts that are foreign-source income.

    (6) The income of a non-resident person under a head of income shall be computed by taking into account only amounts that are Pakistan-source income.

  • Taxpayers require to update profile by March 31 to avoid exclusion from ATL

    Taxpayers require to update profile by March 31 to avoid exclusion from ATL

    ISLAMABAD: Taxpayers are required to update their profile by March 31, 2021 to avoid exclusion their names from Active Taxpayers List (ATL).

    The last date for updating the profile was December 31, 2020. However, it was extended up to March 31, 2021.

    Updating profile by all the taxpayers registered under Section 181 of the Income Tax Ordinance, 2001 and other conditions specified by the Federal Board of Revenue (FBR) is a mandatory requirement under Section 114A of the Ordinance.

    Through Finance Act, 2020, the Section 114A was introduced to make the updating profile mandatory for following persons:

    (a) every person applying for registration under section 181;

    (b) every person deriving income chargeable to tax under the head, “Income from business”;

    (c) every person whose income is subject to final taxation;

    (d) any non-profit organization as defined in clause (36) of section 2;

    (e) any trust or welfare institution; or

    (f) any other person prescribed by the Board.

    The FBR explained the newly introduced section as: “Complexity of return forms is an embodiment of the complexity of tax law. Nevertheless, there is a dire need to simplify return forms without compromising on data required to verify accuracy of the declared version.”

    The FBR said that instead of endeavoring to obtain all the relevant information in the income tax return, a new section has been added wherein taxpayers profile may be prescribed in order to capture data relevant to the taxpayer.

    It said that persons who are already registered before September 30, 2020 and are deriving business or incomes subject to final taxation, trusts, welfare institutions, non-profit organizations and such other persons prescribed by the FBR are proposed to file a profile on or before December 31, 2020, which is not extended up to March 31, 2021.

    Persons who obtain their registration after September 30, 2020 are proposed to furnish such profile within 90 days of registration. In case of any change in particulars of information, such persons shall update their profile within 90 days of the change in particulars. The profile contains information relevant to income regarding bank accounts, utility connections, business premises including all manufacturing, storage or retail outlets operated or leased by the taxpayer, types of businesses and such other information as may be prescribed by the FBR.

    The FBR said that if a person fails to furnish or update a taxpayer’s profile within the due date or time period as extended by the FBR under Section214A, such person shall not be included in the active taxpayers list for the latest tax year ending prior to the aforesaid due date or extended date.

    However, upon filing or updating the profile, such persons shall be allowed to be placed on the active taxpayers list upon payment of surcharge which is Rs20,000 in the case of a company, Rs10,000 in the case of an association of persons and Rs1,000 in the case of an individual.

    Further, a penalty for non-filing or not updating of profile is also proposed at the rate of Rs2,500 for each day of default subject to minimum penalty of Rs10,000.

  • Careless bank record keeping creates difficulties for foreign currency account holder

    Careless bank record keeping creates difficulties for foreign currency account holder

    KARACHI – A Foreign Currency Account (FCA) holder faced immense inconvenience when his bank was unable to trace his long-maintained account. According to the 2020 Annual Report issued by the Office of Banking Mohtasib Pakistan, the complainant claimed that he had opened an FCA with a local bank branch in 1996 before leaving for Saudi Arabia.

    (more…)
  • KTBA recommends daily update of ATL file; banks not relying on online verification

    KTBA recommends daily update of ATL file; banks not relying on online verification

    KARACHI: Karachi Tax Bar Association (KTBA) has advised the Federal Board of Revenue (FBR) to update Active Taxpayers List (ATL) on daily basis instead weekly as banks were not relying on the online verification of the active taxpayers for purpose of withholding tax deduction.

    The KTBA on Saturday said that many taxpayers are making payment of surcharge U/s.182A of the Income Tax Ordinance, 2001 (Ordinance) for inclusion of their names in the ATL and upon the payment the status of taxpayer is immediately updated in the ATL on the web portal.

    However, the excel file available on the FBR web portal of is not being updated which is causing severe problems to the taxpayers as far as withdrawals from banks are concerned.

    “The banks are not relying on the online verification available on the web portal of FBR,” the KTBA said.

    The KTBA suggested that the excel file (lists) available on the web portal of FBR is updated on daily basis and the banks are also informed to rely on the online verification before withholding deducting the tax on banking transactions in order to facilitate the taxpayers.

    The tax bar said that it had received many complaints that where manual extensions were filed/submitted and where no reply was received (whether granted or refused) and the returns were filed within the time applied for; the names of such taxpayers are also not appearing in the ATL though such cases are liable to be treated as filed within the time allowed.

    The KTBA advised that where taxpayers have filed the manual extensions within time and where the returns have been filed within the time applied for, the names of such taxpayers should be included in the ATL and the ATL be updated immediately without payment of surcharge as prescribed U/s.182A of the Ordinance.

    There are several instances where the taxpayers have opted rightly to file their returns, in time, manually (paper returns) as they were legally not bound to file their returns electronically, their names are also not appearing in the ATL for which we are being informed by our members continuously. We feel that the manual returns have not been digitized and such taxpayers are facing severe problems due to non-appearance of their names in the ATL.

    The tax bar suggested that where taxpayers have rightly filed/submitted their returns manually (paper turns), the names of such taxpayers should be included in the ATL forthwith for their facilitation.

    The KTBA also received complaints from members and have also noticed that there are instances where extension applications have been submitted via IRIS within time and the same are appearing in the outbox of IRIS unattended by the concerned Commissioners and the returns have also been filed within the time applied for but their names are not appearing in the ATL.

    The tax bar said that there is no fault of the taxpayers who have filed the extensions in time that remains unattended and the returns have also been filed within the time applied for.

    It suggested that where taxpayers have applied for extensions on IRIS in time, whose applications have remained unattended and the returns have been filed within the time, the names of such taxpayers should also be included in the ATL forthwith for their facilitation

  • Weekly Review: share market likely rebound sharply on successful PM confidence vote

    Weekly Review: share market likely rebound sharply on successful PM confidence vote

    KARACHI: The share market likely to rebound after Prime Minister Imran Khan successfully attained vote of confidence from the parliament on Saturday.

    Analysts at Arif Habib Limited said that a fresh vote of confidence in the PM and his government is certain to stimulate renewed confidence and optimism in the investment climate.

    However markets could witness pressure in the case of an adverse outcome. Our top picks are HBL, MCB, UBL, OGDC, MARI, KAPCO, HUBC, FFC, LUCK, ENGRO, NML, ILP, and PSO.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 7.1x (2021) compared to Asia Pac regional average of 17.2x and while offering DY of ~6.8 percent versus ~4.8 percent offered by the region.

    The domestic bourse started the week on a positive note amid expectations of a successful senate election for the ruling government. However the results were a major surprise with the ruling government facing a setback on the hotly contested Islamabad seat, which sent the market tumbling.

    PM Imran Khan’s decision to seek a vote of confidence and expectations of success helped rebound sentiment starkly on Friday. The benchmark KSE-100 index closed the week nominally down (-28 points WoW), settling at 45,837 points.

    Sector-wise positive contributions came from i) Oil & Gas Exploration Companies (54 points), ii) Power (45 points), and iii) Oil & Gas Marketing Companies (32 points). Whereas sectors that contributed negatively include i) Cement (85 points), ii) Pharmaceuticals (39 points), and iii) Textile weaving (16 points). Scrip-wise positive contributors were KAPCO (42 points), TRG (40 points) and BAFL (39 points) while negative contributors included LUCK (45 points), UBL (41 points) and HBL (37 points).

    Foreign selling continued this week clocking-in at USD 10.7 million compared to a net buy of USD 0.3 million last week. Selling was witnessed in Commercial Banks (USD 10.1 million) and Technology and Communication (USD 2.2 million). On the domestic front, major buying was reported by Insurance Companies (USD 8.4 million) and Banks / DFIs (USD 8.0 million). Average volumes arrived at 386 million shares (down by 35 percent WoW) while average value traded settled at USD 129 million (down by 19 percent WoW).